The term “millennials” refers loosely to the group of individuals born between 1982 and 2004. Although many of these individuals are not yet old enough to consider buying homes, those who are have long been known to avoid it. This means that people who are well into their thirties have yet to settle down and buy homes. Experts believe that 2016 might be the year that these millennials finally take out that first mortgage.
The Millennial Frustration
For years now, real estate agents and experts have wanted the answer to one question: where are all of the millennials? Other demographics are purchasing homes left and right, but it seems that those born after 1982 are holding up the market more than any other group. They simply are not purchasing homes at the same rate as other groups, including the baby boomer generation, which still makes up a huge percentage of all of the real estate bought and sold throughout the country. In fact, many real estate experts found themselves wondering what would happen to the real estate market as a whole if these individuals did not start purchasing more property.
Although there are not any large-scale studies that can point the finger at a particular cause or reason why these individuals tend to avoid homeownership, there is some speculation that the turbulence in the financial market during the millennials’ adult years may have turned them off to the idea of purchasing real estate. Even today, a vast number of these individuals choose to rent their homes or even continue living with their parents until they are into their late twenties and early thirties. However, experts suggest that it isn’t because these folks are avoiding responsibility – it’s because they are waiting for just the right opportunity.
The Slow Increase
CNN Money recently published an article that helped to identify 10 markets across the United States where millennials make up a large number of the new mortgages being provided to homeowners. These locations included four cities in Louisiana as well as cities in Iowa, Utah, Pennsylvania, Michigan, Wisconsin, and Tennessee. With the majority of these cities in Louisiana, many of which were forced to rebuild in the wake of Hurricane Katrina, experts believe that the sheer affordability of the new “starter” homes in this area is what attracts the new generation of buyers.
Streamlining things for 2016
A few companies have even turned toward building new homes designed specifically for millennials. These brand-new builds are “streamlined” in such a way that the bells and whistles have been stripped away in favor of affordability. The rate at which these homes sell shows that streamlining them certainly does not take away from the appeal of homeownership; in fact, it actually makes it even more appealing to millennials who are faced with the increasing cost of renting their homes and who want to put their money toward their own futures instead.
Of course, experts believe that the economy will continue to grow in 2016, and when this is combined with the American dream of homeownership, increasing rental costs, and lower mortgage interest rates across the board, this year may be the year that the millennials truly enter the real estate market.