Is the American dream of home ownership still alive or has it changed to something else? As the millennium generation ages, the age of first time buyers is going up. According to mortgage site BeSmartee, the average age of first time buyers in the late 1970s was about 29. Today, it's closer to 33. Many millenniums say that the longer wait is a combination of lifestyle preference and fear of debt risk.
As a result of the real estate market crash, the cost of real estate is not the main reason people are putting off purchasing. In most markets, the cost of buying a home is just now returning to the cost that it was back in 2006 and 2007. However, the cost of college has increased an average of 112 percent since 2000 and much of the millennium generation graduated during the recession. Watching family and others struggle with housing costs during the recession coupled with large college loan debt is convincing this generation that home ownership is out of their reach. Even when home prices are probably the most affordable they ever will be for these people.
Another factor slowing the move to first time ownership is this generation is less materialistic than past generations have been. Although they claim to not be less materialistic, many do choose to rent in up scale neighborhoods that are more convenient and suit their instant gratification lifestyles. The high cost of rent in these neighborhoods hampers their ability to save for a down payment.
For the most part, the millenniums prefer urban living that is convenient to entertainment and shopping venues. These are typically the most expensive neighborhoods in most cities. The lifestyle also consumes most or all of their discretionary income. Even if they were motivated to buy, in these neighborhoods they won't find houses in the $100,000 to $200,000 price range that are affordable as first homes.
Compounding the fear of risk, high debt, and an expensive lifestyle is the fact that most of these people were unable to find suitable employment when first graduating from college. Many were forced to move back in with parents. Today, most people under the age of 35 are barely able to afford rent to say nothing about saving for a down payment. And with a continuing tight mortgage market, the number of first time buyers is likely to remain low of the foreseeable future.
Overall, this generation disdains debt as well, tainted by their experiences with student loans, low paying jobs, as well as what they have seen and experienced in their own families and the economy during the past five to ten years. Few will feel compelled to enter the home ownership market any time soon.
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Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for seven years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.