News headlines constantly lament which industry the millennial generation is killing, be it diamonds, chain restaurants, or even dinner napkins. But several recent studies show that the news isn’t so bleak for millennials when it comes to real estate.
While millennials – generally defined as people born after 1980 – have major setbacks when it comes to the home buying, a recent National Association of Realtors survey found that buyers 36 years and younger represent the largest share of home buyers, at 34%. Another NAR study listed the median age of first-timers in the U.S. at 32. The majority (66%) of this millennial group are also first-time home buyers.
Student loan debt remains a problem for millennial buyers. A staggering 44 million borrowers collectively owe $1.5 trillion in student loan debt in America. But that doesn’t mean that home buying is out of the question – just that lending trends are different for millennials than for their parents.
A survey by Realtor.com found that millennials now represent 42% of all new home loans. At the end of last year, the median price of a mortgaged home purchased by millennials was $238,000, compared to $264,000 for Baby Boomers and $289,000 for Generation X.
Compared to their parents, millennials are shifting their American dream and moving in together prior – or sometimes instead of – getting married. According to an end-of-year Bank of America survey, a majority of millennials prioritize homeownership (72%) over other major life events and goals, such as getting married (50%) and having children (44%.)
Millennials are also getting into the investment game. According to a 2019 Clever Real Estate survey, millennials are 52% more likely than previous generations to invest in a multi-family property, and 9% of respondents said they were interested in renting out new properties for passive income.
Saving for a down payment is a burden looming over the heads of most young buyers, but managing student loan debt is an essential first step. A Business Insider survey of millennial homeowners revealed a few key similarities among young buyers: many saved for years, lived with family members temporarily, and worked hard to pre-qualify for a loan.
Though millennial buyers face new obstacles compared to past generations, with some strategic planning and cost-cutting measures, home buying is feasible. Real estate professionals would do well to pay close attention to this up-and-coming, resilient generation of young clients.