Monday October 24, 2016
As we’ve written in previous blogs, millennials are regarded as the next age group to bring a lot of activity to the housing market. Certainly, many in this age group are delaying home-buying; they’re encumbered with high student debt and are putting off getting married and having families. Still, Zillow’s recent “Consumer Housing Trends Report 2016” generated some interesting insights in discussing the population group aged 18-341. Millennial home buyers are already having a great deal of influence on the home-buying process.
In order to generate the data, Zillow researchers developed a 160-question survey that gathered information from 13,249 consumers who were past-year buyers, sellers and renters; and long-term homeowners and renters. One very interesting statistic that Zillow released: Half of home-buyers in the United States are under the age of 36 – meaning millennials are driving the home-buying market.
The Largest Home-Buying Demographic
Again, we’ve been reading a great deal about the delay in home-buying among this age group. However, Zillow points out that millennials already account for the highest percentage of home buyers in the United States; close to half of those who are out there, looking for homes to buy, are between the ages of 18-34 years of age.
There are a few reasons for this, one of which is the sheer size of the demographic; this age group consists of approximately 80 million individuals (beating out the next-highest demographic, baby boomers). Another reason is that the older end of the millennial demographic (ages 30-34) is likely moving from being single to getting married – and having families. Families are shown to be one major catalyst that drives people toward home ownership.
Other interesting statistics show millennials more likely to:
- Begin the home-buying process online, though end up engaging with a Realtor or agent sooner, rather than later.
- Leapfrog the starter home, and acquire a more expensive, larger house. This generation is paying a median price of $217,000 for a home that averages 1,800 square feet in size.
- Use online mortgage applications, then their gen x, baby boomer or silent generation counterparts.
And speaking of mortgages, millennials are actually NOT the most likely to finance their home purchases with mortgages. That honor goes to the Generation X demographic.
Finally, there is the issue of diversity among millennials, especially as it pertains to homebuying. One concern has been that people of color and ethnic minorities tend to be shut out of buying houses. A reason for this has been affordability; ethnic minorities, overall, have earned less income, in the past, than their Caucasian counterparts. Additionally, our society is only a couple of generations away from the disgusting practice of “red-lining.” Red-lining was the practice of denying or limiting financial services (such as home mortgages) to certain neighborhoods, based on racial or ethnic composition, without examining the applicant’s qualifications or creditworthiness.
The somewhat good news is that millennial homebuyers are more diverse than the overall homebuying population. Whites still comprise the bulk millennial house buyers. But a higher percentage of Hispanics and Asians are also in the younger demographic.