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We tend to identify large groups of people by the era in which they came of age: The Greatest Generation, who served in World War II; The Baby Boomers, who came on the scene one generation after the end of that great conflict; The Gen Xers, who were born from the 60s to the early 80s.
And we have the Millennials, who were born between 1982 and 2004 (although the dates are somewhat imprecise). This large demographic group has just overtaken the Baby Boomers—75.4 million of them, compared to 74.9 million Baby Boomers.
It is also a group with some unique attributes.
Most of them came of age during the Great Recession, the largest economic slowdown since the Great Depression. 26% of them still live at home, presumably for economic reasons: the unemployment rate for Millennials peaked at 12.4% in 2010, but has since improved to 7.7% as the economy has continued its slow recovery.
That is, they share housing with a roommate, as opposed to a spouse or life partner.
A group this size should wield considerable buying clout, and they do; 35% of the home buyers entering the market are Millennials. They tend to buy outside of the urban areas—just 17% of them bought in a city, compared to 21% just a year earlier. Their average down payment is 7%, and they carry an average of $25,000 in student debt.
What are we to make of these numbers? For one thing, the sheer size of this group of Americans is noteworthy. The low average down payment indicates that Millennials are not waiting to save a large down payment of 20% or more. This means that many of them are becoming homeowners as soon as they have the ability to qualify for a mortgage.
The burden of student loans will limit a buyer’s purchasing power, but it shouldn’t stop anyone from becoming a homeowner. Each $200 in loan payment will reduce the amount a buyer qualifies for by about $35,000. For the would-be home buyer, it might mean having to settle for a $400,000 home instead of a $435,000 property.
Many young people choose to keep living with their parents out of necessity; they are unable to find meaningful work, so they keep their expenses at the bare minimum until their situation improves. Others live with family as part of a plan to save a minimum down payment needed (3% can do the trick), then become homeowners as soon as they can qualify for financing.
In spite of media reports of the supposed difficulty of getting mortgage financing, Millennials seem to be forging ahead into the housing market in spite of the prevailing (false) narrative.
It is our hope that they will read stories like this one, and realize that the dream of homeownership—and the independence that comes with it—is definitely within reach.
For those of you who are already home-owning Millennials, we can assist you in transitioning into your next home purchase. Click the button below to download our exclusive ebook about buying and selling a home at the same time.
Note: for those who would like to verify our statistical references, the numbers in this article come from Pew Research and the National Association of Realtors.
Will you need mortgage financing to buy a home? We offer a wide variety of mortgage programs and tools with flexible qualification criteria. We serve the entire state, as well as the broader Pacific Northwest region that includes Oregon, Colorado, and Idaho. Please contact us today with any financing-related questions you have.
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