First-time homebuyers are largely sitting out this housing recovery, and while affordability may be the primary reason, it is far from the only one. It could possibly be they just want more than their parents did. Three-quarters of first-time homebuyers say they are searching for a home that will serve them long term, perhaps accommodating a family. They’re saying they don’t really desire a starter home. That’s according to a new national survey by Bank of America of more than 1,000 adults age 18 and over who want to buy a home in the future.
Go big, or go home says the Millennial homebuyers
The share of first-time buyers fell to just 30 % in February, according to the National Association of Realtors. Historically, it should be at least 40 percent. The common reason behind this has been that there are an inadequate number of low-priced homes for sale, and that tight credit standards as well as student loan debt take home-ownership off the table for young buyers. Those continue to be valid reasons, but playing into that could also be this young generation’s need for something bigger and better.
Sixty-nine percent of those surveyed said they were willing to delay until they could afford that longer-term home, rather than pony up the cash now to buy a starter home. Over fifty percent said they didn’t think they could afford the type of home they’d want. Just about one-third cited high debt as a cause for postponing buying. In fact, while looking by generation, more Gen Xers than millennials have deferred purchasing their first home because of debt.
“What the report brings out is the shift in how millennials are thinking about home ownership. A home is far more of an emotional decision along with a life priority decision. Is this a place where I may ultimately desire to retire?” said D. Steve Boland, consumer lending executive for Bank of America.
Not only are they willing to pay more, but they are in a position to do what is required to afford more. Over fifty percent say they could make sacrifices when it comes to their spending on a car, travel, clothing and even their social lives, to be able to afford the home they really want.
Part of the shift can also be due to the fact that millennials are beginning to age into their prime homebuying years, and they have already waited longer than their parents to purchase. The recession hit millennials hardest, in employment and wage growth. Millennials, described as those ages 18 to 34, have waited longer to marry and have children than previous generations.
“I do agree there are some well-heeled educated millennials who are very specific about their wants and demands,” said Nela Richardson, chief economist at Redfin, a real estate brokerage.
Richardson, however, does not believe that is the primary reason the young are opting out of starter homes. It’s far more simple than that.
Nick & Cindy Davis a team of agents ready to assist you with your home purchase here in the Tampa Bay area. We even have Millennial Agents who are experienced in helping buyers find their new home. We are always available by calling us at 813-300-7116 or simply click here and we will be in touch.
