Home-buying Millennial Market

Millennials are the largest living population in the United States, and have become a big player in the housing market.  According to a Zillow group report, millennials made up 42 percent of home buyers in 2016 – more than any other generation.

Some of their buying habits mirror those of their grandparents’ generation, like skipping ‘starter’ homes and going straight for purchasing larger properties at higher prices.  They also veer towards townhouses and homes with shared community amenities, while also looking for neighborhoods that are walkable to shopping and stores, and give access to public transportation.

One way they differ compared to older generations is that they are waiting a little longer to purchase their first home.  Millennials want to buy a home, but need to get other finances in order first, including student loan debts that are plaguing the generation.  These debts have caused some to move back in with their parents immediately after college, waiting until they have a better handle before heading into the housing market.

Unsurprisingly, we are seeing mortgage companies vying for the millennial market.  Recently, lenders started offering ‘reward points’ to attract the young generation.  However, advisors would still recommend looking for the mortgage with the best rates and closing costs instead of basing a major financial decision on reward points.

April 2016 Minneapolis/St. Paul Housing Market Update

Interesting. We’re really in a seller’s market again. The news nationally is that the housing market is seeing some difficulty with low inventory. **Reminder; all real estate is local. Thus, local stats and analysis are necessary for our Minneapolis/St. Paul metro market.

This video from MAAR (Minneapolis Area Association of Realtors) puts into a nice, short, perspective, the YTD stats (through March) that can be found elsewhere from our local MLS system.

Summarized, the analysis is; A) We have a very low inventory. We’re at just over 2 months of housing inventory. This means we’re in a seller’s market, and that there are more buyer’s than homes available. A balanced market (between buyer’s and seller’s, is defined as roughly 5-6 months of inventory/supply. B) This low inventory has slowed down the number of sales, thus overall sales transactions are down – YTD – by @ 20%. C) This low inventory, which creates the seller’s market with more buyer’s than homes available has caused housing prices to increase, by over 5% so far, YTD. Some prime areas in our local market have seen significantly larger increases in pricing, YTD. Again, supply and demand.  D) I’ll add: I’m hearing from bother lenders and realtors, about lender’s appraisal issues again (coming in low – it’s been a couple/few years since the last outbreak of this plague: And I call it a plague this time, as I’m not terribly worried about the fundamentals of current home value increases – my only concern is for the mid and long term with respect to what an increase in interest rates above 5.5/6.0% will do).

The takeaway for Sellers, or people considering selling their home: Get your home on the market. The timing is optimal.
The takeaway for Buyers: Be prepared to get into multiple offer scenarios. Be comfortable with this notion. Follow the lead of your Realtor in how best to navigate this process, and also when you’re reaching the upper limit on fair market value for your prospective home. Have your lender’s pre-approval letter ready, and don’t ‘sleep on it’ overnight, or over the weekend, if you think it’s the right home. Aggressively move on it right away. It will most likely be gone when you awake in the morning.

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