Millennials who delayed homeownership following the Great Recession are now finally entering the market in bigger numbers. They comprised 36 percent of home buyers last year, up from 32 percent in 2013, according to the National Association of REALTORS®. But they’re trying to make up for lost time by skipping over the starter, entry-level home and heading right into buying larger, pricier homes that they plan to stay in longer, USA Today reports.
“They rented for longer,” says Diane Swonk, chief economist at Grant Thornton. “Now they’re going to where they want to stay.”
Many millennials in their mid-30s can now afford the more expensive homes. Some young adults have been saving by living with their parents for years into adulthood. They’ve also been moving up in their jobs and earning higher salaries.
As they get married and start raising kids, they’re finding they need more space and are moving into homeownership. However, a severe shortage of lower-priced starter homes is prompting them to up their budgets and look at pricier places.
The cost for what is generally considered a starter home can vary widely by geographic area, but tends to average between $150,000 to $250,000 in most markets, Swonk says.
The percentage of millennials who purchased homes for $300,000 or more this year stands at 30 percent, up from 14 percent in 2013, according to data from NAR.
Older millennials tend to splurge the most. From 2012 to 2016, nearly one-third of buyers ages 33 to 37 purchased four-bedroom homes compared to about 24 percent in 1980, 1990, and 2000, according to an analysis by Ralph McLaughlin, chief economist at Veritas Urbis Economics.
Source: “From Their Parents’ Basements to Dream Homes: Millennials Are Skipping Starter Houses,” USA Today (May 7, 2018)
