National Association of Realtors Data
NAR chief economist Lawrence Yun points out that the Gen Y or first time Millennial home buyer is finally accounting for more home purchases than any other age group. It’s been awhile in the making. This is the generation that’s been crashing in Mom & Dad’s basement forever. Maybe parents are getting frustrated at their loss of privacy with so many kids moving home.
Seriously. That’s been a trending subject. In 2017, about twelve percent of first time Millennial home buyers were moving out of Mom & Dad’s basement. 40% were moving from an apartment.
In any event, Millennial buyers last year accounted for 36% of purchases. Some of these Millennials were repeat buyers. Nationwide, an average first time Millennial home buyer had an income of $88,000 offset by (half the time) a small mountain of student debt. Millennial home purchases might have accounted for an even larger number of homes, had inventory matched demand.
Low Inventory Impacts Market
Its a never ending theme these days. A real lack of inventory is impacting the housing market. True story. Last week I showed a great house to my client Steve. Perfect place. Checked all the boxes. We made a competitive offer, but its tough to win being one of fifteen competing offers for a single house.
Another impact of the inventory issue is that fewer owners are placing their properties for sale. The thinking goes sort of like the childhood game, Musical Chairs. The fear being, you place your house for sale, sell it, but then find you have nowhere to relocate to. You’re homeless.
Soaring Interest Rates Impact The First Time Millennial Home Buyer
There have been policy changes in the past twelve months that are impacting home mortgage rates. The Federal Reserve reversed an Obama era policy of purchasing mortgage securities by the tens of billions of dollars monthly. Now, The Fed is selling. As they securities enter the marketplace, it places pressure on home mortgage rates to increase.
Additionally, the Trump Tax Cuts are good news for the stock market. This has funds moving from a safe harbor such as bonds and into stocks. Again, this doubly impacts interest rates.
Regardless of whether you are or are not a first time Millennial home buyer, as rates increase your purchasing power decreases. So we are seeing a number of buyers get off the fence before rates price them out of their first choice locations.
Boulder Real Estate News Recommends
- Top Home Buying suggestions
- Search by location, style, historical status
- Learn about a great community or two such as Rock Creek
- Read this great article by Petra Norris who touches on some of the primary wants and needs of millennials when searching for a home.
- If you are a first time home buyer, read this article by Kevin Vitali, who goes over tips for buying your first home from 8 different experienced realtors!
- Eileen Anderson wrote an article about common mistakes made by sellers when pricing their homes. To avoid making these mistakes, read it here.
- Michelle Gibson touches on some different rules you should follow when buying your first home!