Why Millennials Need to Take Advantage of Today's Great Market Conditions
In the past few months there has been a lot of press coverage questioning why millennials aren't buying homes in greater numbers.
There is, of course, no quick or simple answer here. The truth is that there are a number of factors at play and with around 87 million potential homebuyers in the 18-35 generation, and over 90% of them reportedly intending to own their own place at some stage in the future, the right answers are important to every real estate stakeholder.
The most commonly cited reason is the difficulty many millennials have in obtaining a home loan. Lending standards are high, certainly, but it's not as if anyone under 35 isn't earning a qualifying salary, of course, especially in the tech industries local to us.
Undeniably, however, there are fewer young home owners compared with a decade ago. Unsurprisingly, therefore, there are also fewer first time buyers today, in terms of the total number of house buyers. It's also very significant that the majority of new household formations are in the rental sector (great news for landlords, of course).
So how have we arrived at this situation?
It's essential to remember just what we've all been through in the past decade, since a time when, admittedly, it was a lot easier to obtain a home loan.
We've suffered the most devastating recession and, for many millennials, that's all they've known in their adult/working lives, until quite recently. Many people in this age group will also have witnessed the financial traumas their parents endured in the bad years. In other words, the millennial generation is, in some senses quite understandably, a more risk averse group than the ones that immediately preceded it. And let's not forget the need to pay off those student loans as well!
The really sad thing about this state of affairs is that, right now, the many millennials who can qualify for a mortgage are able to lock in historically low mortgage rates. For this reason alone, my strong advice is, if you can possibly buy a home, now is most definitely the time, before borrowing becomes more expensive, as it inevitably will do at some point.
Perhaps another aspect of purchasing reluctance for millennials is the collapse in their parents' home prices that they saw during the recession. While there are never any guarantees that something like that couldn't happen again, all the forecasts for our uniquely structured area are for growth and continual improvements in property prices. Please click here and here to read previous blogs I've written examining this in more detail.
I think we all have to understand how the dynamics of life are different for young adults than they were in arguably more certain and stable times in the past. Nonetheless, it would be wrong not to be enthusiastically encouraging home ownership in this sector, as it still offers tremendous potential for a more secure and affluent later life and, of course, there's nothing like the freedom of owning your own place.
Above all, I would like to extend a warm welcome to anyone who would like to reach out to me for experienced advice on the best way to achieve home ownership, tailored to their individual situation.