Millennial Homeownership Up, Inventory Woes Persist

0
196


[ccpw id=”6606″]

Millennials are picking up the pace of
moving into homeownership, but the National Association of Realtors® (NAR) says not all are finding a way. Its
2018 Home Buyer and Seller Generational Trends study found that inventory constraints
and higher housing costs
have prevented some from leaving the more affordable
confines of their parents’ homes.

The study evaluates the generational differences of recent home
buyers and sellers and found that slightly more than a third of home purchases
over the last year, 36 percent, were made by Millennials, an increase from 34 percent
in 2017, making them the most active generation of buyers for the fifth year.  Gen X buyers accounted for 26 percent of
sales, baby boomers for 32 percent, and the silent generation, those born
between 1925 and 1945, 6 percent.

Lawrence Yun,
NAR chief economist, said the survey findings reveal show what it takes for
Millennials to be a successful buyer and why, even as sales to that age group
reached an all-time survey high, slim inventories and other conditions are
working against many. Yun said the overall share of those buyers remains at an
underperforming level.

The typical Millennial needed a household income of
$88,200 compared to $82,000 last year to purchase the same sized 1,800 square
foot home which increased in price from $205,000 to $220,000. They were also
carrying more student debt than revealed in last year’s survey and slightly
more of them said saving for a down payment was the most difficult part of buying
a home.

“Realtors®
throughout the country have noticed both the notable upturn in buyer interest
from young adults over the past year, as well as mounting frustration once they
begin actively searching for a home to buy,” said Yun. “Prices keep rising for
the limited number of listings on the market they can afford, which is creating
stark competition, speedy price growth and the need to save more in order to
buy.”

Added Yun,
“These challenging market conditions have caused – and will continue to cause -
many aspiring millennial buyers to continue renting unless more Gen Xers decide
to sell
, and entry-level home construction picks up significantly.”

Among other generational findings of
the survey was that, as in previous years, younger boomers were the most likely,
at 20 percent, to purchase a multi-generational home with an increase from 30
to 39 percent who said they did so to provide a place for their adult children to
live. Providing a place for their parents was a reason given by 22 percent.  This also applied to Gen X buyers, with those
purchasing for multi-generational purposes rising from 12 percent in 2017 to 15
percent and many of those (35 percent) saying adult children were the reason,
slightly more than those doing so because of their parents.

 “Costly
rents and growing student debt balances appear to make living at home more
appealing, affordable and increasingly more common among young adults just
entering the workforce,” said Yun. “Even in situations where three generations
are all cramped under the same roof, it can significantly help some millennials
eventually transition straight to homeownership. Eighteen percent of millennial
buyers in the survey said their family home was their previous living arrangement.” 

Regardless of the age group, the quality of the
neighborhood was the most important factor
in deciding where to live, followed
closing by proximity to employment. Recent Millennial buyers were also as
likely as other age groups to put a priority on living close to friends and
family.

The
share of millennial buyers with at least one child continues to grow, at 52
percent in this year’s survey and up from 49 percent a year ago and 43 percent
in 2015. With the need for a larger house at an affordable price, 52 percent of
millennials bought in a suburban location while also being more likely than Gen
Xers and younger boomers to choose a home in a small town. After climbing as
high as 21 percent in 2015, only 15 percent of recent millennial buyers
purchased a home in an urban area.

Eighty-six
percent of Gen Xers and 85 percent of Millennials purchased a single-family
home, while boomers of all ages were most likely to buy a multi-family home.
Only 2 percent of millennials bought a condo.

“While there is an overall trend
among households young and old to migrate towards urban areas, the very low
production of new condos means there are few affordable options for buyers -
especially millennials,” Yun said.

The survey also found that both
buyers and sellers in all age groups prefer to work with real estate agents.  Millennials, at 90 percent, were most likely
to purchase using an agent, but at least 84 percent of other generations did so
as well. Close to the same percentages of sellers were also agent assisted.  

NAR
mailed its 131-question survey in July 2017 to a weighted random sample of buyers
who had purchased a home between July 2016 and July 2017. The survey could be
completed by mail or on-line and was available in both English and Spanish. Of
145,800 surveys mailed, 7,866 were returned.



Original Source