Minneapolis Millennials who prefer buying a home are facing financial constraints that blunt dreams of homeownership.
June 6, 2014
Buying a home is being delayed by Americans under the age of 35, according to the Census Bureau. Down from 42 percent in 2007, the report shows that national levels of Millennial's who own thier own home hit a new low not seen since 1982, when the agency began tracking homeownership by age. It's not for a lack of desire; 90% of prospective Millennial generation homebuyers want to buy a homes, yet find renting their only viable option, according to a recent survey from Fannie Mae.
Dodging one clear definition, let's go with Pew Research's profile of a Millennial: "Now ranging in age from 18 to 33, they are relatively unattached to organized politics and religion, linked by social media, burdened by debt, distrustful of people, in no rush to marry— and optimistic about the future." Being the bulk of our future homebuyers, the Millennial generation is commanding the focal point of several real estate studies.
Prospective Millennial age homebuyers currently renting in the Minneapolis area find the costs of living affordable and good job opportunities to help reduce education debt. Compared to national averages, Minneapolis offers reasonable rental rates, inexpensive public transit, jobs whose starting salaries outpace loan debt, and great shopping choices for life's bare necessities.
Housing analysts glean from Fannie Mae's National Housing Survey that the majority of younger renters would prefer owning their own home both for a quality lifestyle and a financial investment. The buying time line is simply being delayed among many in the younger millennial generation. Tighter credit from lenders creates a hurdle some cannot jump and gain the status of homeowners just now.
Millennial Buyers Incumbered With Student Debt
Many younger perspective home buyers face staggering student debt that slows down their ability to set aside funds for a home purchase. For young couples, often just one or both of them graduated with their master’s and I’m still paying off mine.
Even individuals with lower amounts in student loan debt find that affording a home in the Twin Cities still requires considerable effort and planning. Single-family homes that run under $200,000 are few and typically have many bidders, which means you need to have as much cash on hand as possible many times to win the bidding.
HURDLES TWIN CITIES MILLENNIALS MUST OVERCOME TO BUY A HOME
"When we surveyed Millennials, they cited several barriers to homeownership, especially access to financing. Mortgage lending is getting a little less tight, with lenders approving buyers with a little lower credit score and who have less of a downpayment," said Steve Deggendorf, a Fannie Mae senior director.
Many Millennials simply can't come up with the hefty 20% down payments.
Equiped with an education for a great job but burdened with college debt.
Missing a history of established credit, many Millennials lack sufficient credit to qualify for loans.
Heightened need for geographical flexibility due to career moves.
Realistic that homeownership can fail due to witnessing the housing meltdown.
Have grown used to the convince of multigenerational living and opt to remain in their parent's home.
Cultural Riches in the Twin Cities Draw Millennials
Millennials living in the Minneapolis metro average a take home pay of $43,000, which is drawing many of the younger generation seeking employment. With their high earning years ahead of them, Technology and other high paying industries offer the ability to save up for a home down payment. In an January 28, 2014 article titled 11 Best Cities for Broke Millennials, Estately says: "A Twin Cities also have a lot going for them culturally, which is also important to Millennials. Young people are flocking to the urban core".
Younger renters consider haing a sufficient home down payment and the ability to buy with a great credit score to be their top obstacles. The presence of student loans exacerbates down payment and existing debt concerns, delaying the chances of obtaining a home mortgage to buying a home. Younger renters who cannot buy a home due to poor credit scores have more pessimism over their ability to get a loan. The majority of younger renters report having insufficient assets to cover a 5 percent down payment plus closing costs on a typical starter home, according to the survey.
Minneapolis Millennials Have a Positive Outlook About Buying a Home Someday
Millennials seem to have a buoyant perspective that even though they see a tough road to financing homeownership, they remain positive that they can obtain it some day according to Fannie Mae. "The vast majority still plan to own someday; about half plan to buy a home the next time they move. However, a smaller share than last year say that their primary reason for renting now is to prepare for homeownership."
Increases in the younger generation who believe that the rewards of homeownership are well worth saving up for run high. The discipline of Millennials who spend less on discretionary items in order to enjoy the pleasures of owning a home in the future is remarkable.
** Download Fannie Mae's report titled National Housing Survey 2014
Download Pew Research's Report titled Millennials in Adulthood Delay Buying a Home
The light at the end of the tunnel is so bright it's almost blinding. Home sales are in an upward trend, and mortgage financing is easier to obtain. Progress is slow but clearly positive." ~ Sioux City Journal
If you want to but together a plan to buy a Twin Cities home, I would love to help you. Call me at 612-396-7832. Whether you are a Millennial first-time buyer or a senior buyer, the privelege of owning your own home never tires.
Jenna Thuening, a Twin Cities residential Realtor loves to help Minneapolis Millennials avoid postponing their chance to buy a home.
11200 W. 78th St
Eden Prairie, MN 55334 Phone: 612-396-7832
Jenna's home page: homedestination.com
If I'm out in the field, you may quickly reach me by email: email@example.com and note how I can help you, or leave a message on my voicemail and I will return your call as quickly as possible.