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The generation gap between Baby Boomers and Millennials has become something of a running internet joke in recent years, and one of the things the two groups often jibe each other about is home ownership. But numbers gathered by leading real estate analysts show that home buying by Millennials surpassed that of any other age group from 2017 to 2018, making up 45 percent of new mortgages, compared to 17 percent for Boomers. Can Millennials keep those numbers up?
Market Slowdown And Bursting Bubbles
The window for Millennials to purchase their first home may be closing as home prices go back on the rise. With more student loan debt that any other previous generation, Millennials have recently had to take advantage of lower home prices, affordable interest rates, and reduced down payments to become first-time homeowners. If the median price of single-family homes goes on a sharp upswing, Millennials may again find themselves locked out the housing market.
Home Prices Aren’t The Only Roadblock
In the past, retirees would often downsize from large family homes to smaller homes or apartments, or move to senior housing or assisted living facilities. But with health care advances extending life expectancy and many Boomers taking advantage of federal programs and using their mortgage to supplement their income, fewer of those existing homes are being placed on the market. The price of new construction can be cost-prohibitive, and new homes can come with other concerns, such as fraudulent builder-brokers, shoddy construction, and completion delays. It can also be more difficult to secure funding for new construction, and locations may be limited.
So Are Millennials Buying Or Not?
It would seem the trend of Millennials buying homes may be slowing. While the market was ripe in the last few years, mortgage rates are on the rise, necessitating larger down payments and increasing monthly bills. If the choice is between renting and buying, the allure of not having to pay property taxes may win out, especially in high-density, high-cost areas. Renting also allows Millennials greater flexibility and mobility, which they prize more than previous generations. Millennials who do purchase homes own them for an average of six years, as opposed to a ten-year average for older age groups. So while they may have surpassed Boomers in total mortgages and total mortgage dollars, Millennials are staying true to form and bucking the housing trend.
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