Get ready for the Millennial wave to drive the housing market for years. ~ Jonathan Smoke, NAR chief economist
Minneapolis, Twin Cities Minnesota (PRWEB) November 11, 2014
Successful Millennial home buyers in the Twin Cities are ready to celebrate. Parents and friends send flowers, and messages to let them know that a home purchase is a significant accomplishment in today's housing market. Indications are that Millennials will control lackluster or filibuster Twin Cities home sales in the future, according to a RisMedia report on the event. Today Millennials already comprise 37 percent of all home buyers nationally - quite a powerful percentage.
"Millennials looking to buy a home for the first time, who engage a professional real estate agent, are more equipped with a working knowledge of the nuances of their local housing market. Being well informed of how deep their personal finances need be, helps Millennials create a plan that can make the difference in maximizing their potential to gain a quality loan," finds Jenna Thuening, owner of Home Destination.
Realtors® from across the United States gathered to review changing homebuyer demographics on the housing market during the REALTOR® University Richard J. Rosenthal Center for Real Estate Studies at the 2014 REALTORS® Conference Expo. According to reports, whether or not Millennial age buyers are interested and capable of purchasing homes in the future will pretty much be the yardstick of success.
Nationally, so far in 2014, Millennials experienced 60% stronger job growth than U.S. residents overall and a drop in unemployment to 6%. The double side of this great news is that in tandem with improved economic opportunities, this will empower Millennials to form households and a buy home sooner, according to yesterday's HousingWire report on the Realtors Expo. The article titled Millennials still grapple with first-time home buying talks about how Millennials aged 18 to 33 were a hot topic on panel discussion.
“Millennials are the largest generation of people in the U.S. and represent 60 percent of first-time homebuyers,” said Jonathan Smoke, chief economist for realtor.com®. “They are also more likely than any other group to purchase a home in the next year.” Buying a home is one of life's larger accomplishments; those who achieve it at a younger age, have longer to benefit from accruing home values.
The panel discussed one glaring misconception - that is that Millennial age consumers aren’t interested in purchasing a home. The truth is rather that multiple factors are behind why they are delaying when they pull the buyers trigger, according to Lisa A. Sturtevant, vice president of research for the National Housing Conference. “Many of the reasons Millennials are not forming households or making purchases are economic, so as the economy improves, we should see this group become more of a force in the housing market.”
Smoke indicated that successful home sellers will need to understand that Millennials are already strong buying contenders. “They represented 37 percent of home shoppers this summer, and over the next 5 years this generation will make up two-thirds of household formations,” he said. “Between June and September 2014, over half of adults aged 21-34 visited real estate websites or mobile apps. And this is the cusp — get ready for the Millennial wave to drive the housing market for decades.”
Another segment of prospective Minneapolis home buyers that will be competing with Millennials for dominance in the housing market are more seasoned buyers - the baby boomers. “With Millennials searching for new homes, baby boomers downsizing, and groups with historically lower incomes all entering the market, an increased demand for smaller, less expensive homes will begin to emerge,” Sturtevant commented.
A loanDepot survey released October 22, says that "one-third of Millennials say a boost of income of 15% or less is enough to buy first home." Even though stricter lending standards are making it more challenging for most Millennial age borrowers to qualify for a mortgage, some see the upside. They call for a better balanced reform from the federal government to make it possible for low and mid-income applicants to gain financing. Here is a summary of how Millennial age survey respondents feel about today's strict lending guidelines:
- Two out of every three or 65% Millennial renters say that making it harder to get a mortgage may protect form risky loans.
- 59% believe that it reduces the likelihood of another mortgage crisis.
- Close to 1/2 or 49 percent of Millennials surveyed say these stricter requirements are damage their chanced to step into homeownership. This is fits 52% of the respondents, those who earn less than $50,000 a year vs those who earn over $50,000 (44%).
- One in three, or 30%, believe stricter guidelines are a harsh and restrictive measure, while 47% are unsure and 22 percent indicate it is a needed step.
- 82% view homeownership strengthens our nation and they believe that like everyone else, Millennials should have a fair chance to own a home someday.
- In order for that to become a reality, three-quarters, or 76%, indicated that the fed should make it feasible for low and mid-income residents to buy a home with a quality loan.
- 78% plan to buy their own home within five years.
"Due to the metro ranking best nationally for unemployment rates, Millennial home buyers in the Twin Cities housing market are able to afford a home sooner than in many metros," adds Thuening. Home mortgage underwriters want to see documented proof that any prospective home buyer can sustain homeownership and has the income to support monthly mortgage payments. Coming up with the needed W2s and tax returns with a lengthy history of suitable income is certainly more challenging for the Millennial age home buyer.
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 Eden Prairie, Minnesota. 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 hoping to buy their first home to individuals repeat buyers moving-up to a luxury home, Jenna Thuening has the real estate experience and acumen that both homebuyers and sellers benefit from.