Why There Are Fewer Young Home Buyers
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Related blog post: Why There Are Fewer Homeowners Under 35
Home prices have dipped, interest rates are low, but that doesn’t mean a key group of potential buyers are ready to take the plunge into homeownership. Recent census numbers indicate young adults ages 25 to 34 just are not buying and here to explain are our real estate experts John McGeough and Anthony Lamacchia of Lamacchia Realty . Good to see you guys.
A couple of issues, if we look at this age demographic from ages 25 to 34, you’ve got unemployment student loans, maybe some tighter lending restrictions, the cash to put down for a down payment, what do you really attribute to with this age demographic not purchasing right now?
I’d say those three factors but then you also have folks that are just waiting. You know I’ve got two younger brothers, they just got engaged after seven to eight years in a relationship and they’re in their low to mid 30s, so you’ve got people like this just not ready to settle down yet that’s also pushing that home buying opportunity a little farther out, and I think that’s attributing to that as well.
Do you push them towards short sales, foreclosures, more so than another demographic?
No, I mean there’s a lot of good deals on the market all over the place because short sales and foreclosures pull down other values as well and now there’s a lot of well priced homes out there. But I think what John said is the key to this issue: the reason there’s less homeowners between 25 and 34 than there were say, 10 years ago, is people are putting off settling down, they’re doing it a little bit later and 10 years ago you could buy a place out of college, sell it two years later and make a $50,000 profit and think you were some major real estate investor, and think you’re wonderful , and now you can’t do that as easily now we’re back into more of a normal market where people have to buy and hold for a longer period of time.
And if you’re holding and if it’s not as easy how important is this age demographic to stabilizing the housing market right now?
I’d say it’s important, I wouldn’t say it’s you know, critical, because we’re not seeing, we’re seeing a decline, but those folks are still going to purchase at some point. So as long as they’re not completely tainted to buy where they still see an opportunity long term as a good investment and going to settle down with a family then that’s going to help stabilize the market. If for some reason they completely stepped out of the market that’d be a different scenario, but we’re not seeing that age get pushed out just a little bit.
And we deal with it, a ton of our clients are in that age bracket. They all want to buy homes just as much as they did 10 years ago, so it’s not like people longing for homeownership has gone down, they still want to own.
Is it harder for them?
A little bit harder, it’s definitely not like it used to be. When I referenced the example of someone coming out of college, 10 years ago if you had good credit you could get 100% financing, you didn’t have to put anything down, now you have to have a down payment, and you actually have to have good credit. It’s a little bit harder but I think it has to do more–
And you need a job, which is a new criteria. Makes it a little harder.
Right! Actually be someone who pays your bills, but I think it’s more about people who just are delaying it, and because they’re settling down a little bit later, and they’re not as excited about homeownership. You know, 8 years ago people were extremely excited about homeownership because like I said they were buying and 2 years later their property is worth $50,000 more. So now that isn’t happening so it’s not as “cool” but now as rents are going up all of a sudden homeownership is becoming more attractive again and that’s why I think we’ve seen a surge of buying.
Let’s hit the rent numbers because a lot of people say hey, I like paying rent it offers me flexibility, and would probably be similar if not around what I’d be paying for mortgage but what are the benefits of homeownership for someone who is going through this for the first time?
Well there are a number of benefits, when you have that stability, when you’re renting, yes, you get into a lease but then you’re still year to year, but it’s tough to really establish roots, do certain things to a home that you can when you’re owning, you know obviously some of those things are going to cost money but there’s for many that sense of ownership, of putting stakes in the ground, and really setting a foundation is priceless. It’s always going to be slightly more than renting even if you look at the numbers: you’ve got taxes, you’ve got insurance, always got home maintenance in New England, but long-term you’re paying down a principal, and you’re investing in the future.
And we’ve got just about 30 seconds left, in comparison with the rest of the country, is this just a New England issue with this age demographic not purchasing or is this pretty normal across the country, where do we stand?
I don’t know the exact statistics off the top of my head but my guess is it’s similar. People across the country are a little bit less excited about homeownership and that’s why they’re delaying it a little bit more and people are also getting married later than they were 20 years ago like John mentioned with his brother so I think that’s all it is. I don’t really think it’s a big deal, people still want to own a home, it’s great that they still want to and I don’t see it as a big issue.
John McGeough and Anthony Lamacchia thank you. If you don’t know these guys are with us every Friday for the Zip Trips this summer. This week you’re going to be in Groveland on Friday to talk about some housing out there as well. We appreciate it, we’ll see you Friday.
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