Flies in the ointment
While there are some demographic and financial factors spurring a potential Millennial tipping point, there are also some headwinds.
Traditionally, the biggest obstacles for first-time
homebuyers are the down payment and closing costs. Many first-time homebuyers are not
aware of the fact that, in addition to the down
payment, they also need to come up with a
year’s worth of taxes up front, and a year’s
worth of homeowner’s insurance up front, on
top of other fees and closing costs.
An improving market only makes this hurdle
even more of a challenge. Five years ago, in a
distressed market, it was not unusual for sellers
to pay 6 percent or more towards closing costs
in order to get a first-time homeowner in the
house. Today however, significant seller concessions are not nearly so necessary to make deals happen.
These days’ sellers are generally less likely to give as many
concessions, and when they do
those concessions are more
likely to be closer to 3 percent.
MIREALTOR® | DECEMBER 2015
10
Arguably the most
significant drag on
Millennials entering the
housing market is the tremendously high amount
of student loan debt that
many are burdened with.
This hurts them both in
terms of qualifying, and
in terms of being able to save up enough to
purchase a home. Skyrocketing amounts of
student loan debt present a sizable structural
obstacle not only for Millennials, but for the
nation as a whole.
Looking forward
So where do Millennials stand now with respect
to the housing market, and where are they
headed in the months and years ahead? While
precise forecasts are difficult to pin down, most
projections suggest that it is going to take Millennials longer to get into the housing market
than the generation that they are so often com-
pared to in terms of size and influence: the
Baby Boomers. While it was not uncommon
to see Boomers enter the market at age 25 or
younger, Millennials are much more likely to be
first-time homebuyers after the age of 30.
Millennials are much
more likely to be firsttime homebuyers after
the age of 30
In Michigan, Millennials who are buying their
first homes are primarily purchasing in more
urban areas and in emerging neighborhoods
and growing communities like Royal Oak, Ferndale, and Berkley. We are also likely to continue to see Millennial buying heating up in a
few select areas of Detroit where low prices
and appealing opportunities present a
combination of affordability and vibrant
up-and-coming atmosphere. Millennials tend to be attracted to smaller
dwellings and homes with fewer
upkeep responsibilities.
For Michigan Realtors®
looking to prep