Moving Millennials Forward

With Millennials soon becoming — if not already — the generation with the biggest presence in the job market, it is important that they have clear guidance when thinking of purchasing a home. Factors such as student loans and an unstable job market can cause this generation to hesitate on making a huge financial commitment like buying a home. Knowing how much house you can afford, planning for unexpected fees and expenses, while also making sure your credit score is high enough to secure a great mortgage rate, are some factors Millennials need to be aware of while searching for a home.

Jumping into the homebuying process in an intimidating venture, especially for Millennials. Though the Millennial generation typically encompasses those born between the years 1981 and 1996, the range is sometimes examined by being split into two smaller groups; this includes “Older Millennials” which are between the ages of 29 and 38, and “Younger Millennials,” between the ages of 21 and 28. The creation of these sub-generations allows us to compare the homebuying tendencies of different aged Millennials, and ultimately prove how any reluctance had by younger Millennials can be looked past; younger Millennials are just as capable of purchasing their dream home as those in the older end of the generation.

Younger Millennials tend to be more hesitant in entering the market for a variety of reasons, including instability in their careers, high student loan debt, and an overall slower pace in leaving the nest. For example, younger Millennials are more likely to have frequently changing jobs, as they are choosing to take career paths that do not promise a singular, stable position for the long-term. Wes Moss, an expert financial planner describes how “Many millennials struggle to find a career path and those that do may continue to struggle with earning a livable wage” (Moss 2019). In addition, many of these individuals are buried in high amounts of student loan debt and must prioritize paying it off. The combination of these burdens, among others, has resulted in younger Millennials to be much slower in leaving the nest and take initiative in purchasing a home of their own. Moss describes how “Just 26 percent of 18-to-33-year-olds are married. By comparison, 36 percent of Gen Xers, 48 percent of Baby Boomers and 65 percent of the Boomers’ parents’ were married during that same period of life” (Moss 2019).

However, this reluctance should not stand in the way of younger Millennials taking the leap into the housing market. There are countless tools available to these individuals to help guide and encourage them through the entirety of the homebuying process. “Millennials at least want to buy a home of their own, if they can find one that’s affordable and suits their lifestyle. In fact, millennials accounted for the largest share of mortgage originations in 2018, according to Realtor.com” (Moss 2019). This want must simply trump any potential setbacks. 

Younger millennials should start by taking advantage of the technology at their fingertips. By simply using their smartphones, they can explore homes themselves. “Millennials are dedicated to their devices, and for this group, technology plays a central role in home buying” and “according to a 2017 report from the National Association of Realtors (NAR), 99% of Millennials search online to get information about homes and home buying” (Lake 2019). The use of these devices also simplifies back-and-forth communication between buyers and realtors. Further, technology impacts the way that agents are listing and presenting homes to Millennials. “Tech-savvy Millennials are leading agents and brokers to introduce things like live stream and video in lieu of traditional photographs. Videos give the audience a broader view of the property, communication, and location” (Lake 2019). This is a feature that previous generations have lacked.

In addition to putting the advancing technology to use, younger millennials should take advantage of help and become educated on their personal financial capabilities. Studies from several wealth advisors have found how “education is key. Once people learn more about mortgages, student loans and other debt, and know how to pay it off properly, they can make a decision out of confidence instead of fear” (Weaver 2019). This can also provide the buyer with information about which neighborhoods and areas are best for their individual wants and needs. Recently, younger millennials have been following their older counterparts away from cities and into the suburbs due to rising prices of rent. While cities provide more walkable urban centers with restaurants, nightlife, and access to green areas, it has also resulted in premium pricing for in-demand housing. As a result, "many cost-conscious Millennials are choosing to live in the outskirts of a city or the suburbs" (Lake 2019). The suburb allows the buyer to skip investing in a smaller, urban starter home and instead go right to something larger and greater long-term potential. 

Those on the side of the older Millennials, age 29-38, tend to already have a more stable income and have established themselves in the housing market. They had a strong desire to own their own home as they were newly married with kids; this led them to make up 26% of all homebuyers in 2018 (Riggs 2019). In fact, younger Millennials have already begun this process; "There has been an influx of Millennial homebuyers this year, as older Millennials have had some time to grow in their careers and pay off student loan debt," says Stuart Eisenberg, national director of real estate and construction practice for accounting firm BDO USA, LLC (Lake 2019). The future of the Millennial generation in its entirety is strong as well, as “Older Millennials, buyers aged 29 to 38 years, made up the largest share of home buyers by generation at 26 percent of all home buyers in 2018” (Riggs 2019). Older Millennials were likely to use savings or a loan from a friend or relative to finance their homes, and overall were the most likely generation to feel confident in their decision when they “financed their home purchase at 88 percent” (Riggs 2019). This acts as proof and reassurance to the younger end of the generation as they begin to enter the market.