When it comes to the housing market, increasingly it’s all about the millennial.
“They are not only the future, they are the present for housing,” said Jonathan Smoke, the top economist for Realtor.com. “They are the biggest age group buying homes today.”
Millennial buyers currently account for almost 30 percent of nationwide home sales, according to the latest surveys by the National Association of Realtors.
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“Millennials are 60 percent of first-time home shoppers,” Smoke told Realtors who met earlier this month in San Diego for the industry’s annual conference. “There are 87 million of them.
“They outnumber every generation – including the baby boomers,” he said. “By the end of the year, almost 2 million home sales will be to millennials.”
Three-fourths of millennials that bought homes this year came out of apartments.
Another 20 percent are leaving their parents homes after graduating from school and starting careers, Realtor research shows.
“They are suffering from ever-increasing rents — that’s driving those that can into the market,” Smoke said. “They are dreaming about escaping from mom and dad’s basement.”
Smoke said most millennial buyers — ages 25 to 34 —prefer preowned houses.
“They are turning toward closer-in subdivisions,” he said. “These are older, interesting neighborhoods with interesting architecture.
“They are very into real estate,” Smoke said. “Real estate is cool again – especially for young people.”
Real estate agents must get their heads around this younger client base.
It’s been challenging for an industry in which most sales professionals are in their 50s. But they are learning to communicate with customers by text message and tailor digital home listings to display on cellphones.
“Reaching out to millennials is a top priority for our industry,” said Tom Salomone, new president of the 1.1 million-member real estate sales association. “We are trying to infuse our industry with young people.”
While more than 90 percent of millennials surveyed by the Realtors say they still believe in homeownership, this generation of buyers faces unique challenges.
“They face competition from both vacation buyers and investors,” said Realtors’ researcher Jessica Lautz. “The most difficult step for a homebuyer today is finding the right property.
“Tight inventory is affecting many markets today.”
Millennial buyers also face an obstacle different from previous generations – thousands of dollars of student debt.
Lautz said 41 percent of first-time buyers have student debts. First-time buyers with student loans on average still owed $25,000.
Paying those debts keep them from saving for a home for an average of three years, Realtor surveys find.
And soaring apartment rents are taking money away from what millennials can save for a down payment.
That may be one of the reasons that first-time buyers haven’t increased their share of homebuying this year.
Less than a third of home purchases in 2015 have been made by first-timers – the lowest percentage in almost three decades.
“The decline in first-time buyers this year surprised us,” Lautz said. “We expected it to increase.”