Are Millennials Ready to Become Real Estate Buyers?
Data show that despite the slowdown of home purchases in general, it looks like millennials are ready to step up to the plate and start buying real estate. The big question now is, are they ready?
The National Association of Realtors released a report that showed that about 54 percent of aging Millennials have disclosed the desire to purchase a house in three months' time. It was at the start of 2015 and by the middle, the percentage has risen up to 65 percent. According to Main Street, this demographic have shown more optimism than the usual buyers and hinted that they are most likely going to invest in real estate within a year.
By definition, millennials are people who belong to the 18 to 35 age bracket and realtor Denae Montesi of William Raveis Real Estate in New York said that these individuals have a stronger market presence than most people give them credit for. He added, "The real concern is, 'Are they being set up to fail?'"
Montesi further explained that millennials are more prone to veer towards giving a purchase offer with a high debt-to-income ratio since they are very optimistic about their chances of career success in the future. This goes against what most home owners want -- cash buyers. In addition to this challenge of acquiring property without cash, it also does not help that majority of millennials are strapped with college loans. University of Southern Mississippi associate professor of finance Kimberly Goodwin said, "Couple this with an economic climate where businesses are hesitant to hire due to high costs and market uncertainty, and buying a home is simply not a financial reality for Millennials. People simply don't have the money for a mortgage down payment or cannot qualify for a mortgage due to high debt to income ratios."
Meanwhile, in a report by Dallas News, Realtor.com economist Jonathan Smoke said that millennials are not only the hope of the future but also play a huge role in the current setup of things in the real estate world. He said, "They are the biggest age group buying homes today."
Millennials are reported to make up about 30 percent of the current home sales in the country. Smoke mentioned that 60 percent of first time home buyers are millennials and their number is estimated at 87 million.