Getting married, owning a home, and starting a family is the American dream right? Well, for some, owning a home will continue to be just a dream as the US homeownership rate is the lowest it’s been since 1967. According to data from the Department of Commerce’s Census Bureau, the US homeownership rate has been steadily dropping since 2009 and hit 63.4% in the second quarter of 2015. So what’s causing this decline in homeownership? There’s one thing not to blame – millennials.
Although they may be somewhat contributing to the issue, as 50% are renters in the current strong rental market according to a report done by Urban Land Institute, almost all expect to own a home eventually. Those aged 34 and younger are buying homes, as married couples (65%), unmarried couples (14%), single females (12%), single males (8%), and other combinations (1%). This lack of traditional household formation indicates that being unmarried isn’t keeping millennials from buying homes. Furthermore, a study conducted by the National Association of Realtors shows that millennials do a good amount of research before starting the home buying process. Forty-four percent looked online as the first step in their process, 17% looked online for information about the home buying process, 10% contacted a real estate agent, and 10% talked to a friend/family about the process.
With unemployment down to 5.3% as of June 2015, this generational group is working more than it was last year at jobs that are paying well. The NAR study indicates that 31% make more than $100,000. Trends are showing that most millennials are moving out of the rental market, with 59% having rented their residence before becoming a homeowner. Most are buying in the suburbs (49%), others in urban areas (21%), small towns (17%), rural districts (13%), and resort towns (1%). Geographically, 40% of those homes are being built and bought in the South, 24% can be found in the Midwest, 23% in the West, and 13% in the Northeast.
Not only are millennials buying homes, but many are relying on real estate agents to close their deals. Ninety percent used an agent to close their deals, only 5% went through the builder, and 4% bought directly from the previous owner.
With millennials hot on the housing market, what is to blame for the historically low homeownership rate? Many first-time buyers say they can’t find a good house in their budget range and others lack funds for a down payment. On top of this, home prices keep increasing due to the lack of inventory.
Will we continue to see the homeownership rate drop and more millennial buyers on the market? What are you doing to reach millennial buyers?
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