Depending where you live the market has done two things: It has either recovered from pre-bubble numbers or it hasn’t fully recovered. Unfortunately, if your market hasn’t recovered, its hard to predict if it ever will. However the fallout from the recession is not the reason prices in your area are possibly still down. Real Estate is an extremely hard trend to predict, and even harder since the recession. But one thing that has changed since the recession are the buyers who are in the market. Let me explain…..
The 22, 23, 24 & 25 Year Old
Lets get right to it. This group of potential homebuyers plays a major role in the future of real estate. The 22 year old is just finishing undergraduate school, while the 23, 24, and 25 year old have been out of school, they are making student loan payments, and are also in the job market. So why now? Student debt is an often-overlooked factor. A new Bankrate Money Pulse Survey reveals 45% of people with student loans, and 56% of those between 18 and 29, have put off a major life event like buying a house because of the burden of that debt. This is changing though.
Making Up For Lost Time
Sometimes predictions are wrong and the financial markets said interest rates would rise here in 2015, but because of a slowdown in China, Greece Bailouts, and other market factors it just hasn’t happened. It is because of this continued trend that Millennials may be making up for the lost time. A recent NAR report makes it clear that in recent months, it has been Millennials driving the housing market. This generation has made up 32% of home buyers, significantly more than Baby Boomers. This is a huge shift, and again, at the beginning of 2015 this would of never been predicted.
Where Are They Buying
Here is where things get tricky, the millennials continue to adjust their own lifestyle, and because they do this their expectations keep changing. More NAR research has found that Millennials prefer to live in “walkable” neighborhoods, close to shopping and restaurants. Because of that preference, they are less interested in suburban single-family homes and are more interested in urban condos and townhouses. The research also shows that millennials show a stronger preference than other generations for expanding public transportation and providing transportation alternatives to driving, such as biking and walking, while also increasing the availability of trains and buses. They also support the development of communities where people do not need to drive long distances to work or shop.
The millennials are not afraid to buy a home, they are smart consumers. The amount of debt they occurred while in college can equal what most Baby Boomers bought for their first home. The times have changed, but the concept of homeownership, creating equity, and building a net worth has not. If you are a community with a struggling real estate market, it could because you are not in the sights of the millennials.