Stereotypically, millennials in the process of buying their first homes are spoiled and entitled, expecting that homeownership will come their way with minimal effort. But statistics tell a different story.
“Young buyers are debunking the lazy millennial myth by working harder during the homebuying process,” says Manny Garcia, a senior population scientist for Zillow, the national real estate firm.
Nearly half of all first-time buyers are millennials -- people born between 1981 and 1996. As Garcia says, they are very proactive when it comes to homebuying.
“They’re more likely to contact at least three real estate agents, and they’re more likely to make at least two offers on homes,” he says. What’s more, if they’re denied a mortgage the first time, they typically reapply elsewhere until they’re approved.
Why are millennials so likely to persevere to reach homeownership? One factor is that they’re highly motivated to escape their rental units due to high rents and the desire to be independent of landlords. Also, they’re in their prime childbearing years, when “nesting” is a priority.
Garcia describes millennials as a “massive generation,” noting they now outnumber their baby boomer parents’ generation. But the path to first-time homeownership for millennials is now more arduous than it was for their parents.
“Affordability is the greatest hurdle for first-time homebuyers. It now takes nearly 12 years for a typical first-time buyer to save up for a down payment, compared to nine years prior to the pandemic. Meanwhile, the typical monthly home payment has more than doubled in that time,” Garcia says.
Young adults still on the hunt for a first home are often envious of peers who managed to land a property when mortgage rates were much lower during the worst of the pandemic.
“They’re jealous of friends who had more buying power when rates were much better a few years ago,” says Dorcas Helfant, a past president of the National Association of Realtors (nar.realtor).
Some wannabe owners are so frustrated by all the barriers to buying that they’ve given up in frustration. This is reflected in new numbers from the Mortgage Bankers Association (mba.org), which reports that demand for home loans has fallen to a 27-year low.
“Prospective buyers remain on the sidelines due to low housing inventory and elevated mortgage rates,” says Joel Kan, an MBA economist.
Still, there are plenty of young adults who’ve dedicated themselves to buying a first property, no matter the barriers. Take the case of a married couple of 35-year-olds who just purchased a modest bungalow with a newly renovated kitchen and a large backyard deck in Idaho.
“We hated having to take a 7% mortgage, but we project that in the future, after rates eventually fall, we can refinance. Meanwhile, we can enjoy the pleasures of a real house rather than being stuck in a shoebox apartment,” the wife says.
Helfant doesn’t know the Idaho couple in this example. But she encourages those highly motivated to buy a property to take the first step and arrange an in-person meeting with a mortgage banker.
“Your goal at this original meeting is to get a good feel for your borrowing capacity so you’ll know how much you could afford to spend at current mortgage rates. Lenders will chat with you by phone, email or text. But you’ll get taken a lot more seriously if you make an appointment and show up at their office,” she says.
Due to high mortgage rates, many first-time buyers must temper their expectations. For instance, buyers who have been hoping for a two-car garage might have to accept a one-car garage or no garage at all. Likewise, they might need to accept a kitchen with flooring and countertops that need replacement.
“You can accept a property that needs cosmetic work such as painting or carpeting. But if you’re a busy, two-career couple, you should be very cautious about taking on a ‘fixer’ that would require extensive remodeling,” says Helfant, who co-owns six Coldwell Banker realty offices in Virginia.
Here are a few other pointers for buyers in pursuit of a fair deal:
-- Consider seller clutter an opportunity.
It’s not unusual for a property to hit the market in a cluttered condition -- a definite turnoff to most potential buyers.
But Helfant says sharp home shoppers realize it’s possible to get a fair deal on a cluttered home, assuming they’re capable of looking beyond the accumulations to the property’s inherent structure and floor plan.
“The idea is to picture the house as if it were vacant and then decide if it has the ‘good bones’ you’re looking for,” Helfant says.
-- Keep an open mind about unusual decors.
“Of course, people are free to paint their entire interior Pepto-Bismol pink. But they shouldn’t expect buyers to want their house if they do something that eccentric,” Helfant says.
Just like the cluttered house, the flamboyantly decorated house offers opportunity for people with vision to obtain a property for a very favorable price.
“People with the ability to see the potential in this type of a house can really find a diamond in the rough,” Helfant says.
-- Don’t automatically reject a place based on online images.
Like some attractive people, some good-looking homes are simply not photogenic. Or possibly the photographers who take their pictures don’t know how to portray houses well.
Either way, you could be the winner if you’re willing to visit a home that others won’t tour because of unfavorable photos.
“A wonderful and well-priced surprise could await you when you open the door of a house others have missed,” Helfant says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)