Recent reports and surveys show a desire among millennials, as well as renters in other generations, to be homeowners. But circumstances are making things a little difficult.
A recent survey conducted by eXp Realty LLC found 73% of survey respondents believe owning a home is more important now because of the Covid-19 pandemic. Specifically, 80% of millennials said owning a home is now more important to them now than before the pandemic.
The survey was part of eXp’s Emerging Real Estate Trends 2021 National Study, which surveyed more than 2,000 people planning to buy or sell a home in the next year or who have bought a home in the past year.
Millennials have made up the majority of the homebuying population for some years now. But the number of those homebuyers in the housing market is only going to pick up in the coming years, experts predict.
Bobby Martins, CEO of Martins Realty Group in San Diego, said the next seven to eight years will be especially telling. By his estimates, some 180 million will be in their prime homebuying years in the coming years, whether buying their first home or looking for something bigger. The number of U.S. homeowners increased by an estimated 2.1 million in the fourth quarter of 2020 over the prior year, according to Pew Research Center, citing U.S. Census Bureau data.
The survey by eXp Realty found 87% of respondents said they believed people should be homeowners, or should be trying to buy a home, by age 40.
“For the next seven years, we’ll have more and more millennials at that prime age” to buy a home, in their early 30s, Martins continued.https://909a6311dca52963d17beb61509e87e6.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html
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Still, as has been widely reported, those in the housing market today have numerous forces to contend with: home-price escalation in nearly every metro area, limited inventory, bidding wars, competition from institutional investors.
Jason Gesing, CEO of eXp Realty, said first-time buyers have gone from two very different situations: one where they felt they could afford the house they wanted, in the location they wanted, and still put some money away to one where they’re making just enough to afford a house, are getting less square footage for their dollar or are putting off homebuying entirely.
The current housing market has made would-be homebuyers increasingly pessimistic about their prospects. But the survey by eXP Realty and others suggest, despite major headwinds facing first-time homebuyers especially, there’s still a lot of desire to be a homeowner.
A separate survey of 2,050 people conducted by LendingTree LLC found 88% of Americans would rather own a home than rent. But about half of respondents who identified as renters — 48% — said they were worried they’ll never be able to own a home.
Notably, 55% of Gen Xers (the generation preceding the millennials, born between the mid-1960s and early 1980s) in the survey who don’t currently own were the most concerned among all age groups.
Jacob Channel, senior economic analyst at LendingTree, said the housing market is in a state of fluctuation right now. Signs that things may be cooling off — such as new home sales falling to a pandemic low in June, Channel said — suggest the market isn’t growing as fast as it was, but it’s all relative.
“Compared to last year, when we were seeing double-digit growth, that would be cooling, but that (doesn’t) mean it’s cold,” he continued. “As this year goes on, we will see the housing market continue its gradual decline from how hot it was at its peak, but I don’t foresee it cooling off to pre-pandemic levels.”
Martins said some buyers his firm works with are getting frustrated or feel buying a home is unattainable.
But, he continued, apartment rents are growing at a rapid clip, too.
“Ultimately, millennials are paying a mortgage — most of them are just not paying their mortgage; they’re paying a landlord’s mortgage,” Martins said.
Gesing said the survey and anecdotes from the company’s agents suggest millennials, in particular, are getting savvier about using technology in the homebuying process — even buying a home online. More than 70% of survey respondents said they would be comfortable purchasing a home completely online.
Consumers today, including those looking to buy a home, now have more information than ever at their disposal, Gesing said.
“You have to find new ways to add value to the consumer beyond what’s in the data,” he continued.
The biggest hurdle to homeownership identified in LendingTree’s survey was respondents’ ability to afford a down payment, at 54%. Thirty-six percent said buying a home in their area was too expensive and 32% said their credit score made it difficult to qualify for a mortgage.