The story about Millennials not forming households and getting into homebuying is more of a 2012 and early 2013 story. It’s outdated. Our view of 2015 is informed by strong indicators of what’s happening today with Millennials. ~ NAR
Minneapolis, Twin Cities Minnesota (PRWEB) December 17, 2014
The Twin Cities housing trend found in 2014 among Millennials is about to change, according to Economist Jonathan Smoke and NAR’s Housing Trends for 2015 posted December 9th. Leading the national trend, prospective Millennial age home buyer in the Twin Cities are forecasted as the prevalent homebuyer sector for years to come.
"As the Minneapolis, Twin Cities housing recovery continues to improve, the Millennial generation of home buyers has snagged the lead," says Jenna Thuening owner of Home Destination. "Not only is this younger generation full of fresh enthusiasm for homeownership, but they have a fresh idea of what their homes should look like. Predictions are that Twin Cities real estate in 2015 will principally be about Millennials."
One has to appreciate their size. Millennial people born from to 1981 to 2000 make up the largest group the U.S has ever seen comprise the home buyer pool. Currently they make up only 17% of all households nationally. It literally means that over the next five years more and more of the same individuals, who stayed longer than previous generation at their parents’ home, will be ready to move. Already would-be Millennial generation home buyers were the dominate individuals visiting open houses in 2014. Probably this will be the last year that baby boomers will be the largest share of buyers, predicts Smoke.
6 reasons why Millennial homebuyers will be more active in 2015 are as follows, according to NAR:
1. Banks are likely to be more prone to lend in 2015. The theme of credit and access to credit will be the biggest question of the year. A few developments are already setting the stage to ease lending restrictions.
2.Prospective Minneapolis Millennial homebuyers are gaining higher wages
3. 2014 already saw a trend towards Millennials seizing opportunities to buy a Twin Cities home
4. Changing because it is both an economic story and a life story. Younger residents have growth in jobs at a higher pace than the rest of the population.
5. They are the households that are right on the cusp of qualifying for a home mortgage. Smoke talked about the Millennial generation as the "Gen Rent" and that they will become the "Gen Own" population, in his opinion.
Reasons Why Millennials will Find it Easier to Buy a Home in 2015
1. Fannie Mac and Fannie Mae must clarify to their reps more as to whether or not riskier mortgages could be pushed back on them. Lenders expect this to have a material impact. No change seen to date as to just why the U.S. still has the current level of absence on such clarifications. Banks tend to want to mitigate risk problems that could come later on. New mortgage overlays will diminish this risk.
2. Lower down payment requirements will allow borrowers to put only 3% down, which will help the Millennial buyer segment.
When asked about consumer sentiment heading into the election of 2015, Smoke replied that "Consumer sentiment and consumer confidence are both the best we have seen in the last 7 years, even thou less than prior to the tank."
Real estate is 2015 will see a trend to downsize homes. Would-be homebuyers buy a product based on their age and life circumstance. Based on older households, seniors living in single-family homes, tend to live in some of the largest homes on the market today, so they tend to want to sell their current home and buy a smaller house. If current homeowners move-up to buy their larger homes, that will free up inventory of homes ideal for Millennial populations. Roughly 1/3 of current senior homeowners indicate they don't want to down size their floor space and they tend to already be the ones who own medium sized homes, according to NAR.
"One disappointing factor in 2014 new construction has been that most activity has focused on multi-housing - largely apartments. Thanks to some constraints on the supply side; Minneapolis home builders faced a lack of sufficient lots to support the demand from first-time Millennial home buyers," comments Thuening.
About Home Destination - Twin Cities Real Estate:
Home Destination offers a loyal and committed real estate professional service that personally handles all of the details of selling or purchasing homes in the Twin Cities. Highly regarded by peers as a Minneapolis metro expert for over 15 years, gain a skilled representative as guide to make the best possible housing decisions. Helping all home buyer types, from Millennials seeking to buy their first home to individuals moving-up to a larger luxury home, Jenna Thuening has the real estate experience and acumen buyers and sellers benefit from.