As millennials, the next generation of homeowners, transition from splitting rent with friends to buying, the housing market will begin to see changes.
For many millennials, the rising cost of rent is the best motivation to make the switch from renter to owner. In fact, such a large number of millennials are buying homes that their purchasing trends have begun to drive the housing market, according to Zillow.
Currently, half of America’s homeowners are under the age of 36, Zillow’s Consumer Housing Trends Report shows.
“Millennials are shaping the market more than anyone realized. In fact, half of all buyers are under 36 and half of sellers are under 41,” Zillow’s Chief Marketing Officer, Jeremy Wacksman, said.
An interesting facet to the millennial buying trend is the diversity among young buyers, which is working to more accurately represent the country’s population within the collective “homeowner” group. While 77 percent of all US homeowners are white, the figure is much lower among millennial buyers. Of young adult homeowners, 66 percent are white, 17 percent are Latino or Hispanic, 10 percent African American, and 7 percent are Asian or Pacific Islander.
This diverse, motivated group of buyers is exhibiting one trend that took many real estate experts by surprise—nearly half of all millennial homeowners live in suburbs. With stereotypes like “the urban hipster” and a widespread desire to move away from white picket fence homes, the millennial suburb movement may be surprising in a social sense, but it is a wise economic move.
As urban homes become increasingly popular, their price tags become increasingly expensive. In order to afford bigger homes with community amenities, like gyms and pools, millennials are opting to move to the suburbs, where so-called “starter homes” are increasing in size.
Despite the new suburban shift for many millennials, the fact remains that no other generation has such a high urban-living population. The love for downtown living among young adults and the fact that this generation is the highest educated, yet lowest paid group of workers, means renting still looks good for those who aren’t committed or financially stable enough to take the leap from renter to owner.
In cities like Seattle and Denver, owning is out of the question for many millennials, especially those working to make the purchase on just one income.
“Depending on where they liv, homeownership may be out of reach,” Wacksman said. For more information regarding millennials changing the housing market, [Click Here].