As They Pay Down College Loans, Millennials Are Taking a Hard Look at Homeownership
Millennials become driving force in housing as they transition from renting to buying.
By Christopher G. Cox (Publishing/Managing Editor, http://www.realesavvy.com)
As the U.S. economy recovers from a decade of slow growth, more and more millennials—generally defined as people born between the early 1980s and about 2004—are becoming a significant factor in the real estate market, as they pay off student loans and become established in their professions.
And with more and more millennials hitting peaks within their education, Brooke Cashion, a broker with Allen Tate Realtors and the president of the Winston-Salem Regional Association of Realtors, said that she could see the correlation between education levels and higher real estate investments.
“I work with many, well-educated millennials who are finally working in the professions they trained so hard for and are settling down and getting married,” Cashion said. “Some are looking for more traditional properties, while others prefer modern construction, but they are all looking for a good real estate investment that will help them to grow their money.”
As millennials begin to get on their feet financially—after years of struggling with student debt and difficulty finding jobs in their chosen fields—Cashion explained that these same young people, tend to be conservative in their financial planning and want to avoid taking on more debt than they can comfortably afford.
In addition, Cashion also said that millennials are looking for homes that reflect their lifestyles, that allow them to live among likeminded neighbors, and that offer them the opportunity to be a part of the communities where they live.
“I find that millennials are very empathetic,” Cashion said. “They want to play a role in making their communities better places to live.”
Brian A. Hudson, the executive director and CEO of the Pennsylvania Housing Finance Agency, agreed with Cashion, that community is very important to millennials.
“They want to live close to where they work, especially when they can obtain a mortgage that is less than the rent they are paying,” Hudson said.
In addition, Hudson said that the hot rental market in the last five years has caused more and more millennials to evaluate the tipping point between paying rent and paying a mortgage.
“Even if they are not sure how long they will be in a certain community, many believe it makes sense to transition from renting to owning, when rent payments equal or exceed mortgage payments,” Cashion said.
However, homeownership is not without obstacles for millennials, with Cashion noting a lack of housing inventory, as one of the major conflicts.
“I recently had a listing that had seven offers only a short time after it went on the market,” Cashion said.
Millennials comprise 30 to 40 percent of Hudson’s client base. Hudson noted that this level of interest is not unusual for quality properties in the current real estate market.
In addition, Hudson also said that another important factor in reaching millennials, is making use of digital media.
“Running magazine and newspaper ads, as we did for years, does not work well with millennials. These days you have to be on Facebook, Snapchat, Instagram, Twitter and other social media, because that’s what they rely on to get information,” Hudson said.
Christopher G. Cox is the Publisher/Managing Editor of Realesavvy.com. His monthly column, focusing on community and economic development, appears in the Winston-Salem Chronicle. He also has a monthly radio program that can be heard on WTOB (980 AM) in Winston-Salem. Follow Chris on Twitter @realesavvy.