Generations compete for housing

Green Escrow Services | woman home buyer

According to a recent report by Zillow, the intense demand for housing is being driven primarily by two generations: millennials and baby boomers. Statistics show that while millennials want to buy, the share of first-time buyers has dropped to 37 percent this year.

Meanwhile, those aged 60+ who are buying increased by 47 percent in the decade from 2009 to 2019.

As homeowners, baby boomers have a distinct advantage as home values have increased by 31.2 percent in the last 10 years. Many millennials are saddled with crippling student debt which makes saving for a downpayment very difficult, if not impossible.

Millennials are ready to buy!

Green Escrow | Real Estate Market News

As they enter their early 30’s, millennials are turning their attention to the housing market and they’re ready to buy! Because of their large size – they’ve passed baby boomers as the largest living generation in the United States – millennials have long been predicted to have a huge impact on the housing market. They only question has been: are they interested in owning a home?

The answer appears to be Yes!

Existing=home sales jumped nearly 25 percent in July with first-time buyers making up 34 percent of that group. And most mst millennials are first-time buyers.

Of course, it doesn’t hurt that interest rates remain below 3 percent.

Selling to Millennials

Green Escrow | Real Estate online

Millennials represent one of the largest real estate markets today and it pays to understand how they choose a home.

  • Online, online, online: Millennials typically do their research and their research is extensively online before they begin to inspect properties in person. Plenty of quality photos, virtual tours, and floor plans are a must.
  • Tech and quality appliances: Technology has always been a part of millennials’ lives and many look for smart-home accessories such as lights, locks, thermostats etc.
  • Older, historic homes: Some millennials have a deep appreciation of older architectural styles that display real character and charm. If the home you’re selling has historical details, make sure that is pointed out in your listing.

Millennials looking to buy … start with $148,100…

Green Escrow | Real Estate online

Millennials – those in their 20’s and 30’s – looking to buy in the San Jose metro area (including Santa Clara and San Benito counties) are faced with the prospect of coming up with an average down payment of – $148,100 (!) according to a recent report by Lending Tree. Things don’t get much easier for those in the San Francisco metro area (including San Mateo, Alameda, and Contra Costa counties) as the median down payment is a whopping $139,100!

By contrast, the next two highest metro areas are Los Angeles and San Diego with millennial down payments of $81,400 and $67,600, respectively.

Somewhat surprisingly, many millennials are still able to buy. The same Lending Tree report states that 55.8 percent of those requesting a mortgage from the company were from people between 23 and 38.

Millennials are saving up

Green Escrow | Real Estate online

With the price of a “starter home” in the East Bay at a cool $547,000 (in the South Bay it’s $736,000!) millennials – those between 22 and 38 – who want to buy are spending less in traditional ways: cutting back on entertainment and dining out, working extra, and postponing vacations. But some millennials are taking saving a step further by contributing less to retirement savings, delaying doctor visits, and even reducing or canceling health insurance completely.

How difficult is it to purchase a home these days in the Bay Area? In 1960, the average Bay Area family paid twice their annual family income for a home. These days, it’s NINE times their annual income.

Millennials aren’t buying, they’re investing in real estate

Green Escrow | Real Estate News

While many millennials find themselves priced out of the real estate market, many are investing in real estate in other parts of the country. Using online platforms such as Roofstock, they are able to pick properties on risk factors and various returns.

Generally smaller cities offer the best opportunities for consistent monthly returns. In some markets, appreciation of the real estate asset outpaces the monthly cash flow.

According to CoreLogic, 11 percent of single-family homes sold in 2018 were bought by investors, the highest percentage on record.

Millennials finances improving

Green Escrow | Real Estate Market News

A new survey of 1,000 adults born between 1981 and 1996 shows that they are earning more and are confident that they will be able to purchase a home in the near future.

Much of the improvement in earning power comes from women who are making more money than women of older generations. Today’s millennial women are focusing more on careers at a younger age while postponing marriage and having children.

Only 10 percent of those surveyed said they would have to have help from their parents to get a mortgage down from 17 percent a year ago.

Millennials are moving – away

Green Escrow Services | Young Family

The trend has been going on for a while now so it’s not really big news but more and more millennials are finding themselves priced out of the Bay Area. In a recent poll, more than 60 percent of those surveyed under 30 said they expect to leave the Bay Area in the next few years.

The other trend, of course, is living in the home in which they grew up – with their parents. Nearly 36 percent of Silicon Valley adults between the ages of 18 and 34 were still living at home in 2017.

High home prices, low inventory, and soaring rents are all continuing to contribute to this situation with no end in sight.

More Bay Area millennials living with mom and dad

Green Escrow | Rental

Sure, the economy is strong and unemployment is low but due to the high price and low availability of housing in the Bay Area, more and more millennials are moving back home after college. Throw in massive student loan debt and times are especially tough for this generation.

Naturally, the transition can be challenging for all involved and ground rules have to be set. Rent, groceries, laundry, chores all have to be factored in.

According to Zillow, nearly 14 million millennials have moved back in with their parents. The higher the rents, the more likely it is to see parents and adult children living together which explains why it is becoming increasingly common in the Bay Area.

How to attract Millennials

Green Escrow | Real Estate online

Millennials are one of the largest markets these days and it’s important to know what they’re looking for and the best way to attract them.

  • Millennials prepare – and are in no hurry, Millennials grew up with the internet at their fingertips so it’s no surprise that they’re interested in all the information they can get before making a purchase. They research, they explore options and since many of them are currently living with their parents or a long-term share house they’re not going to rush into a decision.
  • Millennials like tech. Quality, integrated smart home appliances and internet connected cameras, locks, thermostats, lighting etc. are very important to this demographic, They’ll also count the outlets, check the ethernet connections, and, of course, make sure the house gets good cell service.
  • Energy efficiency is important. Since they lived through the recent recession and many are currently paying off sky-high student loads, millennials are always looking for ways to save money. At the same time, they’re also aware of the fragility of the environment and thus are more likely to be interested in home with good insulation, solar panels, efficient lighting etc.

Millennials abound and many are ready to buy; their approach is just different than their parents’.