Is the millennial generation really a renter generation? Or are they more interested in owning a home of their own? This article from U.S. News looks at an interesting new report on generational trends from the National Association of Realtors, and also provides some tips that home owners and home buyers can learn from the newly acquired real estate skills of Gen Y.
As a newlywed in his mid-20s, Andrew McFadden lived in an apartment in Fresno, California, with his wife, but they soon felt ready to move into a bigger place. “It met our needs, but as a finance guy, I thought we could get into a home and build equity in something as opposed to just paying out a monthly rental payment,” says McFadden, a certified financial planner. So at age 26, he purchased his first home. Six years and one daughter later, his family still lives in it.
Despite millennials’ reputation as a transient generation that’s not ready to settle down, McFadden’s experience is more common than you might think. The National Association of Realtors 2015 report on generational trends found that millennials, who are currently between ages 25 and 34, make up the largest share of homebuyers at 32%. Even more striking, millennials now constitute 68% of first-time homebuyers. That percentage might soon grow even more: A survey of 1,002 adults by TD Bank released in July found that just under half of millennials will be looking to buy their first home over the next two years.
“It’s surprising because all we keep hearing is that [millennials] don’t want to buy homes, that they’re the renter generation, but that’s just not true. They are the most optimistic that their home purchase is a good investment,” says Jessica Lautz, NAR’s director of survey research and communications. She notes that most millennials did not experience the housing crash firsthand, although they may have seen parents or older siblings go through it.
Dennis Delaney, partner at the law firm Hemenway & Barnes LLP in Boston, says buying a home can be a smart choice for millennials, as long as they are ready to settle down in it for more than a few years. “Having a home base or an anchor in your life is good to ground you,” he says, in addition to having a monthly payment to build net worth.
Several millennial financial planners interviewed for this article pointed out that like the decision to have children, you might never feel really ready to buy a home. Brandon Marcott, a 30-year-old financial planner and founder of Edify Financial Planning in Waukesha, Wisconsin, says he didn’t feel like he was ready to buy a home when he and his wife purchased their house a year and a half ago.
“We felt pressure from multiple sides telling us, ‘Now is the time!’” he says. Still, the father of two says he is glad to have a fixed monthly mortgage payment that can’t go up, as rent can. “This is by far my favorite benefit,” he says.
