Millennials’ supercharged the housing market in 2021. The group, many of whom are first time buyers, were finally able to put down roots thanks to the record low interest rates and while rates are going up slightly, this new generation of homeowners won’t be going anywhere soon. A study from Realtor.com shows a generational shift with more than 45 million millennials reaching “the prime first-time home buying ages of 26 to 35 in 2022.”
Unfortunately, it’s likely to be an even tougher year for new buyers. As demand surpasses supply and home sales hit an expected 16-year high. Here’s a bit about the unique challenges that Millennials are facing while trying to buy a home and how Ribbon is helping this new generation get the security they deserve.
While it’s been often said that millennials would not ever be interested in purchasing homes, they’ve actually performed well in the housing market, with homeownership rates rising faster than previous generations. However, first-time home purchases come nowhere near the homeownership boom that happened before the Great Recession, when more than half of all home purchases were made by first-time buyers.
It is true that millennials are making their first home purchase later than previous generations. This is partly fueled by the fact that marriage and building a family— events that often trigger a home purchase —are also happening later. No matter the personal reason, the financial stakes for the generation are a clear issue.
Millennials have faced a wider wealth gap than older generations, due to student loan debt and career paths stagnated by the 2008 financial crisis. These factors have led to millennials relying more on their families for financial support compared to prior generations. According to a Pew Research Center report, millennials live with their parents longer than both baby boomers and Generation X did before they formed their own households. Millennials are also more likely to rent longer. Apartment List's 2021 Millennial Homeownership Report found that in 2020, 18.2% of millennial renters say they plan to rent forever, up for the third consecutive year from 12.3% in 2019 and 10.7% in 2018.
The rising cost of housing is another issue. Home prices have been soaring over the past year, with a median sales price of $353,900, up 13.9% year over year. While historically low mortgage rates have certainly helped, a lack of savings and other financial burdens have prevented more millennials from attaining homeownership.
According to Apartment List, affordability remains one of the biggest roadblocks for millennial buyers. For those planning on buying a home, 63% reported having no money saved for a down payment—and many don’t even see buying a home as a possibility, ever.
Another challenge millennial buyers are facing, especially first-timers, is the intense competition in the housing market. In a market with low inventory and rising home prices, first-time homebuyers are regularly being outbid by repeat homebuyers, investors, and other cash buyers. Over 51% of millennials have reported being outbid when trying to purchase a home.
Many millennials are choosing to take the risk of waiting for the market to cool down. The gamble is big. Sitting on the sidelines could mean missing out on low interest rates and building home equity, one of the biggest sources of wealth creation.
That was a dark one, we know. There are quite a few obstacles in the way of this generation. But that doesn’t mean that ownership is impossible. Ribbon exists to help worthy buyers get the homes they dream of. So we’re here to help.
RibbonCash Offers gives millennial buyers the edge they need to make a competitive offer in this market. Our cash offers turn buyers’ offers into all cash, have no financing or appraisal contingencies, and are three times more likely to win in a multiple offer situation. Ribbon has a 100% on-time closing rate, meaning a less stressful homebuying experience and no need to move multiple times. Millennials have had a hard time economically. We’re excited to help them build home equity and feel the sense of security they deserve. Want to learn more? Ribbon experts are available to chat today.