While millennials are certainly some of the first to buy the best and brightest new gizmos such as iPhones and other high-tech toys at a fast rate, when it comes to new homes, they aren’t so quick to hang a home-sweet-home sign.
A Forbes survey reported millennial renters indeed want to buy houses, but they’re not so fast to hire a Realtor and start hunting for 2 beds, 2 baths in the suburbs.
The report added first-time buyers in today’s market continue to increase; 34 percent of those who bought a home in the past 2 years were millennials, according to Realtor Redfin. It seems they are moving into homeownership a lot slower than their parents did at the same age.
Here are some other reasons Forbes says millennial buyers aren’t buying:
- Obtaining a mortgage isn’t easy.Lenders have toughrer standards when it comes to the debt-to-income ratio, which is rough for potential buyers who already have more debt and less income than their previous generations. Many of today’s millennials graduated into a tough job market and as a result, spent years un- or underemployed. Even if they’ve since landed a better position, they haven’t seen the wage growth to let them save while paying off student loans and record high rents. The Forbes report also adds that 70 percent of millennials said they need to save for a down payment before they buy a house, and 52 percent said they have debt to cover first.
- BiglyAs demand has increased as well as prices, the inventory of available houses has not stayed on par. “Getting a mortgage might not be enough for millennials,” says Nela Richardson, chief economist at Redfin in the Forbes report. “You can have a great credit score and a decent down payment, but if you’re competing against an all-cash buyer in a competitive market, that may not be enough.”
- Families are down the road. This particular generation has decided to wait longer to get hitched or have kids. Millennials were also more likely than other home buyers to want to buy a home in a good school district, according to Redfin; however, they may not want to pay the high taxes associated with such homes until a child comes into the picture. Plus, they’re less likely to become homeowners on their own. Millennials are more likely to purchase their first home with a partner or spouse (70 percent), compared to potential first-time home buyers of other generations (49 percent), according to the Forbes report
- Better to Rent.When the housing bubble hit home, many institutional investors were among those who plunked down money for single-family homes, which have now turned into rentals for the same people. Those properties, along with new apartment buildings being developed around the country are offering lots of options for renters.
So, if you are a millennial and you want to at least start looking to see what’s out there in terms of a home to buy, it never hurts to begin exploring options. You never know, you might want to hang that ‘Home-Sweet-Home plaque quicker than you planned.