For millennials, buying a home still seems to be part of the American Dream.
According to the 2014 National Association of Realtors Home Buyer and Seller Generational Trends study, the millennial group is the largest among recent homebuyers in the U.S., with ages 33 and younger comprising 31 percent of recent home purchases. “Millennials are the largest generation in history after the baby boomers; and since many still aspire to one day invest in their future through home ownership, they will drive future housing demand,” says the association's chief economist Lawrence Yun.
In today’s virtual world, potential homebuyers have residential real estate at their fingertips through smartphones and tablets. Yet, rather than completing their entire home-buying search online, millennials also are looking for personal guidance—and, oftentimes, finding it in the expertise of a realtor, explains Beth Braznell, president of the St. Louis Association of REALTORS. “Getting information from the Internet is a lot like trying to take a drink from a fire hydrant. Young buyers are looking to realtors to help them understand and interpret all this information, give them insight into everything that goes into the home-buying decision and guide them through the process. This is the largest financial transaction of their lives, so they are looking for someone they believe is honest and trustworthy.”
That’s why this young generation is most likely to hire an agent based on a reference from a friend or relative, Braznell notes. “As this is probably their first venture into the real-estate market, a recommendation from mom or dad—or perhaps a good friend who just went through the process—is going to carry more weight than any online reviews.”
But as millennials clamor toward the housing market, they are facing some roadblocks along the journey to ownership. The Generational Trends study also shows that 20 percent of those polled in this age group said obstacles included difficulty saving for a down-payment, citing student loan debt as their main financial challenge. Additional limitations that were found included tight credit, limited inventory and the possibility of rising interest rates.
However, these hurdles don’t seem to be intimidating young buyers from aiming to achieve the goal of home ownership. According to the study, the generation values the long-term benefits and economic security of owning a house, with 87 percent polled reporting that they consider it a good financial investment.
Realtors know that younger people often need to make compromises to get into their new home, but agents can help guide buyers along the path to ownership, Braznell notes. “Desired size and location are usually negotiable when buying a home, and most buyers are willing to make financial sacrifices if it means they can make this important investment in their future.”