Ah, Millennials. If Hasbro is to be believed, Millennials are self-indulgent youngsters whose only objective is to collect avocado-based life experiences the same way they collect digital Pokemon. (Gotta catch ‘em all!)
In fact, Millennials are fully grown and fully ingrained in the workforce. Born between 1981 and 1996, the youngest Millennials are now graduating college, while the oldest are potentially helping their children apply this year. As a cohort, they’re racially and ethnically diverse, well educated, and officially the largest generation in America’s history.
However, the rumors about Millennials persist. “They are physical and cultural nomads with no interest in homeownership,” people say. But are the rumors true? Are Millennials less interested in owning a home until they finish this level of Candy Crush? Or is the American Dream having trouble keeping up with many recent shifts in society?
Much like Millennials themselves, the answer is more than one-sided. According to current research, many Millennials are homeowners, while even more desire to own someday soon. Let’s take a look at the rumors in detail to uncover the truth.
Rumor: Millennials are too Young and Unstable for Homeownership
With their impulsive wanderlust, there’s no way Millennials would want to settle down and saddle themselves with a mortgage, right? Actually, Bank of the West’s annual Millennial Study found that 69% of Millennials anticipate staying in the same area for the next 10 years. That’s just short of the all-age average of 74%.
An additional Urban Institute study from earlier this year found that the rate of homeownership among people aged 25–34 was at 37% in 2015. A generation ago, that rate was at 45.4%. That’s a gap of 3.4 million homes! The more recent survey puts that number at 42%. So, yes, Millennials are buying homes at lower rates that Gen X was at the same age. However, with more than 4 in 10 Millennials now categorized as homeowners, we can hardly say that the generation as a whole is unsuited for it.
Rumor: Millennials have Zero Interest in Home Ownership
BOTW found that as many as 49% of Millennials said stability would motivate them to buy a home. And 47% said they wanted to own a home to make it their own. The same percentage said they would buy if it made more sense than renting. In fact, compared to Gen X, more Millennials think that it makes more financial sense to own (44% vs. 43%) and that homeownership is a good financial investment (39% vs. 35%).
Among Millennials who do not own their home, there are common barriers to homeownership:
- Delayed marriage. Millennials are marrying later and at lower rates. This perceived disinterest in “settling down” does have real effects on homeownership. According to Urban Institute, “If the marriage rate in 2015 had been the same as it was in 1990, the Millennial homeownership rate would be about 5 percentage points higher.”
- Student loan debt. Urban Institute found that for every doubling of student loan debt (for instance, from $50,000 to $100,000), the likelihood of owning a home decreases by 15%.
- Housing availability near job centers. Many young professionals are choosing to rent near their workplace rather than own and commute long distances. With homes in city centers at historically high prices and in high demand, purchasing first homes near work is becoming more prohibitive.
- Race and education. Of great concern, Urban Institute found that the gap in homeownership rates between college graduates and high school graduates increased from 3% to 10% between 1990 and 2015. In addition, black and Hispanic Millennials own at lower rates than other people their age, and homeownership among blacks dropped further than other groups since 2000.
Many of these barriers are hard to push through, but it’s clear that at least half of Millennials who currently rent would choose homeownership if they could.
Rumor: It’s Impossible to Buy a Starter Home in Today’s Market
Yes, it’s true that home prices have been climbing for 79 straight months. Yes, it’s true that housing inventory is down, and the availability of affordable housing is down by a lot. But there are still homes available at great price points, even in Western North Carolina. And there are still ways to make a smart purchase that will benefit you now and in the long run.
With a little planning and the right professional real estate agent by your side, nothing is impossible. Contact us today to speak with a Beverly-Hanks real estate agent about buying homes and land in WNC. Ask for the complementary Beverly-Hanks Buyer’s Guide that walks you through the homebuying process, from planning your home search to what to bring on Closing Day.
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