Here’s a fun quote: “Millennials: Yes, they eat avocado toast. Yes, they love their phones; and yes, they’re shopping for homes,” from a recent Colorado Biz magazine (cobizmag.com) article.
According to the National Association of Realtors (NAR), Millennials make up the largest portion of homebuyers – 36 percent. “Despite being strapped with unprecedented levels of student debt and experiencing the 2008 housing market crash, millennials are ready to leap into homeownership,” the article continues.
Here are 5 ways they can increase their chances of purchasing a home.
1. Pay off student loans and get pre-approved for a mortgage before you start the search.
“It’s much harder to save for a house if you’re still paying off student loans,” the article states. This may mean you’ll have to cut back on luxuries and dig deeper to put some money aside for a down payment.
2. Decide if you’re buying a starter home or your forever home.
“It may be tempting to think only short-term,” the article suggests, “but don’t buy a home that will only work for you for two or three years.” Depending on market conditions, you may lose equity in your home over a short period of time, so it’s better to buy with a longer timeline in mind.
3. Decide on your must-haves and narrow down your search location
Creating a list of three-to-four must-haves makes your search easier and eliminates homes you don’t even need to consider. Limiting your location to areas you can afford, thinking about your commute, resale values and school districts will help you further focus on what’s important in your home search.
4. Check out Down Payment Assistance Programs to help you buy.
Indiana and many other states offer a variety of down payment assistance programs. Ask your lender and real estate agent about them. These programs can help with the down payment and sometimes closing costs, and will reduce your mortgage payment by doing so.
5. Understand that as a buyer, you don’t pay your Realtor’s commission.
According to the NAR study, only 61 percent of Millennials are working with a Realtor to find their home. This may reflect the fact that 80 percent of Millennials are first-time homebuyers and may not know that sellers pay the buyer agent fee/commission, not the buyer.
Interestingly, Millennials are also aware that owning real estate “can be a viable path to financial freedom.” Therefore, some 52 percent of them are more likely than older generations to purchase a multi-family home, according to Colorado Biz magazine.
“In spite of the challenges Millennials face, an overwhelming majority believe purchasing a home is part of the American Dream. Their path might be rocky and filled with holes in their roof, but Millennials are still finding ways to break into the housing market,” the article concludes.
If you are a Millennial hoping to purchase your first home, please contact me. I know about programs for first-time buyers, many Down Payment Assistance programs, and affordable homes in many parts of Central Indiana.