How Much Do Millennials Care About Home Ownership
News Posted On: 07 April 2015
It’s a standard line of argument that America’s millennial generation - those sometimes categorised as ‘Generation Y’ - aren’t interested in home ownership. They’re certainly not buying as their parents did, and it’s enough to worry real estate professionals. One explanation that’s offered is that Generation Y don’t work hard. They’re entitled: the Facebook generation, expecting to Tweet their way to fame and riches and unwilling to accept the effort and discipline of work. When that argument fails to answer, the other claim that’s often made is that Generation Y cares - they just don’t care about owning a home.
But the facts don’t support that argument. Ask them their general principles and yes, Generation Y often say they value experiences over things, relationships over real estate… but what they actually do belies this.
In fact, 38% of millennials choose a mortgage over marriage in the USA.
That’s the surprising result Redfin came up with when they polled 18-35 year olds in the US.
It’s borne out by the company’s own data which shows RSVPs to the company’s home-buying classes, aimed at first-time buyers, rising by 27% year-on-year in the first three weeks of 2015. During the same period, 57% of Redfin home tours were taken by first-time buyers, indicating a big step into the market by this group. A spokesperson for Redfin said: ‘it’s the highest rate of first-timers touring we’ve seen since the end of 2012.’
Partly it’s because the costs of an American wedding are spiralling - things haven’t quite reached the point where it’s cheaper to buy a house, but last year’s average wedding cost topped $29, 000 (£20, 000), so down payments are a competitive option.
Clayton Jirak, a Chicago realtor with Redfin, said that buying a home together rather than marrying was ‘becoming a popular option for couples who are prioritizing home ownership over marriage,’ while his fellow Redfin realtor Lindsay Milkovich, who works in Los Angeles, agrees. She helped two young couples move into their first homes in December of last year, and says: ‘to them, it just seemed more practical to put their money towards the purchase of a new home instead of a big party.’
So much for impractical, dreamy millennials. What about commitment-phobic, insular, individualistic millennials? Looks like they’re alive and well, judging by these figures, right?
Not so fast. Buying a house together is actually a steeper commitment than getting married, opines Redfin chief economist Nela Richardson. ‘A house for most people is a long-term asset,’ Ms Richardson points out, and ‘breaking up is hard to do, but splitting financial assets makes it even harder especially considering the fees and closing costs that are associated with buying and selling a home, which if done too soon can wipe out all the equity accumulated.’
Since these rising numbers come as the US economy finally starts to recover sufficiently to offer a dividend to young people who might be interested in buying a house, it looks like millennials were interested all along: not lazy, just unable to stump up the down payments. As they transition to better pay and start looking for properties, millennials will either reinforce or transfigure American home-buying habits and the shape of the American city. Watch this space!
Written by Les Calvert of www.property-abroad.com
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