Homeownership remains the american dream for young buyers
Photo credit: Gauri Ma
Indeed, eight out of 10 recent buyers considered their home purchase a good investment, with an even higher 87 per cent of buyers under the age of 33 saying so.
Young home buyers remain optimistic about homeownership, with it remaining the aspiration for many. Indeed, the reason for buying a also varied across generations, with younger house hunters citing the desire to won a home compared to older buyers citing retirement or a desire to be nearer to family and friends.
12 per cent of all recent buyers had delayed their home purchase due to outstanding debt. Of the 20 per cent of Millennial buyers who took longer to save for a downpayment, 56 per cent cited student loan debt as the biggest obstacle. Fifteen per cent of buyers aged 34 to 48 had delayed buying, with 35 percent citing student debt and 46 percent citing credit card debt.
Even with the market frictions, the study found that the largest group of recent buyers was the Millennials, sometimes called Generation Y or Generation Next, those born between 1980 and 1995, who comprised 31 percent of recent purchases; followed closely by Generation X , those born between 1965 and 1979, at 30 percent.
Percentages of recent home purchases among earlier generations was notably lower; 16 per cent were Younger Boomers, those born between 1955 and 1964, while 9 per cent were from the Silent Generation, those born between 1925 and 1945.
The median age of Millennial home buyers was 29, their median income was $73,600 and they typically bought an 1,800-square foot home costing $180,000. The typical Gen X buyer was 40 years old, had a median income of $98,200, and purchased a 2,130-square foot home costing $250,000.
Lawrence Yun, NAR chief economist, said the Millennial generation, which is under the age of 34, is now entering the peak period in which people typically buy a first home. “Given that Millennials are the largest generation in history after the baby boomers, it means there is a potential for strong underlying demand. Moreover, their aspiration and the long-term investment aspect to owning a home remain solid among young people,” he said. “However, the challenges of tight credit, limited inventory, eroding affordability and high debt loads have limited the capacity of young people to own.”
The dream of owning a home is backed up by a poll from Zillow, which found that more than 4 million first time buyers want to climb onto the US property ladder in 2014. Renters in Miami, Atlanta and Las Vegas expressed the strongest desire to become homeowners, although barriers to become successful buyers include tight inventory, rising mortgage rates and increasing prices.
"Even after a wrenching housing recession, this data shows that the dream of homeownership remains very much alive and well," comments Zillow Chief Economist Stan Humphries, "even in those areas that were hardest hit. But these aspirations must also contend with the current reality, and in many areas, conditions remain difficult for buyers."
"The market is moving toward more balance between buyers and sellers, but it is a slow and uneven process," he added.