This week an article on HousingWire.com stated that Millennials are no longer a renter generation. Seeing as how I just wrote a book about how destructive Social Security and student loans are to Millennials finances, this came as quite the surprise to yours truly. Especially since I just wrote a blog about how they will be forced to work later in life than previous generations have. Matter of fact, this directly contradicted much of the economic evidence that I have seen in recent months. So, let’s find out if more Millennials are actually starting to buy homes…
Homebuying trends in 2015 are undermining the image of the Millennials as a generation of renters.
realtor.com Chief Economist Jonathan Smoke has argued for some time now that Millennials are not different than previous generations in homebuying, delaying homebuying decisions by no more than a year or two beyond the habits of Generation X of Baby Boomers.
Well, it is my understanding that Millennials are very different than Baby Boomers when it comes to an attitude toward home ownership. Previous generations were infatuated with their home as the “American Dream.” That ‘dream’ is not nearly as prevalent as in past decades. Many would rather ditch the large suburban house for a smaller simpler space to live. Millennials turning down their parent’s furniture has even become a trend. They are very different from previous generations as many are still living with their parents! Arguing that the habits of Millennials are no different than previous generations is at the very least misguided. Well, there must be something else, so let’s keep reading.
The news is finally a departure from years of being told Americans prefer renting their homes. Is that attitude finally shifting?
Almost 65% of millennials aged 21 to 34 looked at real estate websites and apps in August, according to realtor.com analysis of data from comScore and current population estimates.
“Additionally, when we focus on 25-34 year olds we find that this group is 70% more likely than the average adult to be currently looking for a home to buy on realtor.com,” Smoke says. “While it is difficult to estimate the effect of millennial buyers in the new home market, one can infer that since prices over the year have trended towards the more affordable, that some of the growth in the new homes market is a result of builders providing more affordable supply.”
Wow! I guess that settles it! Because 65% of Millennials looked at real estate websites, well, Millennials are simply no longer a renter generation.
In the past few months, I have become infatuated with Porsche cars. I’ve seen some here in South Florida and I’ve taken the time to admire them on Porsche sales sites. I work as a school teacher in my daytime job, but hey, we can all dream, can’t we? The point is, looking up Porsche cars on a website does not make me a Porsche owner. And browsing real estate sites does not mean that Millennials are no longer a renter generation.
In August, the market share of first-time buyers of existing homes increased to 32%, from a July rate of 28%, according to National Association of Realtors.
Smoke estimates that half of all home sales activity for the first half of the year can be attributed to first-time buyers and according to the NAR 2015 Home Buyer and Seller Generational Trends report, Millennials comprise 68% of all first-time buyers.
“People who believe that Millennials are disinterested in home ownership are grossly mistaken,” said Smoke. “This generation hit the job market during one of the largest recessions of all time and they’ve had to work hard to establish credit and save for a down payment.
Jonathan Smoke is the Chief Economist at Realtor.com. His title sounds an awful lot like that of former Chief Economist of the National Association of Realtors, David Lereah. If you don’t remember who David Lereah is, just know that the guy is a legend. But not a legend in a good way; more like the guy who threw up on stage in front of a few thousand people, that kind of legend. His incessant cheerleading of the virtues of real estate investment while the housing market was collapsingupon itself in the mid 2000’s has earned him a place in infamy.
“With the older segment just beginning to enjoy the life events that drive home ownership – marriage and children – now is the most appropriate time for them to consider home ownership, and that’s what we’re seeing,” he says.
Any advice about when to buy a home from a “Chief Economist” of a company that derives its income from real estate should be taken with a pound of salt.
The vast majority of Millennials are in no position to purchase a home. They are being robbed of 6% of their earnings through Social Security. They are leaving school awash in student loan debt. Tuition prices are still increasing with each passing year, wages have flat-lined and our economy is stagnant. They aren’t staying with their parents out of convenience. They are staying out of financial necessity.
This whole article is a vain attempt to alter perception and jump-start a trend with nothing but hot air. The statement that Millennials are ‘no longer a renter generation’ only means that Jonathan Smoke is blowing smoke.