Millennials Ready to Buy a House Before 2023, Envision Pricey Dream Homes
Younger adults were supposed to be the rental generation, bypassing home purchases altogether or living with their parents for years.
Now the negative home-buying mantra, most pronounced in the wake of the housing slide nearly a decade ago, is starting to change. Millennials shoppers are finding value in buying residences, if not right away.
Northshore Fireplace, an Evanston, Illinois-based home improvement company blanketing the Chicago area, surveyed 2,000 people this summer “to learn more about how people envision their dream homes in 2018 and to see if millennials are finally ready to start buying homes.”
Among the findings, 60 percent of people from their late teens to late 30s intend to own a home within the next five years. Still 20 percent of millennials “get anxiety at the thought of owning a home,” according to a marketing agency representing Northside Fireplace.
“While two-thirds of millennials don’t have anything saved for retirement, they would be willing to spend on average $1.5 million for their dream home. How’s that for wishful thinking?” the agency notes.
Potential home buyers as a group believe they could land a home worth seven figures, but not a very large one. On average, the typical American dream home would cost $1.3 million, count seven-and-a-half rooms and an average 2,195 square feet — more than one-third smaller than the average-sized home in the U.S. Nearly two-thirds of shoppers “believe they will be able to obtain their dream home within their lifetime.”
The fireplace company’s study also found men have wider eyes in terms of a dream home, averaging $1,917,000, than women at $989,850, notes the DS News online site for the real estate servicing industry.
Still, 75 percent of the survey group note that owning a home is “a lifestyle choice, not a necessity or a requirement to a ‘good life.’”
Some of the respondents say they already live in their dream home: 51 percent of the “dream home” owners reside in the suburbs, 25 percent in a rural area and 24 percent in a city.
In some cases, younger singles, couples or families ready to acquire a home are skipping beyond the step of buying an entry-level house and heading straight to a high-end residence, according to an article this summer in USA Today.
“Millennials put off buying their first home as they struggled with the after-effects of the Great Recession. Now that they’re snapping up houses in greater numbers, many older millennials are making up for lost time: They’re bypassing the traditional gateway to home ownership — the starter, or entry-level, home — and buying larger, more expensive houses where they’re likely to raise families and maybe even grow old,” the newspaper report found.
“They rented for longer,” says Diane Swonk, chief economist at Grant Thornton. “Now they’re going to where they want to stay,” she notes in the story.
According to USA Today, millennials can afford more expensive homes because they saved up money while renting. Also, there are few starter-priced homes on the market.
Starter homes are typically a one- or two-bedroom or maybe a small three-bedroom, says Lawrence Yun, chief economist of the National Association of Realtors. They typically cost $150,000 to $250,000, Swonk estimates.
The NAR says that 30 percent of millennials born between 1980 and 2000 bought homes for $300,000 and more this year, compared with 14 percent in 2013. They are buying more substantial homes than similar age purchasers in the past. From 2012 to 2016, nearly a third of buyers age 33 to 37 bought four-bedroom homes compared to about a quarter in that age group in 1980, 1990 and 2000. That’s based on an analysis of Census Bureau figures by Ralph McLaughlin, chief economist of Veritas Urbis Economics.
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