There’s no denying that the real estate market is undergoing numerous changes. In fact, it changes by the year as well as by the month. It even varies from one city to the next. Several factors come into play when determining the state of the market at any given time. These include interest rates, demand for homes, supply, and trends in the home-buying sector. Of course, the demographics of potential buyers make an impact as well. Right now, it seems that Millennials are making their mark on the real estate market across the nation from a few angles.
Looking at How Millennials are Changing the Face of the Real Estate Market
Millennials, or those born between 1981 and 1997, are rising through the ranks of the real estate world. Their views on the market differ from those of their predecessors, members of Generation X. No doubt, they’ll certainly be different from those of Generation Z, the ones who will follow in their footsteps in the near future. From where they choose to live to how they select a home warranty, they’ll impact the real estate market for years to come.
A Transition from Leasing to Homeownership
Until fairly recently, the real estate market was split almost evenly between renters and homeowners. Things began to shift about a decade ago. At that point, the number of renters slowly started to decline while the number of homebuyers gradually rose. This change happens to have begun right around the time the first of the Millennials began to enter the housing market. They start off by leasing apartments or renting homes, but like so many generations before them, they eventually lean toward buying. Now, as the bulk of the Millennials are starting to trade in their leases for mortgages, the market is transitioning accordingly.
Changes in the Availability of Homes
As the market shifts along with Millennials purchasing homes, it’s bringing about another turn of events. Each home that Millennials purchase takes another one off the market. At the same time, each rental property they leave behind places another of those on the market. That means fewer listings are going to be available for purchase moving forward, and more rentals are going to enter the market. This will certainly lay out a course for younger Millennials and Generation Z as they reach the home-buying stage of their lives.
New Trends in Home Prices
It’s no secret that home prices fluctuate in proportion to supply and demand. When supply is high, and demand is low, home prices tend to drop. When the tables turn in the opposite direction, home prices rise. This will certainly play a role in home values during the years to come.
Though a recent write-up indicates that some analysts expect prices to level out next year, that development is being attributed largely to the pandemic and resulting rebounds in the construction market and people’s salaries more so than other factors. Once that influx subsides, home prices will most likely return to their previous uptick.
Increases in the Age of Homeowners
Ongoing research shows that Millennials are waiting longer to purchase homes than previous generations. It seems the Great Recession of 2007 through 2009, and all the negative impacts it had on incomes and the real estate market, has left Millennials a bit leery of purchasing homes during their early adult years. They’re generally waiting until they’re well into their 30s and 40s with established incomes and added financial security to take the plunge.
Of course, the pandemic is also playing a role in this regard. Many Millennials were affected by job loss during the pandemic, and they’re actually moving back in with their parents in an effort to make ends meet. This could delay their home-buying plans even further.
Creating a Shifting Population
Previous generations seem to have been trending toward either urban or rural life. Some ventured into the nation’s most populated cities and made their homes there. After all, there were plenty of employment opportunities, entertainment options, and other amenities to choose from. Others stepped outside the confines of the city and moved out to the country. Rural areas offered a quieter, more laid-back way of life. Millennials are largely choosing the middle ground, opting instead for the suburbs. That doesn’t mean some of them aren’t looking to the cities and the country for homes. It just means the majority are looking for a bit of a compromise.
Altering the Way Homes Are Being Purchased
Based on the latest trends, it seems the old ways of purchasing homes have gone the way of the dodo bird. In decades past, people drove around to scope out homes they might be interested in purchasing. They toured those homes in person to see their flaws and strong suits firsthand. Once they found the right one, they dressed in their nicest clothes and visited their financial institutions with the hopes of getting a mortgage.
All that is long gone. Today, Millennials are largely using technology to help them find their homes. They look online for a real estate agent and browse the internet to see which listings are available in the areas where they’d like to live. They take virtual tours to see those houses from various angles. Then, they seek out mortgages online rather than in person. Some never even meet with their real estate agents and mortgage lenders in person, and they don’t actually have tangible experiences with their homes until the day they move in.
Shaping the Real Estate Market for Future Generations
Millennials are certainly leaving an imprint on the real estate market. They’re waiting longer to purchase homes while changing the way homes are chosen and purchased. They’re also bringing about an evolution in home prices and shifting the population toward suburban areas. As the Millennials reach the next stages of their lives and Generation Z rises to make its mark, it’ll be interesting to see how things play out in the future.
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