After years of renting in cities, younger homebuyers need a place for a family.
Debt.com reported before that high rents are forcing millennials into homeownership. Now a new study tells us children are part of the reason for their housing needs.
The amount of millennials with a child has increased by 9 percent over the past three years, says a study from the National Association of Realtors (NAR).
Time to raise a family
The number of millennials who are both raising kids and buying homes has increased every year since 2015, the study says. Starting at 43 percent, then jumping to 49 percent last year — and now it’s up to 52 percent.
While the generation has been delaying parenthood until later in life, more than a million millennial-aged women become a mom every year, according to Pew research. There was an increase of 1.2 million in 2016 alone. And 82 percent of births that year were to millennial parents.
The number of millennial mothers is now up to 17 million.
Leaving the city
More than half (52 percent) of millennial homebuyers are shopping in a suburban area — higher than Gen Xers and baby boomers, according to the study.
In 2015, 21 percent of recent millennial buyers purchased a home in the city, now only 15 percent do. More millennials are moving to larger homes with a yard and space, unlike condominiums, or even residential neighborhoods. The number of millennials (85 percent) purchasing standalone homes is as high as Gen Xers (86 percent) now.
More millennials are of the age where they feel they can’t rent forever. A quarter (23 percent) of millennials say they need to buy a house due to rising rents, says another poll from Realtor.com. Housing prices have been on the rise, too, leading to obstacles when finding a place to raise a family.
Low housing inventory and rising prices will make this spring the “toughest home buying season in history,” according to a recent study from Realtor.com. Currently, home prices are at a high of $280,000. And around the country inventory levels have dropped to 35 percent, lower than 2012, the study says.
The same year that the market first showed signs of recovery from the housing bubble, according to Fortune. At the time, sellers were afraid of putting their homes up for sale in a buyers’ market. Home prices were on the rise, when they slowed, and the market returned to normal levels by 2014, Fortune says.
“Millennials want to buy, but record-low inventory is making it extremely difficult,” says Realtor.com chief economist Danielle Hale. “Despite the difficulties, first-timers are optimistic and more than willing to weather the challenges this spring has to offer.”
Rising home prices
The vast majority of millennials say rising home prices (93 percent), and interest rates (92 percent), will impact their home search this year, Realtor.com says. To get around rising homeownership costs 41 percent are trying to find smaller “starter” homes and 35 percent are going to look for less expensive homes.
Housing inventory has decreased by 20 percent since last year, according to previous Debt.com reporting. And the demand to purchase is making it competitive for millennial homebuyers to buy faster than before. Almost half (45 percent) are making a purchase after viewing the home online only — not in person.
“Prices keep rising for the limited number of listings on the market they can afford, which is creating stark competition, speedy price growth and the need to save more in order to buy,” says NAR chief economist Lawrence Yun.“These challenging market conditions have caused – and will continue to cause – many aspiring millennial buyers to continue renting unless more Gen Xers decide to sell, and entry-level home construction picks up significantly.”
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Article last modified on June 4, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: More Millennials Are Moving to The Suburbs - AMP.