By KIMBERLEY HAAS
Addressing affordability issues by allowing for creative living solutions may be the key to getting more Millennials into homeownership.
According to the 2023 Home Buyers and Sellers Generational Trends Report published by the National Association of Realtors, the share of Millennial buyers has declined. Millennials between 24 and 42 years old made up 28% of all buyers surveyed.
The share of Millennial buyers dropped because Baby Boomers between 58 and 76 years old were on the move in the last half of 2021 and the first half of 2022. They made up 39% of buyers and were the largest share of homebuyers, taking the top spot from Millennials, who had held the position for eight years.
Overall, just over half of Millennials are already homeowners. Between 2017 and 2022, the number of Millennial homeowners increased by 64% to 18.2 million, according to RentCafe.
It is estimated that 52% of Millennials own a home.
Bennie Waller, a William Cary Hulsey Faculty Fellow in the Department of Economics, Finance, and Legal Studies at The University of Alabama, was asked by WalletHub what can be done to increase homeownership rates for Millennials. He said many members of this generation “are sitting out of the current housing market as a result of not being able to afford or qualify for the property that meets their needs in terms of size, amenities, and location.”
Waller pointed out that a $200,000, 30-year mortgage at a 3% interest rate has a monthly payment of $843. That same mortgage at a 7% rate is $1,331 a month.
Mortgage rates are currently averaging above 7%.
“This, coupled with the significant increases in housing prices, makes buying a home difficult, particularly for low- to middle-income buyers,” Waller said.
When asked the same question, Kelly Snider, a professor in the Department of Urban and Regional Planning and the director of the Certificate in Real Estate Development Program at San Jose State University, told WalletHub that Millennials are sitting out of the market because their jobs don’t pay them enough to afford a home.
Snider suggested that Fannie Mae and Freddie Mac make long-term, low-interest loans for accessory dwelling units available. She said older homeowners can move into these units while the main house is sold to younger family members to raise the next generation.
“Adding infill and missing middle housing on existing residential lots is definitely the cheapest, fastest, and most desirable way to create more low-cost housing for young families,” Snider said.
Having families live together is a solution that could potentially work. The NAR report said although Baby Boomers bought homes for a variety of reasons, they did so primarily to be closer to friends and family.
Plus, families sticking together for the financial benefit of the group is not a new concept. According to the Pew Research Center, the share of the U.S. population living in multigenerational homes has more than doubled over the past five decades. Four in 10 adults in multigenerational households cite financial issues as a major reason for their living arrangements.
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