What do you know about millennials and their home buying habits? You might think they are not ready and have no desire to change their avocado toast eating habits for saving for a downpayment or handle the responsibility of carrying a mortgage? Studies have actually shown that millennials are in fact already home owners or are about to dive into home ownership. They are buying homes on their own terms and within the limits of their budgets. Truth be told Millennials are already the largest group of home buyers today. They see the value in homeownership and are doing their home work and preparing financially, so they can buy when they’re ready.
Homeownership is without a doubt a serious financial commitment, but it’s also one that can provide financial and emotional stability — these are come key reasons why millennials may want to become homeowners. Two thirds of millennials said they believe that, regardless of homeownership status, buying a house is “one of the best investments you can make.” It’s also something this generation is not waiting on, ditching the idea that homeownership is meant only for later in life when you have a family.
It used to be that people would feel they had to wait until they reached a certain milestone, like getting married or making a certain amount of money, before they bought a house, since they would anticipate living there for 30 or 40 years. That is no longer the case.
Homeownership may also be well within the reach of many millennials’ current financial situations. A national survey found that a whopping 96% felt confident or somewhat -confident they could afford their current home, a key factor in security and stability. What we at Charley Real Estate Team advise anyone who is even casually considering buying, we encourage them to sit down with a lender at their local bank branch and run numbers, just to have a sense of what sort of loan you would be working with if you were to buy a home. In addition to that, contrary to what of our clients assume, debt — especially student debt — doesn’t automatically preclude you from a home loan.
Talk to an Expert
Another piece of advice we would like to give is that working with an expert advisor can make a big difference. There are so many calculators and tools online that it can be overwhelming, especially to someone buying their first home. We have found that mortgages are like houses — they come in all different shapes and sizes. Talking to a financial advisor early on can help you understand different loan types and get you prequalified for a mortgage that’s right for you.
Consider the Outside Space
One of the millennial clients we talked to recently, an online audience strategist, set out to buy a home with her husband, they were surprised by the loan offer they received, given their ages and mutual combined income. They decided that they wanted to look for houses that were about half that amount, to give them some wiggle room in their budget for future renovations and also to minimize their eventual monthly mortgage payment.”
One of the key reasons our client and her husband decided to purchase a home was to be able to have outside space. They’re not alone – In another survey, a third of millennials said the size of outdoor space was a key factor in choosing a house. It has become clear that millennials have a sense of what they plan to do to their home and know that a house can be a template for customization.
Calculate to Renovate
That includes renovations. This really is a generation of savvy buyers who are aware of the options available to them, including renovation projects. Nearly 70% of millennials today said they plan to finance home renovation projects. These homeowners plan to borrow an average of $19,000, with popular renovation projects focusing on kitchens, bathrooms, landscaping, and creating decks or other outdoor spaces.
Sure, five figures can give anyone sticker shock (especially after a down payment and closing costs), but with our client’s experience, budgeting for renovation costs up front — even before they put in an offer. This will give a realistic sense of what budget you’re working with, what may be doable, and how you can create a home you love from one you just like on first viewing. Our client, when the saw the house they ended up buying, they knew the kitchen was small and dated. So they received estimates and they knew it would be pricy to complete a kitchen renovation, but they also knew, since they were looking under budget for homes, that it would be something they could swing.
Our online strategist and her husband put in an offer and, like nearly one-third of millennials surveyed, got to work on a kitchen renovation, knocking down walls and raising the ceiling to create an airy, open-concept first floor they love. They said later “If we had gone house hunting with that specific kitchen in mind, we either wouldn’t have found it or may have found it in a much larger, more expensive house. Knowing we could do our own renovations was helpful in considering different properties.”
Even those who aren’t quite ready to pull the trigger on a home are still thinking about it. According to studies, three out of four non-homeowner millennials still regularly discuss eventually buying property. Additionally, 40% of millennials plan to purchase in the next three to five years. Even if you aren’t planning to purchase a home just now, there are still proactive steps to take so you can be a savvy, competitive home buyer in the future. In closing, it’s important to do your home work, know any weak points you may have in your finances, and then take steps to address them.
Millennials aren’t waiting – They’re ready to buy homes now.
If you are thinking of purchasing your first home and have questions about the market, where to buy, how much to spend and what it will end op costing you, please call Malinda Shelley right away at