Parker-Associates-blog-October-2018-Millennials1
The Entry Level & Affordable Options are NOT There
Millennials, for the most part, are a generation of renters. Only 34.7% of Americans under the age of 35 owned their homes as of 2016, according to a Census Bureau survey. But that’s not always by choice. According to a Pew survey, 72% of renters are planning to buy single family homes soon. One big hurdle, especially for Millennials, is that they are unable to buy affordable homes. Millennials are not often in a position to afford more than an Entry Level home. Three bedroom townhome for rent is sometimes more affordable and offer a solution that Millennials are turning to.
Parker-Associates-blog-October-2018-Why-Arent-Millennials-Buying-Homes-More-Frequently
Millennials are renting and buying Townhomes because they are Affordable. Being Affordable is the key to selling homes to Millennials. It’s a question of logistics. They are just not able to afford anything more. Then finding an estate agent is crucial if you are selling your property in the UK and there are so many options now with online estate agents offering such cheap prices, but high street agents are now often matching those prices. One such estate agent is in Bristol and are a brilliant option of those offering really cheap rates on selling a property in Bristol.
When determining what home price someone can afford, a guideline that’s useful to follow is the 36% rule. This is calculated by taking the total monthly debt payments like student loans, many don’t know that they can calculate their loan finances with this student loan payoff calculator.
They also have to calculate credit card, car note, as well as the projected mortgage, homeowners insurance and property taxes which should never add up to more than 36% of the gross income (i.e. pre-tax income). There are property tax services companies that can help manage and possibly lower your property taxes, so you may want to consider consulting one of them. In addition, those who are looking for affordable insurance rates may visit sites like https://forbrukerguiden.no/husforsikring/ for more info on insurance rates and coverage.
Data analytics is essential to the mortgage industry because it gives lenders a holistic look at a customer, you may check out this Certified Credit mortgage credit data here for more helpful info!
Using the 36% Rule:
| Monthly Pre-Tax Income | Remaining Income After Average Monthly Debt Payment | Maximum Monthly Mortgage Payment (including Property Taxes and Insurance) with the 36% Rule | Estimated Home Value |
| $2,000 | $1,400 | $120 | N/A |
| $3,000 | $2,400 | $480 | $79,000 |
| $4,000 | $3,400 | $840 | $138,000 |
| $5,000 | $4,400 | $1,200 | $197,000 |
| $6,000 | $5,400 | $1,560 | $256,000 |
| $7,000 | $6,400 | $1,920 | $313,000 |
| $8,000 | $7,400 | $2,280 | $360,000 |
| $9,000 | $8,400 | $2,640 | $416,000 |
| $10,000 | $9,400 | $3,000 | $523,000 |
Parker-Associates-blog-October-2018-millennial-survey-homeownership-housing-recovery
Most markets today have few, if any, housing options under $200,000 which would require a monthly income of $5,000 or more to be affordable. The average monthly income of Millennials is below that and in some cases, well below that.
Parker-Associates-blog-October-2018-Millennial-Housing-Location-Preference
If you’re a millennial, it probably won’t shock you to learn that the average salary of a millennial today is an estimated 20% lower than the average salary that a baby boomer had at the same age (in real terms). What’s more, today’s Millennials are deeper in debt than their parents were at their age. Let’s take a closer look at the average salary of a millennial.
According to U.S. Census Bureau data, the median earnings for full-time workers age 18 to 34 were $35,845 in 1980. By 2000 the same cohort was earning $37,355. For the period of 2009-2013, however, full-time workers between 18 and 34 had median earnings of just $33,883.
This is not very positive for the potential of a Millennial individual buying a home. Obviously, couples would have a higher output provided they both work (and hold off on family for a bit). But, there is a significant shortage of homes that Millennials, now the largest segment of the population, can afford.
Parker-Associates-blog-October-2018-Where-are-millennials-buying
This is especially true in cities like New York or San Francisco. There are some cities however where Millennials are overcoming mortgage costs and buying homes. In a national survey, SmartAsset took a look through the data to find the cities where Millennials are buying homes. Millennials, for the purposes of this survey, were defined as those under the age of 35. If you’re one of those people who’s also looking to buy their first home, you must seek for topnotch professionals who offer residential real estate services.
Parker-Associates-blog-October-2018-2018_01_Millennial_Home_Buying_map-1
Key Findings
- No big cities – No big city cracks the top 10. The biggest city to crack the top 25 was Las Vegas at 22. In fact, seven of the top 10 largest cities are ranked in the bottom half. New York and L.A. in particular score poorly, ranking 148th and 153rd, respectively.
- Millennial homeownership dropping – Across the largest 200 cities, only 18 saw millennial homeownership rates increase from 2007. This means in many cities homeownership rates have not fully recovered from the recession.
Parker-Associates-blog-October-2018-What-can-millennials-afford
Tips for First-Time Homebuyers
Buying your first home can be daunting. After all, it might be the biggest purchase of your life and you want to make sure you leave no stone unturned by looking to every property such as those lake lanier homes for sale. The first step might be to talk to a financial planner to determine how buying a home fits in with your other financial goals.
Coming up with a down payment is one of the first things any homeowner should think about. Ideally people save 20% of the home value for a down payment. If you are struggling to do this, there are federal programs to help first-time home buyers such as this Real Estate Private Money Loan Program. For example, you can get a FHA loan with only 3.5% down.
Parker-Associates-blog-October-2018-Millennials-home-buying-infograph
Depending on where you live, there may also be state or local government aid available. For example, Texas has the “My First Texas Home Program” to help first-time homebuyers in the Lone Star State. Other reputable professionals such as home inspectors in palm beach county would also come in handy in the home-buying process.
Parker-Associates-blog-October-2018-Millennials-and-Real-Estate
Once you have found a house you are happy with, make sure to negotiate on the buying price. There are many factors you can negotiate on, like who pays certain closing costs. But if you are in a sellers’ market you may not have a lot of leverage. In that case you probably want to avoid getting into a bidding war. The worst-case scenario for any first-time homebuyer is that you end up buying a home you cannot afford.
The REMA Team is an alliance of professionals in the real estate industry focused on research, data, and how it can be used in marketing and sales with our expertise in understanding and interpreting the data we gather for our clients. We focus on ensuring that visualizations are clear and accurate, giving decision-makers confidence in their choices. Data is data, but visualizing the data is what makes the difference. Explore both the spatial and non-spatial data in several different formats to understand it fully such as mapping, charting, and tabular. Interpretive data follows in qualitative, quantitative, and temporal data formats. Understand what will suit your situation best. We’d enjoy the opportunity to connect with you. Contact us directly to discuss your personal situation.
Parker-Associates-blog-October-2018-The-Millennial-Dilemma-Ren
Stay on top of the latest market research showing important housing data that can help in the real estate industry. Contact us for more information.
David WB Parker is a principal of Parker Associates of Jacksonville, Florida, marketing consultants to the real estate industry; President of PTC Computer Solutions, IT Specialist, and an active real estate sales professional with PARFAM REALTY based in Jacksonville, FL. He can be reached at 904-607-8763 or via email davidp@ptccomputersolutions.com.