Millennial Homebuyers are the Future of Twin Cities Housing Recovery: Millennial Homebuyers are the Future of Twin Cities Housing Recovery There is a great deal of discussion in the news today about the potential of Millennial homebuyers to refuel the housing market. The weight of their potential buying power is undeniable. There is no doubt their influence will play a role the nation’s economic and Minneapolis real estate housing recovery. According to new research by the National Association of Realtors® Minneapolis St. Paul is well-suited for upticks in first-time home-buying from Millennials as the economy improves. In fact Minneapolis was listed in the top 10 best purchase markets for aspiring Millennial homebuyers along with Austin and Dallas, Texas, Denver, Des Moines, Grand Rapids, New Orleans, Ogden and Salt Lake City, Utah, and Seattle. In the Twin Cities, where low home prices and high wages made the region the second-most affordable housing market in the nation last year, 20-34 year olds comprise more than one fourth of all new residents. Other factors that impacted the rating include solid local job market conditions and inventory availability. Uncertainity if Would-be Millennial Homebuyers Will Actually Buy Currently only 35% of Millennials own property, according to housing data supplied by the Census Bureau. Most are drowning in student loan debt. “Student loans are a big problem for potential Millennial homeowners,” according to one realtor. “Some would-be buyers with student loan debt try to qualify for a mortgage and can’t, while others aren’t bothering to try,” she said. “It’s not just the students, either, sometimes the parents have taken out the loans.” And many Millennials have had difficulty finding full-time permanent employment. So why should homeowners looking to sell focus on this segment of the population? Do the math— Millennials will account for 50% of the work force by 2020 Millennials—defined as those born between 1980 and 2000 (ages 20-36)—total about 85 million people, far outnumbering even the baby boomers. With more than 90% of renters under the age of 39 indicating they will eventually want to purchase a home, the housing demand is expected to increase 2.7 million in the next 10 years, according to a national housing survey published last month by Fannie Mae. Making Millennials a prime target for home sellers Twin Cities home buyers in the Millennial age bracket are maturing. And as the unemployment rate continues to drop, more Millennials are getting jobs. They are moving out of mom and dad’s basement and striking out on their own for the first time. And although many still find renting desirable because it requires less commitment and comes with a landlord to handle the household headaches and handyman projects, increasing numbers share that age-old dream of owning a home. Meanwhile Rent is Definitely not Less Expensive Some Millennials may be looking to home ownership out of sheer self-preservation. They simply see it as a way to protect their limited resources by investing in real estate instead of totally depleting their savings on skyrocketing, highly inflated rental prices. Homeownership is a Practical Solution When Younger Buyers Can Attain it For these Millennials homeownership may be a practical solution if not quite the status symbol or achievement it was for earlier generations. Instead buying simply makes better financial sense than renting. In fact according to a comprehensive Harvard study, 50 percent of all renters nationwide are now spending more than 30 percent of their income on housing—for rent and utilities. That’s up 12 percent from 2000. And although the housing bust dampened many Millennials’ enthusiasm for homeownership, purchasing a home has historically been the most financially conservative way for people to build wealth for more than 50 years. Millennials will want to capitalize on that opportunity just like their parents and their grandparents did before them. Financial Struggles Won’t Hinder Millennial Home Buyers Forever Although they have faced a very tough financial crisis, economists and housing analysts agree that in the next two to five years, Millennials with college degrees will benefit from a stronger labor market and will have greater access to housing. A June 24, 2014 article in Bloomberg Business Week titled Millennials Seen Surging as Homeowners in U.S. references a study from the Pew Research Center. Millennials ages 25 to 32 with a bachelor’s degree and working full-time will have a median annual income of $45,500, based on 2012 dollars. That averages out to almost $17,500 more than their fellow classmates who only hold a high school diploma. Millennials hold Record High Education Levels Pew studies show a record 33 percent of Americans from 25 to 29 had completed at least a bachelor’s degree in 2012, compared with 17 percent in 1971. With almost 63 percent attending some college. Labor Department projections show employment in occupations requiring a bachelor’s degree increasing by 12.1 percent by 2022. While work at a master’s degree level will rise by 18.4 percent compared to jobs at a high school diploma or equivalent level slated to grow by only 7.9 percent. The drop in the unemployment rate combined with a stronger labor market that favors college degrees means all systems are go for maturing Millennials. They have the world by the string; they are approaching their peak buying years. What remains to be seen is if their parents will quit subsidizing their rent and give them a gentle nudge out of the nest. Other Millennial home buyers are waiting for a lift in household income. Tastes and Lifestyles of Millennials Will Change As they move into the housing market, home sellers looking to attract these young new home buyers will want to focus on the Millennial generation’s unique perspectives and needs. “With the internet, they can use Google to shop and compare more real estate options than ever before possible,” says another realtor. “Because of all the choices available to them, they tend to be more discerning. They don’t necessarily want a bigger house, but they want quality—especially kitchens—and will spend more on luxury items like pools and electronics than their parents would.” Prepping and staging a house with Millennial buyers in mind can help make the difference. Subtle changes and simple upgrades can make a sale. For examples check our article on Why Millennials want to buy a home in the Twin Cities. Article written by Mary Pat McNeil of MP&G Marketing Solutions Millennials today are more informed on aspects of buying a home, yet may not fully comprehend what they need for a home down payment. Negotiating an home purchase offer is a new and challenging experience. An experienced realtor is a key help at closing. Financial planning tools and simple guides to help with negotiating, nd understanding buying points are a few of the benefits that a seasoned Realtor offers the new Millennial home buyer. ~ Jenna Thuening, owner of Home Destination Home buyers in the Twin Cities form strong and lasting first impressions when viewing homes listed for sale. Make the exterior of your home stand out from all other on in your nieghborhood. Call 612-396-7832 and ask for me; I would love to ensure your experience selling your home is fun and rewarding by finding ways to speed the sale of your Twin Cities home. Jenna Thuening, a Minneapolis residential Realtor shares thoughts that Millennial homebuyers are the future of Twin Cities housing recovery. 11200 W. 78th St Eden Prairie, MN 55334 Phone: 612-396-7832 Jennas home page: homedestination If Im out in the field, you may quickly reach me by email: jenna@homedestination and note how I can help you, or leave a message on my voicemail and I will return your call as quickly as possible.
Posted on: Sat, 09 Aug 2014 20:13:06 +0000
Trending Topics
Recently Viewed Topics
© 2015