I’m old enough to remember when Millennials “weren’t buying homes”. I guess they were wasting all their money on avocado toast or something. For five years now, Millennials have passed baby boomers and Gen Xers as home buyers. This tech savvy generation is smart, and they are often looking for something that their elders are not. Specifically, that thing is value.
84% of Millennials see owning a home as part of the American Dream. They see it as a great investment and historically, they couldn’t be more right. They witnessed the housing crisis of the early 2000s. While values dropped dramatically, prices have more than recovered. (If you bought right after this crisis struck, your investment has probably skyrocketed!).
Millennials are often looking for their “forever” home right out of the gate. They are patient. They have rented for longer than their parents and many are professionals with nice salaries. Instead of buying a small house with the intention to move up, many Millennials are going straight to a purchase that they intend to keep for the long haul.
Since these younger buyers are tech savvy, they are adept at finding their home online. Real estate websites show available listings. However, a word of caution, real estate agents are not a data source. They are expertise. Purchasing a home is a large transaction with many legal ramifications. Buyers’ agents are usually paid by the seller. Pair up with an agent that you trust, and the process is almost certainly going to be easier. (See also our post on Zillow home prices).
Millennials are also very likely to have large student debts (and other debt) before they become homeowners. Most advisors recommend paying down (or paying off) debts before making that purchase. Not only will payments be more affordable, but buyers can get better products from lenders when their overall financial picture is better. Advisors cannot stress enough the importance of the household budget in determining affordability and making plans. A good financial coach can often work wonders in “finding dollars in a budget”.
Millennials should be prepared to make a strong offer. Competition for great homes is high. I was showing a home to a young couple recently. His mother was there and advised that you, “never offer list price”. Unfortunately, while that used to be a rule, it just isn’t right now. I have been involved in many transactions that started as bidding wars with the house going to the highest bidder…even OVER list price! Listen to your agent, they have your best interest in mind!
My best advice to young home buyers is to be patient. You may lose a bidding war or two. (We have some great strategies to win these). The right house may be not be available yet. Making well thought out decisions will prove to bring peace of mind for years to come. Go slow and get what you want!
The market is always evolving. Prices are higher but there is value to be found. Millennials, do you homework, work with an amazing agent, and making that purchase will be a blessing for years to come!