The millennials have finally arrived on the real estate market.
Ever since the recent economic housing disaster, the world of real estate has been waiting for the arrival of millennial homebuyers. And in 2017, they were the most active generation to buy homes, according to the National Association of Realtors (NAR).
This late bloom of millennial buyers could be a result of many factors. First, many of those who graduated college between 2008-2012 entered a weak job market. They also may have witnessed parents and older relatives losing jobs or even losing their homes at this time, discouraging them from entering into a real estate commitment.
Then there was the challenge of saving for a home because of excessive student loan debt every month. Not to mention, this student loan debt would produce a less than favorable debt to income ratio, which is an important consideration when getting approved for a loan.
But times are a-changing and as mentioned, in 2017, millennials were the largest home-buying generation since the baby boomers. But some recent studies indicate another strong trend: the age of millennials buying homes is getting younger and younger.
The data comes from Ellie Mae, a software company that processes nearly a quarter of all U.S. mortgage applications.
The reason for this decrease in age is not 100% clear, but it could be the result of recent-tax-law changes or surging rent costs. Either way, this new trend is worth keeping an eye on.
Beyond Millennials: Generation Z Homebuyers
The Pew Research Institute defines Generation Z as those born in 1997, making the oldest members of this generation 21 years old.
Perhaps one of the youngest Generation Z home buyers is Benjamin Ulloa, who bought a home at age 17, 2 years ago.
So what does this mean for future real estate predictions?
We’ve already noticed the trend of millennial home buyers getting younger. But what about Generation Z?
“They grew up in the wake of the Great Recession. They saw what their parents went through and became more fiscally conservative as a result. They know the value of saving and not living beyond their means. It was something ingrained in them at a very young age.”,
says Chris Porter, chief demographer at John Burns Real Estate Consulting.
With this information in mind, Generation Z may be more financially responsible and save more money after seeing the mistakes of parents and older generations.
This does not mean they won’t buy homes as they will likely be in a financial position to purchase. However, they may be more inclined to buy fixer-upper homes and shy away from larger homes that would cause them to live beyond their means.
Contact Michigan Mortgage Expert, Julie Krumholz for More Information
Regardless of what generation you may fall under, if you are considering buying a home, don’t navigate this on your own. Instead, consult with a Michigan mortgage expert. Julie Krumholz has over 30 years in the mortgage industry and can help you with the pre-approval and every step of the mortgage process.