HOUSTON – (Realty News Report) – Millennials are buying homes. Or trying to.
More Millennials will reach the age of 32, the peak age for first-time home buyers, over the next two years than ever before, according to a recent report by the Zillow real estate firm.
“As millennials go, so goes the housing market, and we are seeing now, as millennials age, that they are looking for homes that fit the needs of growing families,” said Zillow economist Nicole Bachaud. “Millennial demand has helped push up home prices in areas with the most children. Competition for homes in these family-friendly areas should intensify in the coming years as more millennials reach the key age of 32, adding to the affordability squeeze.”
Millennial concerns, attitudes and outcomes of the process have been surveyed nationally for the 2022 Millennial Home Buyer Report, recently released by Real Estate Witch, now of Clever Real Estate.
Among the report findings, the homesteading demographic is feeling stress and fearing an end to the housing bubble as they face continued low inventory and affordability.
They’ve upped their savings (46%). They’ve sweetened their over-asking price offers (43%).
They’ve also altered their expectations with respect to home-buying timeline (42%, whether delayed or accelerated), location (47%) and optimal square footage (34%).
They persevere. Toward that:
Financial factors, such rising interest rates, are motivating a third-of millennial buyers, down from 40% in 2021. Meanwhile, the social incentives for home buying include wanting to start a family (37%), needing remote work space (31%) — and keeping up with home-buying peers (27%).
However, they appear less likely to stay put once they’ve moved in, with 31% planning to move on to another house within 5 years.
Nearly half of respondents cited buying a home as a good investment, with a similar number making sacrifices to afford homeownership. Non-mortgage debt continues to weigh on millennial home buyers, though 82% report savings of more than $10,000. That’s up 25% from last year.
Being able to qualify for a mortgage worries 45% of respondents as does a competitive market (59%) with pricey properties (56%).
For risk-tolerant millennials, buying a house sight unseen could be an option, or so 90% of respondents indicated, if the price was right (56%), if the property were a new build without previous owners (56%), competition was high (48%), and the seller offered concessions (49%). Today’s listing technologies enable house hunting as well via photos (65%), live virtual tours (70%) or help of someone trusted checking it out in person on their behalf (59%).
Bidding wars are on the mind of nearly half of home-buying millennials, with 43% expecting to pay more than asking price.
At 82% of respondents, more millennials appear to be willing to consider a more budget-friendly fixer-upper than in 2019, when 67% were so-minded. Of note is that one in four with such properties later regret the purchase due to unexpectedly costly repairs and maintenance issues.
Millennials’ optimal home size sits at 1,700 square feet, about the same as before the pandemic swelled dimensions to 2,400 square feet.
For millennials polled who are hoping to buy in the year ahead, 98% expect obstacles, from making offers on multiple homes (52%) or accepting concessions to home characteristics (57%) to rushing the decision-making process (42%).
And lurking in the aftermath of a successful home purchase: Worry about the hidden costs of owning a home (51%) and whether values will hold over time (49%).
But the home price appreciation surge is expected to moderate this year. CoreLogic’s Home Price Index (HPI) and HPI Forecast for 2021 released last week says: “Price gains are predicted to start 2022 above 10 percent, but steadily slow to 3.5 percent by December.”
Feb. 8, 2022 Realty News Report Copyright 2022.
Photo Credit: Ralph Bivins, Realty News Report Copyright 2022