They said they’d never buy homes. Never say never! Millennials are to credit for the biggest increase in homeownership rates in over a decade.
Homeownership rates rebound
In 2004, the rate of homeownership was at an all-time high, with 69.2% of all households in the U.S. owning their homes. Just a few years later, the housing crisis and general economic decline caused these rates to spiral down to a record low of 62.9% only two years ago (2016).
Many millennials entered the workforce during these trying economic times, around the housing crash of 2008. As a result of witnessing this economic downshift, in addition to a move toward delaying marriage and children, a lot of millennials have been indifferent to homeownership. Until now.
Homeownership rates started to show significant signs of improvement in 2017, climbing to 64.2%.1 And while those 65+ still have the highest rate of homeownership, the millennial generation has shown the most growth. With the sheer numbers of individuals belonging to this generation, even small shifts can make a significant impact on the overall rate of homeownership.
Why millennials are buying homes now more than ever
With recent economic changes and naturally changing lifestyles, millennials have moved into homeownership at a faster pace than expected. Here are a few reasons why:
Rising rent prices
Rental rates across the U.S. continue to increase, rising 18% over the last five years.2 Rental demand is still high due to a shortage of homes available for sale. And with increased demand, comes an increase in price.
As rent prices continuing to get higher, the difference between paying rent and paying a mortgage isn’t as significant as it was a few years ago. For those frustrated with the high prices of rent, home ownership can seem like a logical answer.
The possibility of rising interest rates
Those of us who have only benefited from interest rates of 6% or less don’t know how bad it could be. In 1981, mortgage interest rates hit a high of over 18%. And in the 1990’s rates were still hanging around the 10% mark.3
With mortgage interest rates on the rise and the possibility of more increases in the future, many millennials are motivated to buy sooner rather than wait as rates rise.
More jobs available
While many millennials entered the workforce during crummy economic times, that’s all changed. Today the job market continues to improve. Unemployment rates, particularly here in Iowa, are at all-time lows. And with a shortage of workers, wages are on the increase as well.
The rough entry into the job market millennials experienced is no longer a factor. With plentiful jobs and steady income, homeownership is within reach now more than ever before.
Approximately ¼ of millennials are in their 30s now. And they’re starting the move toward more traditional lifestyles that generations before them started in their 20s. As Millennials age, more of them are getting good jobs and striking out on their own. They are forming long-term relationships and having families. Thus, they are putting down roots and buying houses for their families.
As the largest generation since the baby boomers, millennials continue to create change and impact the economy. The rising rates of homeownership are the perfect example of how this can happen now and in the future.
Whether you’re selling or buying a home, the process can feel intimidating and overwhelming. But it doesn’t have to. At Coluzzi Real Estate, we answer all your questions and simplify the process. We’re there for you every step of the way. Please don’t hesitate to contact us today!
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