There have been countless articles on what Millennials, who make up 92 million of the population, want these days.
As they come of age in the world of real estate and marketing, they’ve shown themselves to be finicky consumers, most of the time with good reason. Millennials are shaping the market, and the world, to fit their needs and the needs of their future.
With growing concern for what materialism and consumerism means for the Earth’s future, the group of 20-30 year-olds has become more and more attracted to minimalism.
This could mean potential problems for the real estate market.
Recent statistics and interviews have shown that Millennials lean more toward owning dogs and renting property than starting families and buying houses. Income vs. the cost of living plays a large part in this. And the creation of businesses such as Airbnb, which provides an experience on top of a place to stay on top of additional income for home or apartment owners, has made the ability to move around quite enticing.
Renting vs. Buying
Millennials actually have a higher number of college graduates than previous generations. But earnings aren’t necessarily reflecting that education, and instead, debt has become a problem.
It’s hard and unattractive to take out loans on top of loans, and so for an individual who already owes thousands for their education, why would they want to add onto the bill with a mortgage?
Renting instead of buying a home seems like an obvious solution, except that analysts have noticed that renting costs roughly the same as buying, anyway.
So is it just the idea of owing a debt long-term? Or is it something else?
Just a few short years ago interest rates for mortgages were much lower, making home buying more attractive than renting. But if we’re at a similar price-point, then Millennials might just like the idea of not being tied down.
By renting, they can experience more of the world if they so choose, and minute responsibilities – such as the general upkeep of appliances and the home itself – aren’t on their shoulders. This could definitely be a draw for a generation that is seemingly more and more focused on the larger world problems.
Currently, the market isn’t shifting too much; but home prices are actually rising. Normally this would be good news for those in the market to sell their home. But with fewer and fewer offers being made, and a decent chunk of the population disinterested in owning a home, it puts sellers at a stand-still.
It doesn’t help that interest rates are on the rise as well. With a current rate of 4.4% for a 15-year mortgage, potential buyers may be crunching the numbers and dreading the debt.
On top of these market changes, the group of potential buyers themselves are more interested in energy efficiency than showy homes. They aren’t necessarily looking for granite countertops, but perhaps the added benefits of solar panels or self-sustaining backyards.
What does this mean for sellers?
Luckily, Millennials are projected to make up 45% of the real estate purchasing market within the next few years – that’s if they decide that settling down and owning is what they want to do. If you’re not liking how the market looks at the moment, hold out for a bit longer, and there might be a change of pace as the upcoming generation settles into income brackets that allow them to afford mortgages.
If not, they could stay on trend with renting, and that isn’t such a bad thing either. This could be a great time for potential investors to grab up properties and rent them out; or, if you’re already a homeowner looking to move or downsize, consider renting your property.
Turning an additional home, small property, or apartment into a rental option for Airbnb or VRBO could also see a good return, as travelers seem to prefer these startup businesses that give them a more personalized experience than the bare-essentials hotel industry.
Yes, it is added responsibility as a landlord. But real estate is and always has been a great investment. Keeping property in the family may not be such a bad idea, as it will always be a source of income.
When it comes to the real estate business your best bet is to talk to those who are deeply involved and experiencing the market day in and day out.
Contact a reliable realtor, pick their brain, and see what the best option could be for you – whether you’re a home owner or looking to rent.
As the culture of the Earth itself changes and directs more toward sustainability and a more minimalist approach, the market will follow – make sure you’re prepared for your own future as far as living arrangements, financial security, and investments.