2021: Welcome Home Millennials

The landscape of the housing market is as unpredictable as a millennial’s next social post. One unexpected turn was the emergence of a millennial home-buying frenzy. What caused this up-tick in younger generation home-buying? Let’s take a look at the pieces:

Transition to Work From Home:

As everyone masked-up and left their office desks behind, they transitioned to working fully remote. This opened up the opportunity for young couples to be able to work from anywhere, unbound by a specific office location or commute. This was enough for some millennials to take the plunge and relocate to a new place and new home (that happened to have a WFH office.) As the spread of Covid-19 has slowed, many workplaces are sticking with the option for their employees to work remotely as it supports the company’s bottom line with being able to scale back on items such as rent, space, office supplies, while giving millennials and other generations alike the freedom to try new homes and spaces.

Forbearance on Loans, Stimulus Checks:

It is no secret that school loans have burdened the millennial generation. According to Credible, on average at least 20% of their monthly income goes straight to school loan repayment. This has slowed the pace of first-time homebuying upon graduation. To ease the financial difficulties of this group, during the Pandemic, there were federal programs that automatically put school loan debt repayment in forbearance. For those who had hours cut back or lost their job, this freed up some resources to put towards more crucial things such as housing and food. For some, this widened the opportunity to shift and save money to then look for a house. This carries the same for stimulus checks – they allowed people to catch up on bills, be able to take care of their families and give people a chance to plan for the future.

City to Suburb Migration:

With the spread of Covid-19 moving quickly and through the population, cities were hotspots for the for the virus, making people rethink their renting situation in an apartment complex of thousands. Young millennial families started to migrate from the bustling city to the suburbs, where they had more room and less people close around, so that they and their young children could be protected.

Mortgages Rates have declined and More Loan Options:

While the housing market has soared, in the past year, Mortgage rates have dropped almost as much as 8% since the 1980s creating opportunity for Millennials to have a lower monthly payment. There are now more options than ever before for first-time homebuyers, such as 0 money down. These things make the overall process less scary for Millennials even if the total price of the house is extensive.

Change in Mindset:

Millennials are a generation that challenged the status quo of years past. Many didn’t see the value in home buying, wanted to travel, wait to have children, but with the recent events of this past year and its instability, people wanted something that was stable and concrete. A home did that for many.

The past two years have been a whirlwind that changed the behavior of the housing market substantially. With having to spend more time at home people were able to see what they liked and disliked about their living situation, deciding on whether to change it. For those millennials that were on the fence about purchasing a home, these two years gave them new perspective – whether it was moving to a new town, moving closer to home to be with family, buying a home with an office, or transitioning to a safer area people had the veil torn off from their previous views and converted. The housing market backed this up. According to the Wall Street Journal, the millennial “generation accounted for 67% of first-time home purchase applications and 37% of repeat-purchase applications in the first 8 months of 2021.” Professionals in the field don’t see this slowing down, making this generational segment the powerhouse of the housing market.