Millennials On The Move Are Creating Major Market Opportunities For Baby Boomers
Millennials are now the largest group of home buyers. They have a different wish list than their parents and face different challenges to obtaining the American dream.
Millennials are on the move and fast becoming the largest segment of home buyers, creating major market opportunities for baby boomers downsizing. According to realtor.com’s latest numbers, in November 2017, Millennials (born between 1982 and 2000) made up a 39.6% Share of Mortgage Originations.
Shutterstock: Millennials Like Old Town Alexandria, Virginia Where They Can Walk To All
The median price for mortgage originations in November, 2017 was a median price of $238,000 and an average price of $270,000. That number soars when you look to major metro areas Millennials flock to. Take Boston where according to Zillow the median home value was $561,600 as of November 30, 2017.
Director of Economic Research for realtor.com, Javier Vivas sees the Millennial market share growing. “Many millennials are buying a home for the first time, so there is inherent enthusiasm in how they approach the process. But for many young homebuyers there is also an increased sense of urgency. Life events and market conditions are accelerating their need to enter the market,” Vivas observes. “Millennials are a driving force in today’s housing market. They already dominate lower price home mortgages and are getting close to overtaking older generations for mid- and upper-tier mortgages. In 2018, we expect millennials (buyers aged 18-34) to gain market share – even in the face of challenges.” he adds.
Those challenges include Millennials taking on more debt. According to Vivas, record home price increases in most major cities (where Millennials like to live) is growing faster than income. “We see them being forced to take on more expensive mortgages with the same down payment,” Vivas explains.
Add in that pesky student loan debt and some Millennial couples are facing a harsh reality. Listen to Rick Ross, co-founder of College Financing Group, a national consulting firm specializing in financial aid and student loan repayment counseling . “We are now seeing the direct impact of student loan debt for those in their late 20’s as the major hurdle to buying a home,” says Ross . “Lenders see couples with a $100,000 of combined student debt when qualifying them for a mortgage.”
Koki Adasi, an associate broker at Long & Foster in the Millennial laden Woodley Park area of Northwest Washington DC works with many Millennials. “They want an urban lifestyle with good schools and walkability to restaurants, libraries and parks. Millennial wish lists include; open concept living spaces and home offices. Some in-demand areas include; Arlington Virginia, DC’s Chevy Chase, Old Town Alexandria, Virginia and Bethesda, Maryland.” On any weekend you’ll find these spots loaded with strollers, dogs and Millennial parents. “Because prices are steep, I see more buyers getting assistance with down payments either from their parents or from government and municipal programs,” notes Koki who also points to lenders recently loosening up on down payment requirements which should help Millennials.
Poolside View At CANVAS in Miami
Head south to Miami’s vibrant and developing, Arts & Entertainment District located just north of downtown Miami. Nir Shoshani and partner Ron Gottesmann of NR Investments (NRI) had the vision to transform what was urban blight into an urban village concept. “We wanted to create a different type of urban living and entertainment experience with the Arts & Entertainment District, dedicated to happiness and mindfulness,” Shoshani said.
NRI’s current condominium project, CANVAS ready in early 2018 with 37 floors and 513 units soars above the Arts and Entertainment District. It’s only two blocks from Miami’s free Metromover, a plus for Millennials. With 20 street artists creating murals throughout CANVAS’ public spaces and a state-of-the art fitness centers with training walls designed for couples, CANVAS which is Fannie Mae approved for up to 97% loan amount hits all the sweet spots for Millennial buyers. These include; indoor/outdoor yoga garden, 30,000 square feet of amenities and Children’s Playroom and Lab.
Danielle Coughlin, 32 and fiancé Angelo Lavorgna, 34 recently purchased a 1,544 square foot home in Palm Desert, California after renting a much smaller apartment. They couldn’t be happier with home ownership. “I had been saving and saving for a down payment. Then the right place at the right time at the right price just came along and we jumped on it,” says Coughlin. Competing against higher offers, Coughlin said their 20% down payment helped them land the property. A personal letter to the seller explaining how Coughlin and Lavorgna hoped to raise their family in that house, cinched the deal.
If you’re a baby boomer selling, there’s probably a Millennial buyer just right for your family home.
Source: Forbes.com , Dec 27, 2017 Opinions expressed by Forbes Contributors are their own.