Millennials Take the Real Estate Market By Storm
Economists predict sustained demand as this generation enters homeownership
Millennials — people born between 1981 and 1996 — have long been teased for their aversion to purchasing anything besides avocado toast and fancy lattes. However, in the last few years, their sudden interest in entering the housing market has turned that stereotype on its head. Now, economists say, millennials are “supercharging the housing market.”
Why Now?
After the crash in 2008, when many millennials were graduating college and entering a cruel job market, the task of saving up enough for a down payment on a home was not a possibility or even a desire for most of the generation. Difficult borrowing requirements also left many millennials unable to take out mortgages after the 2008 crash.
Different mindsets and priorities also played a role. Many millennials value travel and self-exploration, with very few settling down in one city immediately after college. Known as a generation valuing experiences over possessions, it was more common to spend savings on a year of travel than a down payment.
However, when COVID-19 closed borders and turned travel into a substantial risk, lifestyles shifted. From jumping between cities to van life to backpacking through Europe, many plans were interrupted by new guidelines and a need for isolation during the first lockdown. At this point, especially for millennials who had already taken time to travel and live a more nomadic lifestyle, it only made sense to begin looking to settle down.
Lockdown and the ongoing challenges of responding to COVID-19 have introduced new priorities and perspectives across generations. A need for personal space and access to outdoor recreation grew more urgent than ever. At the same time, many professionals found more freedom of location as jobs across industries moved to remote work.
Suddenly, millennials found themselves with no travel plans to save up for and no limits to where they could live long-term. Plus, interest rates dropped to record lows around 3%, expanding budgets and bringing homeownership goals within reach. Young tech workers in cities like San Francisco and New York could now expand their horizons to more affordable markets like Raleigh and Charlotte, often finding single-family homes with mortgage payments lower than what they’d been paying for rent.
In a recent survey by Zonda, only 7% of millennials said they never plan to purchase a home, with 32% reporting that they planned to buy a home in the next three years. Eager to begin building equity and raising a family in a home they own, millennials are throwing their hats in the homeowner ring. The biggest obstacle, experts say, is winning bidding wars. In many cities, buyer demand is far outrunning inventory for existing homes.
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