It’s no surprise that the rate of first time home buyers has been steadily declining for some time now. There’s a variety of factors contributing to the lack of under-35 buyers we’re seeing out in the market. Student debt, a change in family dynamics, and pure preference are all playing vital roles in the market we’re seeing today.
For one, student debt is out of control. According to The Wall Street Journal blog, the average student debt in 2015 was $35,000, which makes it quite challenging to save for a mortgage. Although unemployment is down, most millennials aren’t making enough to support both their rent and student loans, let alone save for a home.
Another change we’re seeing in the market goes back to family dynamics. The millennial age isn’t as quick to settle down with a family as society once was. More often than not, they’re opting to put off marriage and children until their mid and late thirties. Thus, they’re more likely to continue to rent until later on in life.
Unlike earlier years, millennials aren’t so quick to choose a suburban life for their families either. More and more people prefer to raise their children in urban settings, as opposed to, what was once, “the suburban dream”.
What might further attribute to the lack of millennials on the market, is the inventory of entry level homes available. Today, developers aren’t catering their plans to the millennial, as they’re likely aware of the current trends with that generation. According to the National Association of Home Builders, about 20% of new construction is attributed to entry level properties, whereas it once was an average of 30%.
As described in the time.com article, it’s become a “chicken-or-the-egg situation”. Developers aren’t going to cater to first time home buyers as much anymore thus, when the millennials do choose venture the housing market, there is a higher demand for such properties. With rental rates rising quite dramatically, I’m not sure how long millennials will hold off from buying a home. Check back for more blogs on the housing market today!