The young generation of American citizens are waiting long to purchase their first home mainly because of the short of cash and no security of their careers. The typical first timer usually rents a property for more than six years before deciding to purchase a home. Thus, in the 1970s the first property would be brought by the age of 30, which is the upper range of the millennial generation, which actually spans from 18 to 34. Now, the median first time purchaser is about 33.
As per Tracy Luttrell the trend reflects that millennials keep facing financial challengers. The renters are already struggling to save for down payments. This means that they are also delayed in some key landmarks of adulthood including marriage, children. This in fact explains why homeownership has started to decline which was previously a long source of middle class identity and economic opportunity.
Furthermore, Tracy Luttrell found that when adults do agree to the deed, the purchase price become relative to the income. This is because first time buyers would pay premium rent, which can range upto 2.6 times the income. In the bygone era of 1970, the starter home was priced cheaper. As per John Eilermann, it’s not that the millennials are not interested for a purchase, but they are delaying for the decision.
Once they family has kids, they would begin looking for homes. Furthermore, with the rental rates further rising, many people are actually facing difficult time in saving for down payment and qualifying for a mortgage. These millennials are increasingly finding themselves sharing and paying for flats hugeamounts especially if they wished to stay within the walking distance of their work and loved ones.
The older generation, however, has been building their homes steadily and upgrading it as possible to put in the thought that renting is actually money wasted. However, despite this novel thought, the millennials are still unable to afford homes even in places like San Diego because these properties cost more than half a million dollars each. So bad is the situation in California that people have started thinking that if planning to buy a home, it is financially impossible to do so without backing of parents.
Moreover, as per Tracy Luttrell, there are few people in the country that can take such a step. Statistics revealed that among homebuyers who were under 34, 14% of them actually got money for the down payment of the property with the help of friends and family. To cater to these needs, McBride Homes and sons has understood the market well enough to know what would be dealing with. They found that most of these first timers ready to buy property are actually saving money for some down payment of some sort.
Besides, as rental prices would go up, more millennials would actually come forward to purchase flats and homes. However, these prices is what is consuming most of their income. Research has found that more that millennials spend 30% of their income on rent. A 40% hike from a decade earlier. But as long as there are job markets in the area, millennials would continue looking for options.