Survey: Millennial Sentiment Trending Positively About Purchasing Homes
John Jordan | July 2015
MIAMI—Realtor.com, a leading provider of online real estate services operated by News Corp, recently revealed that Millennials have become more positive when it comes to taking the plunge into home ownership and are primed to gain market share in the second half of the year.
The finding was based on the results of its consumer behavior survey of more than 12,000 respondents conducted from Jan. 1, 2015 to June 15, 2015.
Jonathan Smoke, chief economist for Realtor.com, revealed an in-depth analysis of these survey findings during the Mortgage Availability for Millennials and Other First-Time Buyers panel discussion at the National Association of Real Estate Editors conference in Miami on June 25.
“Despite the slow indicators we saw earlier this year, 2015 is on pace to be one of the best years for housing since 2006 due to strong sales and higher than predicted home prices,” said Smoke. “Additionally, we’re observing an uptick in millennial traffic and sentiment that we expect will result in more first-time home buyer sales in the later part of the year.”
Smoke went on to explain that first-timers are especially critical when it comes to the health of the market. “Historically, they’re the largest demographic of home buyers and can have a dramatic impact on housing,” he said.
Since the beginning of the year, Realtor.com has observed a slight increase in older Millennials—between the ages of 25 and 34 years old—visiting its website and mobile applications with the goal of buying a home. In the first half of June, Realtor.com saw its share of traffic represented by older Millennials looking for a home to purchase increase to 23%, as compared to 21% in January. In mid-June, it also observed its share of those looking for property to rent decrease to 20%, from 26%in January.
Another revealing metric is the number of Millennials who intend to buy a home within the next three months. In mid-June, 65%of 25-34 year olds responding to the survey indicated that they intend to buy a home within three months, up from 54 % in January. Additionally, older Millennials and first-time buyers are very optimistic about buying. Both groups are slightly more likely than the average buyer to say that they are “very likely to purchase within the next 12 months.”
“Last year, first-time buyer market share decreased as the year progressed and dropped all the way to 27%in the summer, according to data from the National Association of Realtors,” stated Smoke. “This year, we’re seeing an increase in Millennial demand that points to a strengthening first-time buyer demographic. As the economy continues to grow over the next few years, we can expect first-timers to return to a healthy level of 40%of the market. A return to that level would add approximately 15% to the number of total homes sold.”
In the first part of the year, Millennials were held back by some significant market challenges and were especially impacted by the lack of affordable inventory. Forty-one percent of older Millennial homebuyers cited that they “have not yet found a house that meets their needs” as the biggest factor holding them back from a purchase. Other reasons included difficulty finding a good house within budget, not spending enough time looking, needing to improve credit score, lacking a down payment, and currently being in a lease.