First-time homeownership for Millennials is so difficult—pause for a “Match Game”-worthy “How difficult is it?”—that efforts by this youthful demographic to buy homes is being thwarted by significant shortages in inventory.
Realtor.com acknowledged the imbalance between Millennial homebuyer desires and available properties by offering its list of the toughest housing markets for Millennials. Not surprisingly, the top two markets are high-tech hubs that are notorious for being among the most expensive: San Jose with a median list price of $1.24 million and Seattle with a median list price of $553,000; the national median list price is $280,000. Both cities have sizable Millennial populations, with 14.3 percent in San Jose and 15.4 percent in Seattle.
However, the other top five markets on Realtor.com’s list are not known for their you’ve-got-to-be-kidding home prices: Salt Lake City (median list price of $394,000), Minneapolis (median list price of $283,000) and Omaha (median list price of $283,000). Millennials average about 14 percent of the population within these three markets, but the lack of entry-level homes is keeping them out of the market. All told, Realtor.com stated the shortage in these five markets is severe, supply nearly three times lower than the rest of the country: 5.7 listings versus 16.1 listings per 1,000 households.
“Millennials want to buy, but record-low inventory is making it extremely difficult,” Danielle Hale, chief economist for Realtor.com. “Despite the difficulties, first-timers are optimistic and more than willing to weather the challenges this spring has to offer.”
But it might be a rough spring for Millennials. Another data report from
Zillow determined there are nearly 9 percent fewer homes on the market than a year ago, with the majority of properties priced too high for most first-time homebuyers. In fact, more than half of all homes for sale across the U.S. are at the high end of the market, with only 22 percent priced at entry-level.
"This year's home-shopping season is shaping up to be even crazier than last, and sadly, the group that will have the hardest time is first-time and lower-income homebuyers," said Zillow Chief Economist Svenja Gudell. "These buyers will be competing for the few entry-level homes on the market, which are also the ones appreciating the fastest because of extremely high demand. One way to take the edge off would be an increase in inventory, but that is easier said than done."
And it doesn’t look like home prices will be falling anytime soon. Zillow found the national home value rose 8 percent since March 2017 to $213,146. And renters are not getting off easy: median rent across the nation rose 2.7 percent over the past year to a median payment of $1,447 per month.
One could imagine there would be additional available inventory if more people moved from their homes, but a survey of 1,000 adults by the online self-storage marketplace
Sparefoot found 67 percent of people would definitely or probably move if the process wasn't such a hassle. And Millennials are particularly eager to move: 32 percent of them said they moved in the past year, compared to 15 percent of the general population.
But that creates a Catch-22 of sorts: 37 percent of respondents said they were moving for more affordable housing. Yet finding such residences only complicates an already chaotic environment where affordable homeownership options are elusive.
Then again,
Bankrate.com offered its
own survey yesterday that found 79 percent of homeowners have no plans on moving in the next decade while 62 percent of homeowners insist they have no plans to move at all. Go figure!
