Are Millennials Really Giving up on Homeownership?
A recent Zillow study reveals that millennials are indeed looking to purchase homes.
The Seattle market has made countless headlines recently for seemingly endless home price growth, and in expensive markets such as ours, there’s often a misconception that millennials are giving up on homeownership altogether. In a recent feature covering the 2017 Zillow Group Report on Consumer Housing Trends, Puget Sound Business Journal (PSBJ) debunks the millennial myth, as the survey, which polled a representative group of over 13,000, reveals that “42 percent of all buyers are looking to purchase their first home.”
As Zillow’s Chief Economist, Svenja Gudell, told PSBJ, “despite difficulty coming up with a downpayment and other challenges, including a severely constrained housing market, millennials are very much in favor of buying homes.” The assumption that millennials have no interest in purchasing “has been a somewhat misleading characterization in the news,” she added. “Believe it or not, a large majority think buying a home is the best investment you can make.” The reality in increasingly pricier cities such as Seattle, however, is that a desire to buy a home might not translate into a feasible opportunity.
Yet even with increasing price points, there are plenty of millennials that have already leapt into homeownership, as the report indicates that “millennials make up almost a third of sellers,” so “for all the talk about millennials having trouble saving down payments and getting into their first home, a fair share of them have both done that and are now selling.”
The trends outlined by PSBJ align with an article published by The FutureCast Forum in Seattle Magazine earlier this month, which covered Seattle’s “condo conundrum” and outlined creative solutions some lenders are using to make homeownership a reality for millennials in the Emerald City. With more tech job openings than the Bay Area, meteoric population growth has made Seattle the fastest-growing large city in the US with the steepest rise in median home prices, increasing by about 1-percent per month for the last year.
Dean Jones, President and CEO of Realogics Sotheby’s International Realty says would-be buyers are facing several challenges in today’s housing market: “1) a lack of available homes at more affordable price points; 2) tech-driven compensation plans that include both a base salary and future stock rewards; and 3) misconceptions about mortgage lending. Any of these headwinds could stall a buyer from making progress as a homeowner.”
As a branch manager for Caliber Home Loans, Trevor Bennett, who ranks in the top 1% of mortgage originators in the US, says success in Seattle requires products that cater to the local real estate microclimate.
“Fortunately, we can responsibly underwrite our mortgages considering the unique dynamics of our regional housing market and the borrowers that work here,” says Bennett. “Not all mortgages are created equal, so a nationalized policy will overlook opportunities in the local market. As a non-bank, portfolio lender, we underwrite our own loans and are able to serve a wider range of needs.”