“Despite recent news reports of young adults moving back home to live with Mom and Dad, millennials haven’t completely written off homebuying and still aspire to owning a home,” said C.A.R. President Kevin Brown. “What’s encouraging is that while many saw their parents or friends struggle through the housing crisis, the majority haven’t changed their attitude toward homeownership. Young buyers may have to delay their home purchase, but they eventually hope to own their own home.” CAR.org
The 2014 California Association of REALTORS® Millennials Survey looked at those born between 1980 and 1996, or 18 to 34 year olds, who currently live in California. The Survey focused on renters and home owners and found that one in five are homeowners, 41% are renters and 36% live with their parents. When looking specifically at 18-26 year olds, the Survey revealed that nearly half (49%) live with their parents.
Demographically, they are very diverse—62% are minorities. This generation is known for delaying marriage and having children; the majority are not married and nearly half do not have children. They are, however, well educated; 46% of 27 to 34 year olds have a college degree and 42% of 18 to 26 year olds are currently enrolled in a college.
Despite many having a higher education, their earnings and employment have some catching up to do. Only about half of echo boomers are currently employed, and only one-third have a full time job; 19% have a part time job, 24% are students and 20% are unemployed. This bleak employment situation translates to a median annual income of $35,000. There is a silver lining for earnings; older millennials (those between 27 and 34 years old) have a median annual household income of $50,000, compared to $30,000 for their younger cohort (18 to 26 year olds).
Renters
Approximately two out of five millennials are renters, paying a median monthly rent of $1,075. Affordable rent is the most important reason for electing to live in their current residence and also why the majority rent instead of buying—67% said they rent because they cannot afford to buy.
While they may not be able to afford to buy a home now, most Gen Y renters feel that homeownership is important because it gives them the freedom to do what they want with the property, and they expect to buy a property within the next five years.
Echo boomers in California prefer single family homes, as two out of three indicated they plan to purchase a single family home, compared to only 12% who plan to purchase a townhome or condominium. Contrary to popular belief, the ideal home for many would be on a big lot with lots of land (42%) in the suburbs (41%). Fewer than one in three indicated an urban location preference for their ideal home.
While they aspire towards home ownership, the majority are uncertain or doubtful they could obtain a mortgage now. Millennials are realistic about the responsibility that comes with the territory. Affordable home price, problems with credit/mortgages/taxes and maintenance are some of their biggest concerns about home ownership. About half of Gen Y renters have student debt, which is below $20,000 for many, so they do not feel it is preventing them from qualifying for a mortgage. However, the majority have other debt, such as credit cards and auto loans, which would make it difficult for them to buy a home.
Additional findings from C.A.R.’s “2014 Millennial Survey” include:
- Of the millennial renters, the majority (67%) rent because they can’t afford to purchase a home.
- Like any other home buying segments, millennials are concerned about high home prices and affordability, with nearly half (45%) citing those as their biggest concern about homeownership.
- One in two millennial renters has student debt, but most don’t feel it is preventing them from qualifying for a mortgage. Additionally, more than four in 10 (43%) don’t have debt that would prevent them from buying a home.
- Even though many millennials saw their parents struggle through the recession, more than half (59%) said the housing crisis didn’t affect their attitude toward homeownership being a good investment.
- Despite the stereotypes that these young adults mostly seek urban living with a high walkability factor, millennials said they prefer single-family homes on large lots in the suburbs, with two out of three (67%) indicating they plan to purchase a single-family detached home, while only 12% said they plan to purchase a townhome or condominium.
- While they aspire toward homeownership, the majority was uncertain or doubtful they could obtain a mortgage now, with 45% saying they were not sure, and 33% saying they would not be able to obtain a mortgage now.
What does this mean for you? If this generation starts purchasing homes, homebuying will trickle up. More home buyers will be able to enter the market and more sellers will be able to sell their homes.
I can discuss this with you more in depth – especially with “Season” knocking at our door. More buyers and sellers will be coming to the Desert over the next few months making this the best time to buy or sell your home. Call me today and let me show you why I’m your best choice to work with in the Desert.
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**above information is from the California Association of REALTORS(R)
