There has been a lot of press coverage surrounding how a number of millennials have struggled to get on the property ladder, but it seems that this generation is now starting to move to the suburbs in much bigger numbers, leaving their rented flats behind.
The problem with this news, is that there is simply not enough housing stock available to meet this rising demand for suitable properties, and mortgage restrictions are causing issues too.
Some problems are seemingly easier to resolve than others, with a firm like Samer Habbas & Associates helping their clients to make a successful personal injury claim where possible, but when it comes to helping the millennial generation move into their own family homes, it seems that the lenders and the housing market, are simply not ready to meet demand.
Generation Y no longer living up to their profile
Millennials, otherwise known as Generation Y, have been the subject of widespread discussion and consternation in some circles, due to the fact that this has been a generation that seemingly shunned home ownership in favor of rented apartments in trendy urban areas.
It now seems that this profile needs rapidly updating, as this age-group have recently become the largest share of buyers, according to feedback gathered by the National Association of Realtors.
As this generation has become older, there is strong evidence in the housing market to suggest that they are subsequently returning to a more traditional life-plan, which involves buying a family-style property in the suburbs.
It could be argued that some millennials are having their hand forced by rising rents and property prices in more expensive urban areas, which is then leaving them with little choice other than to search out something more affordable further away from the city center.
As with any buyer, if you need space and you want it at an affordable price, it sometimes means that you have to cast your net wider in your search for a suitable property, until you find an area and style of property that is within your price range.
Interestingly, it seems that the younger the age of the buyer, the older the age of the property tends to be, which is some weight to the argument that part of the reason behind the trend to move out of urban areas, is partly driven by cost factors as well as a change in lifestyle and attitudes.
Lenders are a barrier to homebuyers aspirations
With plenty of mounting evidence to suggest that millennials are aspiring towards owning their own home in greater numbers as they get older, the biggest barrier to them achieving this goal, would be appear to be a lack of available credit.
It should be remembered that millennials are the first generation to reach homebuyer age since the major financial crisis that struck back in 2008. Many lenders are still nursing heavy losses, and paying billions in reparations for mortgage misconduct and other misdemeanors.
Although you clearly can’t lay any of the blame towards millennials for these past issues with the mortgage market, it does mean that this generation are suffering from the consequences, with lenders operating much stricter borrowing criteria and demanding greater down-payments.
It is estimated that there are somewhere in the region of 86 million potential homebuyers that could be classed as belonging to the millennial generation, and if the majority of them aspire to owning their own home, lenders will probably need to prepare to try and find a way of meeting these demands.
A study of urban planning and demography from the USC Price School of Public Policy, recently concluded that 2015 represented a pivotal point where urban centers reached what they termed as peak millennial, where the trend of urban living has peaked for this generation.
If their predictions are in any way accurate, this could have major implications for urban planning as well as suggesting a big buildup in levels of mortgage demand. Property developers and lenders will need to take heed of this shift in trends as it will make a major difference to demand on both counts, and could end up creating problems in the housing market.
Help to buy
In excess of a third of all home loans granted to millennials since 2014 have been Federal Housing Administration loans that are insured by the federal government.
That is a disproportionate percentage when you compare the overall mortgage volumes, and it points to the fact that not only are more millennials desperate to achieve home ownership, they are struggling to meet the high rental prices being demanded in some urban areas.
Without government help, many millennials would not be able to contemplate buying their own home, but the other major problem to contend with, is that it seems lenders or the housing market itself, are not ready to rise to the challenge at the current time.
Benjamin Kent works in the real estate market and writes on this topic for a selection of property, financial and news based blogs. Outside of work Ben enjoys golf and has also just taken up oil painting.
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