In our Columbia SC Real Estate News for August 2015 We're Taking an In-Depth Look at Millennials and Why They Can't be Blamed for Low Home Ownership Rates:
Millennials Are Not Why Columbia SC Home Ownership Rates Are Down
Columbia SC home ownership rates are the lowest they’ve been in 48 years, and there are several factors involved, including a strong rental market and a lack of traditional household formation. But let's look at why millennials are NOT to blame for the lower rate in Columbia SC home ownership.
Some stats about Millennial homebuyers — those aged 34 and younger — that show that they are not only buying homes, but also what trends they're following as they do.
According to a study of generational trends (namely, Millennial home buyers) by the National Association of Realtors, 65% are married couples, 14% are unmarried couples, 12% are single females, 8% are single males and other combinations create the last 1%. So, being unmarried isn’t keeping Millennials from joining the ranks of Columbia SC home ownership.
Millennials are also working more now than they were even compared to last year, with unemployment down to 5.3% as of June 2015, as opposed to last year’s 6.1% in June, according to the US Department of Labor.
Stats and trends show that Millennials are moving out of the rental market and buying the homes they once rented. Forty-nine percent are buying in the suburbs, 21% in urban areas, 17% in small towns, 13% in rural districts, and 1% are buying in resort towns. This is a more diverse buying pattern then those from 35-49, who are buying 60% of their homes in the suburbs.
Not only are Millennials buying homes, but they’re relying on real estate agents to make the deal happen. The study shows 90% of Millennials used an agent to close their deals, with only 5% going through a builder and 4% buying directly from the previous owner.
Technically, if you wanted to blame a generalized age group for the dip in use of real estate agents, Gen X, those in the 35-49 age range, could qualify, since only 88% of those homebuyers used an agent.
Millennials are definitely joining the ranks of Columbia SC home ownership, but let's look deeper into the trends of this age group to see why more are not buying a home.
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Why the Columbia SC Housing Market is Changing for Millennials
According to the same recent study by the NAR, Millennials prefer walking over driving by 12 percentage points. Millennials want to live within walking distance to shops and restaurants, and have a short commute to work. They also favor expanding public transportation and alternatives such as biking. This is the largest margin in favor of walking for any generation, ever.
The Columbia SC housing market may be seeing a drop in overall numbers of those owning homes now versus past years because of the disinterest in traditional single-family homes by these Millennials prefering to walk rather than commute to and from work and recreation.
Nearly half of Americans participating the recent survey by the NAR said they would prefer to live in neighborhoods that have small yards but are in easy walking distance to stores and restaurants, vs neighborhods with large yards but where driving is required to get to amenities.
Around 60 percent of Americans live in detached, single-family houses, but one in four of these individuals would rather live in an attached home in a more walkable neighborhood.
Even though the job market is improving, it seems that more and more Millennials are living with their parents today than they were at the height of the Great Recession. We'll look deeper into this in a moment.
It's no secret that Millennials have had a tough time getting started with careers, families and saving for retirement. And this struggle has carried over into home ownership as well.
Everything from the recession, to the rising cost of higher education, to the increasing scarcity of better-paying jobs has taken its toll on people born in the last two decades of the 20th century.
Many Millennials feel there is no hurry to own their own Columbia SC home, because of how the economy has changed. Our current economy has shifted to a knowledge-based or connection-based economy, and we are seeing people now work well into their 70s, 80s and beyond. So many Millennials feel they have plenty of time to become home owners.
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More Millennials Live With Parents
According to a new Pew Research Center analysis of U.S. Census Bureau, which found that the share of young adults living in their parents' homes has increased from 24 percent in 2010 to 26 percent in the first quarter of 2015. During the same period, the unemployment rate for adults ages 18 to 34 dropped from 12.4 percent in 2010 to 7.7 percent this year.
Despite the fact that there are 3 million more Americans in the 18-34 range now than there were in 2007, the number who are living independently has fallen from 42.7 million in 2007 to 42.2 million today.
This trend could be one reason why the economy, and namely, the Columbia SC housing industry, isn't growing stronger than it is.
The growing young adult population has not fueled demand for Columbia SC housing units and the furnishings, telecom and cable installations, and other ancillary purchases that accompany newly formed households according to the Pew Research Center.
Millennial women, by the way, are more likely to leave the nest than millennial men, and fewer women tend to buy a home on their own than do men.
So what do we glean from all this Millennial data?
Trends have changed. Potential Columbia SC homebuyer desires have changed. Has the real estate market failed to change with the demand? Something to think about!
Columbia SC home buying has never been more affordable than it is right now. However, there are factors looming that could change the face of home ownership in this country forever.
The Joint Center for Housing Studies of Harvard University recently released their report, “The State of the Nation’s Housing 2012.” In that report, they forecast that over the next few years, home ownership rates among younger households will remain under pressure. Members of the large echo-boom generation are just beginning to enter the housing market, but primarily as renters. In addition, greater numbers of middle-aged households are delaying home ownership or returning to rental housing.
As millions of distressed homeowners lose their homes to foreclosure, they will require years to repair their tarnished credit records before buying again. As a result, increases in the number of renters will continue to outpace any growth in homeowners. If not for older households, who have high home ownership rates and account for an increasing share of the population, the decline in the national home ownership rate would be much greater.
Columbia SC Home Buying – Rarely More Affordable Than Now
A strong, sustained economic expansion could, however, produce a quick turnaround—particularly in markets that did not experience the worst of the foreclosure crisis. Columbia SC home buying has rarely been more affordable, and a more robust economy would provide the income and confidence that would enable many potential buyers to make the long-term commitment of owning. Indeed, home ownership continues to have strong appeal. In the fourth quarter of 2011, the Fannie Mae survey found that seven out of ten renters—as well as more than eight out of ten homeowners who are underwater on their mortgages—think that owning makes more financial sense than renting.
According to the Harvard University report, young first-time buyers, including an increasing share of minority households, will drive future growth in home ownership. The question going forward is therefore whether the troubled mortgage market will provide access to affordable mortgage credit for borrowers with limited savings and anything but the highest credit ratings.
Columbia SC home buying can be tricky. Contact us today to learn more about how we can help you all throughout your Columbia SC home buying experience.