Thursday, March 19, 2015
Millennials on the Market
Over the past several years commentators nervously observed the low rate of millenial home ownership. Industry analysts wondered whether the numbers foretold a permanently lower interest in home ownership. However, the numbers are now in and the majority of new home buyers were millenials in 2014.
According to the National Association of Realtors (NAR), the most powerful and prominent real estate brokerage group, the median age of millenial buyers was 29 with incomes of 76,000. This radical shift is giving the real estate new hope for the present and the future.
After the 2008 housing crisis, real estate industry professionals observed the rapid decline in home ownership in general and for millenials in particular. Housing prices were way out of line with incomes and millenials simply could not afford to purchase. In fact, due to the decline in employment, many millenials moved back in with their parents and refused to even rent apartments. This hurt the multi-family housing market as well.
However as the economy came back over the last few years, the unemployment rate dropped from 10% to 6%. Millenials gained more and more jobs and slowly rebuilt their incomes and savings. By 2014, the generation had established enough to get back into the game of purchasing homes.
At the same time, the natural need to expand, start families and increase living space took hold. Real estate industry professionals have always counted on this factor increase the demand for housing. In the US, the millenial generation is the largest generation, just recently surpassing the baby boomers. The millenial generation has been bolstered by immigrants to the US while the baby boomer generation slowly ages and naturally decreases with higher moratality rates over the age of 65. In addition, baby boomers are less likely to buy new, large homes as they are decreasing the number of possessions they own.
Instead, the real estate industry must rely on the growing millenial generation to pick up the demand. Their increasing incomes, increased families and movement from parent's homes to their own homes all bolster the demand for real estate.
The Federal Reserve has also helped, keeping interest rates extremely low. Banks are issuing mortgages at historically low rates, providing an easier path to home ownership.
Overall, the increase in home ownership among millenials is a huge boon to the real estate industry. It will create huge demand for years to come.
Gennady Barsky is a Real Estate Mogul. Barsky is a lover of all things automobile and has a passion for Social Media.