More Millennials Will Become Home Buyers and Renters In 2018
According to Zillow and many respected economists, half of all home buyers are under age 36. Currently, less than thirty five percent of people under age 35 are already home owners, yet seventy four percent of millennials are looking to buy in the future. Now, not all economists agree with this assessment (because factors such as education level, marital status, and even geographic location can affect projections) but what is clear is that Millennials will continue to make up a large and growing portion of the new home buyer and renter pool. They also make up the greatest percentage of the workforce. Redfin expects many of the Millennial homebuyers will move from the coasts to “inland markets” where starter homes are more affordable. This gives them more opportunity and also gives investors more opportunity at both locations.
In 2018, sellers will definitely maintain the edge over buyers as demand is expected to increase. Redfin began measuring in 2009. In 2016, the typical mid-class home stayed on the market for just 52 days, about a week faster than in 2015. It was even faster in 2017 and expected to be faster in 2018 due to a shortage of houses. The Millenialls will find their homes but possibly will be satisfied with more fixer-upper homes or rentals. The answer for investors seems to be small to mid-sized homes and rentals for those millennials as starter homes.
If a Millennial is looking at coastal areas, he or she is looking at staggering prices and competition. “Inland markets” are far more affordable and family friendly details don’t have to be researched such as schools, parks, and poverty rates, especially if you already have a transfer job. For instance, Wallet Hub looked at categories related to family fun across the largest 150 cities. They included the number of playgrounds, young children, indicators of child health and safety, and affordable child care. The website also took into account the cost of living, housing affordability, and poverty rates. Birmingham has a high infant mortality rate and nearly a third of families are receiving food stamps. But the Birmingham metro area might be just right for would-be home-owners on a tight budget who do not have kids. The median home price was just $208,500 from realtor.com. That’s 31.8% less than the national inland median price. It’s even less if it’s an older home in poor shape, in which you can get a private lender to help you fix it up. I’d suggest avoiding banks with their high interest rates, but that’s up to you.
The bulk of the affordable, least-family-friendly cities for Millennials were in poorer parts of the South. Some inland cities are growing but are still very affordable (yet still family-friendly), such as Texas, Nevada, Arizona, pretty much any desert area. Just get away from the coastal areas and the Millennial will find their first home far more affordable. Compare the prices of the homes first, rentals, and job opportunities, unless your job has already offered you that transfer opportunity to consider. Investors should not overlook those mid-smaller homes, condos and apartments that Millennials often seek!