For a long time, experts predicted that Millennials would form a majority of home buyers. And we can see that this is finally turning out to be true. Millennials are busy home buying on a large scale. As per Realter.com, Millennials exceed Generation X in January 2017, who was previously responsible for creating the newest
For a long time, experts predicted that Millennials would form a majority of home buyers. And we can see that this is finally turning out to be true. Millennials are busy home buying on a large scale.
As per Realter.com, Millennials exceed Generation X in January 2017, who was previously responsible for creating the newest mortgages. But since then, the mortgage market share of Millennials has increased consistently. If we compare the percentage of all the new mortgages, Millennials make up for 45%, Baby Boomers for 17%, and Generation X for 36%.
Millennials finally surpassed Generation X in November 2018 by making up the majority of new loans with the volume of dollars. The share of Millennials was 42% compared to Baby Boomers’ 17% and Generation X’s 40%. This specifies that Millennials are taking more mortgages than previous generations in order to fulfill their dreams of owning a home.
Millennials are moving to house markets that previous generations considered less desirable. Since the end of 2018, Millennials are shifting to affordable areas where there is a strong job market, increasing their buying power. At the end of the year 2018, the average amount of mortgage on purchasing a home by Millennials was $238,000. The average mortgage of Millennials is $26,000 less than Baby Boomers and $51,000 less than Generation X.
Millennials are growing older, have deeper pockets, and better jobs, which increases their purchasing power, so they form the majority of home buyers compared to previous generations. Even the average down payment of Millennials in December 2018 was only 8.8%. Meanwhile, Baby boomers were on 17.7%, and Generation X was on 11.9%.
Reasons Why Millenials Are Keen on Home Buying
1. Considering the Advantages of Home Buying Instead of Renting
Millennials are comparing the amount they will be paying for renting and purchasing a home. Millennials are focusing on a single fact that throughout their life, they will eventually be paying less by owning a house than paying rent every month for years. This productive thought encouraged a lot of Millennials to save from their earnings and buy a house. By purchasing a house, they are saving money in the long run.
2. Increasing Interest on Home Loans
Millennials already have the knowledge that home prices, along with the interest rates on a home loan, are rising gradually. They do not want to miss any opportunity to own a house. Such factors have developed a sense of urgency and pressure among millennials. Millennials are afraid of increasing interest rates and worry that they will be paying a lot more every month by delaying purchasing a house.
3. Increased Ability to Afford
Other than choosing to live and buy houses in large metro areas, a major factor that resulted in the expansion of Millennials was their affordability. So they dive into the market of homes instead of focusing on any other traditional market. However, their affordability is not only because of their jobs but because they lowered their expenses and payments since 2015. This increased their affordability, and they are now they form the majority of home buyers compared to other generations.
Millennials are now considering buying a home rather than renting one after analyzing the advantages carefully. Millennials have greater mobility and generate savings from short-term renting. However, they also consider buying a house as building independence and equity. In addition to that, those who are thinking of starting a family are keeping in mind security and stability for their future. However, delaying purchasing a home might mean that you will be paying more in the future as the market rates will be higher.