Millennials compose the largest demographic in the country these days at 75.4 million young men and women. While they are the people dominating the web while searching for their first time homes, they have a tough rough ahead of them. In markets across the country, Millennials lament how they’ve been repeatedly outbid (some as many as 13 times) even while offering thousands over dollars over the asking price. Considered late arrivals to the housing party, their tardiness is just one factor that’s working against them.
“Late” coming into housing markets by some people’s standards, this age group (U.S Census Bureau says ages 18-24; Pew Research says ages 22-37) is, for the first time, making long term commitments to one particular location and/or one particular “home.” (This idea of commitment is a huge shift for a generation that has experienced economic uncertainty, international conflicts and home soil attacks, climate upheavals, the realities of deep student debt and unprecedented technological connectivity much, if not all, of their lives.) Already, as of January, 2017, millennials make up 45% of all purchase loans, an increase of 3% over 2016.
The housing markets millennials are committing to are even more challenging than they were last year. Across the country, home/condominium prices have increased by 7% and home/condominium inventories have decreased by 3%. (These percentages go up and down depending upon specific locations and specific markets.) Millennials just entering the market are and will be competing among themselves as mostly first time buyers for starter homes and among repeat buyers who have “…more leverage and experience,” says Javier Vivas, manager of economic research for Realtor.com.
Vivas suggests that millennials take a good look at the realities of these highly competitive housing markets. “Expect that you won’t get your “first” house…expect a bidding war…expect to pay more than the listing price for the house you want…expect that everyone else you’re bidding against is pre-approved for a loan…so do your homework, prioritize your requirements, be first in line, pre-approved and ready to go fast…”
Millennials do have the advantage of low interest rates going for them, however. Despite the Federal Reserve already raising rates .25% in March while anticipating two more hikes this year and three next year, millennials do have access to credit and the ability to get into homes more easily than previous generations who had much higher interest rates. Again, advice from Vivas, “…research lenders as well as you research homes on the web…lenders and payment assistance programs. Know what you want…know what you have…be prepared to take action quickly.”