By: Karen Laurence Special to the Boca and Delray newspapers
Millennials can be defined as being born between 1982 and 1996. They are between 21 to 35 years old. There are 80 million of them with an annual combined spending of $600 billion. By 2020, they will account for one-third of the consumer spending budget.
The common consensus was that millennials did not want to own a home. Not true. They carry around that American dream of home-ownership the same as generations before them.
The U.S. Census Bureau shows that home ownership rates are the highest for people 65 and over (79.2 percent) and the lowest for the under 35 age group (36 percent). That 36 percent is significant as it is an increase of 34.7 percent from last year.
More millennials are working in urban centers and are seeing rents skyrocket. This is a good reason for them to buy a home now, as well as them forming households and desiring to own their own home. They rented longer or lived in their parent’s basement (home) while working at the lower paying jobs found during the recession of 2008-2012. They were forced to take jobs that were beneath their skill levels but in the past few years have been moving up the economic ladder. This will be the largest home-buying generation since the Baby Boomers and will continue to be that for generations to come.
The older millennials, who have been deprived of a home due to economic reasons, are making up for lost time. They are not doing the traditional starter home but going straight to the home of their dreams, which is usually larger and more expensive. They will stay there, possibly age there, and so will not be returning to the housing market to move-up as was the previous common practice. Homeowners typically used to move every five to seven years—not a millennial. Moving to them is too much time and effort. Do it once and do it right! They say.
According the National Association of Realtors, a starter home, depending on location, is priced between $150,000 to $250,000. Trade-ups or premium homes are over $300,000. Thirty percent of millennials bought homes upwards of $300,000, doubling their rate from the previous year. They are buying 4 bedroom homes, using their savings, possibly parents contributions, and splurging on a home they may age in.
The builders are paying attention to this new wave of buyers and catering to their wants and needs. One of the latest trends is building each bedroom with their own bathroom. Why have to share a bathroom if you don’t have to? Think where that will lead us for the next buying generation after the millennials.
Karen Laurence is a sales associate with Keller Williams. She is Technical Real Estate Instructor, Real Estate Agent and Certified Luxury Agent. 516-524-3953.