Homeownership was crawling slowly back from its record low two years ago, but it just stalled, and the youngest homebuyers are behind that. Millennials had been driving the nation’s overall homeownership rate, showing the biggest gains throughout 2017, but they dropped back in the first quarter of this year.
Homeownership Roadblocks for Millennials
Millennials are hitting some major roadblocks on their way to homeownership these days, causing this bulky buying power to lose some steam given needs gone unmet within current market conditions. As inventory levels across the board continue to cinch at the minimum, certain markets are particularly volatile for millennials based on hiking home prices due to short supply.
According to a recent report from CNBC, “The culprit is pretty clear: weakening affordability. Home prices have jumped dramatically in the past year, and the gains accelerated in the first quarter of this year, as the supply of homes for sale continued to drop to record lows. Mortgage interest rates also surged at the start of this year to the highest level in four years.”
Limited Options for Millennials
In more ways than one, options are becoming more limited as millennials edge away from those areas where the odds are clearly against them. On this, CNBC reveals, “Low supply and high demand are pushing prices higher everywhere, but the situation varies slightly city to city. No surprise, San Jose, California, and Seattle are the toughest housing markets for millennials,” along with some other areas less foreseeable.
And on a broader spectrum, millennials aren’t the only homebuyers caught in the crossfire of cutthroat competition that can be nothing short of exhausting when on the home hunt.
Realtors Assisting Clients to Win
Real estate agents across the nation are on high alert when it comes to assisting their clients in the aggressive game to win at homeownership, especially when stakes are high. Philadelphia agent, Patrick Clark, notes, “The frustration with the lack of inventory is, so many of the houses are going into bidding wars, and so you know you really have to step up to the plate and you have to do your homework to be a competitive buyer.”
Starter Homes Supply
And perhaps this does not ring truer than for millennials because of their affordability needs and tendency to gear toward starter home purchases that fall within an attainable price range. According to the National Association of Realtors, “The supply of starter homes is so lean that March sales were down in that sector over 21 percent compared with a year ago,” as cited by CNBC.
But despite having to wade through murky market conditions, millennial resilience is noteworthy. Cheryl Young, senior economist for Trulia, speaks to this stating, “Millennials have emerged as the most dogged homebuyers with those under 35 far outpacing the overall annual homeownership rate change, despite contending with the most vexing portion of the housing market.
Millennials make up the largest share of those seeking starter homes, a portion of the market that saw inventory plummet 14.2% and prices leap nearly 10% year-over-year in Q1 2017.” With millennials still in a power position as buyers, all are left to hope that supply begins to better meet demand.