Despite Money Issues, Millennials Want to Buy
Millennials have a lower net worth than their parents did at their age, and a lack of money coupled with student loan debt continues to be a roadblock to home ownership for this generation, according to Paul Taylor, executive vice president of the Pew Research Center and author of the book “The Next America: Boomers, Millennials, and the Looming Generational Showdown.”
Taylor presented his findings at the REALTORS® Legislative Meetings & Trade Expo in Washington, D.C. last week. Among them, households headed by an individual under the age of 35 had a median net worth of $15,260 in 1983, as compared to $10,460 in 2013. However, wealth has significantly increased over that time period for those 65 and over. Median net worth for that age group was $210,500 in 2013, up nearly $100,000 from $120,524 in 1983.
The financial situation of the millennial generation is reflected in the real estate industry. Historically, first-time buyers have accounted for about 40 percent of total home buyers annually, but that figure has trended downward since 2011 to 32 percent today. It’s not surprising, Taylor said, as a record number of young people are strapped with student debt. This trend has also led to 39 percent of millennials currently living with their parents.
“These shifts are creating big generation gaps that will put stress on our families, our politics, our pocketbooks, our entitlements programs, and perhaps our social cohesion,” Taylor said.
Jessica Lautz, managing director of survey research at the National Association of REALTORS®, agreed that the major hurdles to home buying for people under the age of 35 includes flat wages, rising rents, and student loan debt. The 2016 Profile of Generation Trends shows that one in six younger baby boomers purchased a multi-generational home to accommodate their own aging and returning children.
But the vast majority of millennials are optimistic about home buying, Lautz said. In fact, 94 percent of millennial renters say they want to own, according to a recent NAR survey. And what they’re looking for is affordability in first-ring suburbs with shorter commutes and good schools.
What’s more, 87 percent of millennials who bought a home in 2015 used a REALTOR®, Lautz said. “Not having been through the process before, they rely on real estate agents to get them through the competitive market and to the finish line,” she added.
Despite major economic changes affecting this generation, one thing has stayed the same: the median age of a first-time buyer still hovers at 31.
“This means that they are ready and willing to buy if they can, in fact, break into the market,” Lautz said. “It’s getting more difficult to get to that point, but the desire to do so hasn’t changed.”
—Erica Christoffer, REALTOR® Magazine
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