KANSAS CITY, Mo. – Last year millennials were blamed for declining sales in all kinds of products ranging from cheese to canned tuna. But how does the generation stack up when it comes to home ownership?
Research suggests millennials want to buy homes and in fact, they are, but not at the rate of previous generations.
"They are probably going to be our biggest segment of buyers over the next five years," said Andrea Sheridan, realtor and president of Kansas City Regional Association of Realtors.
In 2018, people 37 and younger made up the largest percentage of home buyers in the United States at 36 percent, according to data from the latest Buyer & Seller Generational Trends Report.
However, that number is still about eight percentage points lower than that of the two previous generations when they were about the same age, a new report from the Urban Institute shows.
"I think they’re waiting a little later in life than a lot of the older generations," Sheridan said.
Some of the reasons why millennials are holding off on buying a home include a lack of income, college debt, they’re not getting married and having children faster than previous generations and many fear they can’t afford a mortgage.
"A lot of it is a lifestyle piece that they don’t want to be tied down to anything," Sheridan said "I think there is still that spirit. However, we are still seeing that millennial buyers want to have roots."
"I’ve been looking for a while now," said Brian Sandvig, a first-time home buyer.
The 28-year-old wants a duplex near downtown so he can live in one unit and rent out the other while also enjoying the lifestyle of living in a city.
"I’ve been saving up money, and really what I want to do is build up equity and start having assets that can make me money," Sandvig said.
His biggest concern is home affordability.
"It definitely is intimidating, especially when you start seeing the numbers, what it takes to responsibly buy a home," Sandvig said.
Molly Dean, a senior mortgage banker with Leader One, said buying a home doesn’t have to be scary. She suggested first-time home buyers consult with a lender at the beginning of the process to come up with a plan.
"We talk about what they can buy, what they’re pre-approved for and what their comfort zone is," Dean said.
She said many first-time home buyers simply aren’t getting the right information.
For example, a common misconception is that you need 20 percent down to a buy home. Dean said there are ways around that thanks to ever-changing home loans and programs.
"The older generation will always talk about more money down, create that equity, you don’t won’t private mortgage insurance. But the reality is you can still buy a home," she explained. "Depending on their particular situation, they can buy a home with little to no money down. A lot of times they don’t know that. They don’t understand the process."
Dean said if you want to buy a home, start with a pre-approval, know your credit and learn about the different programs available to you.
"It’s an easy process if you’re talking to someone you trust," Dean said.
Sheridan added that buying a home is a "safe investment" because millennials can use home ownership as a "vehicle for increasing wealth."
"If you’re planning on being somewhere for 3-5 years, it definitely makes since to purchase a home and allow it to gain appreciation," she said.
Data shows millennials are getting more help from their parents to buy their first home, but again, experts said creating a plan from the start – no matter how you’re going to pay – is most important.
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