Millennials Become Buyers As Market Normalizes
Posted by Richard on February 12, 2019
Eleven years after the real estate crash that triggered a recession, there’s good news: the market appears to have normalized in recent years.
Sales prices have rebounded but are not extreme, and loans are more readily available than in those first few panic-stricken years. Meanwhile, the Millennial generation (ages 22 to 36), are aging into home buying range just as baby boomers age into retirement sales — although that tradeoff has not been fully realized.
Even a steady stream of interest rate increases since 2015 hasn’t dampened the mood — 30-year fixed rates are still in the historically low to average range, hovering between 4 and 5 percent.
Lower inventory of homes for sale and the higher cost of materials and labor means sales prices have risen and conditions have favored sellers; additionally, many homeowners have opted to remain in place, finding it cheaper to renovate or add on rather than sell and find a replacement home.
In fact, in November 2018, the National Association of Realtors said that year-over-year contract signings — an indicator of pending home sales — had dropped for 10 straight months. At the same time, the federal Bureau of Economic Analysis reported a rise in rentals, which it expected to continue.
But that doesn’t mean home buying has stalled, either. In fact, opportunities are still plentiful, as are the number of buyers, especially millennials seeking their first homes.According to Trulia, 21 percent of Americans aged 18 to 34 said they plan to buy within the next 12 months.
And in the end, a quarter of a percentage point here or there doesn’t equate to a big difference in the monthly payment — it can be as little as $20 in many cases. According to some forecasters, home prices adjust to accommodate the change. In other words, prices could actually come down a little.
So if you are considering a purchase, 2019 is expected to provide plenty of opportunity.