With the recent COVID-19 pandemic, we have seen many changes to the housing market, including the need for more space for those who work from home. We are also seeing many younger people, such as millennials and Gen Z, choose to move back in with their families and stay for longer periods of time. Millennials make up the largest portion of first-time home buyers right now, but they aren’t buying homes at the same age and rate previous generations have. With more options available to them, affordability issues, and starting families later in life, millennial home buyers and older Gen Z have been slower to buy homes than the generations before them.
Millennials and older Gen Z are prolonging the home buying process by having more access to options and information than previous generations have had. Technology plays a big part in everyday life, and it is no different with the home buying process. You can find homes online through websites like Zillow or Redfin and have access to almost all the information you need to know, such as pictures, number of bedrooms, what kind of flooring; you don’t even have to enter the home. The number of options that are at their fingertips gives them more homes to sift through, more options to think about, and more areas to cover. Mortgages can also be shopped around for online. With easier access, home buyers now receive more mortgage quotes than previous generation home buyers; millennials have seen to get an average of 6 mortgage quotes, compared to the 3 that their parents may have gotten.
One of the biggest issues that has exiled younger adults from the housing market is affordability. Across the United States, new home buyers are being left out in the cold due to a housing shortage of nearly 4 million homes, propelling the average home prices to an all-time high. Homes today are 39% more expensive than they were 40 years ago. While wages have risen since then, they have not kept up with the increasing costs such as climbing rent prices, home prices, or tuition costs. Saving up money for long term goals, such as buying a new home, is hard to do when you have student loan payments and high living expenses.
Being able to afford to buy your own home has risen to top priority amongst millennials and older Gen Z, knocking down the idea of settling down and starting a family. With home prices already being at an all time high, younger couples can no longer afford the challenges that come with having kids, such as higher insurance, childcare, and parental leave. This higher cost of living contributes to the lack of stay-at-home mothers; families can no longer survive off one income. Many women also want to build a career and be financially secure before settling down to start a family, and women 50 years ago weren’t given this kind of opportunity. With so many couples waiting until later in life to settle down, it also pushes back the idea of buying a home.
Buying a home is a large investment, and it is a decision that many millennials are taking their time on. Whether it be due to too many decisions, affordability issues, or even the need to feel financially secure before making a long term decision, younger generations are ultimately prolonging their home buying experience.