- For millennials, the housing market looks a lot different than it did for their parents and grandparents.
- Rising housing costs and mounting student debt have led millennials to buy different types of homes in different types of locations than their parents did.
- Millennials are buying under different circumstances, too, often waiting longer, buying before marriage, or living with their parents to save cash so they don’t have to wait years for homeownership.
- Below are nine surprising facts about the millennial housing market that put it in perspective.
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The housing market looks a lot different today than it did a couple generations ago.
That’s something that more and more millennials, the group between the ages of 23 and 38, are discovering firsthand every day, whether they’re renting their first apartment or already on to their second purchase of a house.
Why is the housing market so different for millennials compared to the one their parents and grandparents faced?
In large part it’s because of how much housing costs have risen, but it’s also because of the student debt with which many members of the generation are saddled. Some 70% of recent college graduates finish school with an average of $US29,800 in debt to repay, plus the inevitable interest.
Faced with these financial challenges, it’s little wonder that millennials are buying different types of homes and in different types of locations than their parents did. And they are buying under different circumstances, too, often waiting longer, buying before marriage, or living with their parents to save cash so they don’t have to wait years for homeownership.
Here are nine surprising facts about the millennial housing market that put it in perspective.
Millennials face house prices 39% higher than their parents did in the 1980s
Housing prices have soared by nearly 40% in the past three-plus decades, far outpacing wage increases and making homeownership much more of a challenge for today’s buyers. The increase is even more dramatic the further back you look: Today’s average home price is more than 70% higher than what a buyer faced in the 1960s.
Rent prices are up nearly 50% over the last half century
While traditionally renting an apartment or house while saving up to buy your own residence was once a logical approach, since the 1960s, average rent rates have increased by 46%, meaning just affording a rental is harder than ever, let alone saving up to buy.
Many millennials turn to ‘super commuting’ to find homes they can afford
Super commuters are those who travel more than an hour in each direction to and from home and work. In order to find homes they can afford while sticking with a job, many millennials are buying residences in the exurbs and accepting a daily commute of two or more hours.
Birmingham, Alabama, has seen the biggest growth of millennial home ownership increases in recent years
In 2017, millennial homeowners accounted for an impressive 18% of total homeownership in Birmingham, Alabama. That was a dramatic increase over the 11.9% of the homes owned by millennials just one year before in 2016.
33 of the nation’s top 50 housing markets saw increases in millennial home buying
Contrary to the misconception that fewer and fewer millennials are buying homes in major metro areas, the majority of the nation’s top 50 housing markets have actually seen increases in millennial homeownership in recent years.
In some markets, homes built before 2012 are selling at close to 50% discounts because they’re too big and spacious for millennials
Most millennial homebuyers are looking for smaller, more manageable properties than the mini mansions so popular a generation before. And they like sleek, simple interiors. The result is a steep drop in the value of many of the homes baby boomers are now hoping to sell as they downsize after emptying the nest or retiring.
According to the Wall Street Journal, homes around Scottsdale, Arizona, that are worth millions of dollars are selling at discounts of close to 50% because younger buyers aren’t interested in all that space.
A quarter of home-buying millennials are buying homes before getting married
The traditional approach to life put marriage ahead of buying a home with a partner, but millennials aren’t overly concerned with tradition. As many as a quarter of all millennials who buy a house with a partner do so before marriage.
One in three millennial homebuyers tapped into a retirement account to get cash for the purchase
About a third of millennial homebuyers took money out of a retirement account or even took a loan against the account to pay for the purchase. This trend alarms financial experts, who advise people to be paying into these accounts during these younger working years, not depleting them.
Nearly two thirds of millennial homeowners have regrets about their purchase
According to CNBC, 63% of millennial homeowners report some degree of buyer’s remorse. Their most common complaints are miscalculating the hidden costs of the purchase and the ongoing expenses the home demands.
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