Page 28 - Green Builder Nov-Dec 2020 Issue

LATER MARRIAGES. In 1960, 80 percent of people aged 25 to 34 lived
Holding Pattern with a spouse or partner. By 2019, that number had dropped to 60

percent, according to the Census Bureau. People are also waiting longer
Millennials may want to buy homes, but not to get married—approximately age 21 in 1960 vs. age 29 as of last year.
everyone’s ready — or able — to move. And, they’re starting families later: the Department of Health and Human
Services Center for Disease Control reports that the first-time mom’s
average age has increased from 21 years in 1970 to 26 years in 2020.
HANKS TO MILLENNIALS’ emergence as a real estate buying power, Delays in those life events lead to less of an urgency to buy a home, Hankin
there’s a lot of construction work ahead for new homebuilders. notes.
Realtor.com senior economist George Ratiu notes that the housing STUDENT DEBT. Student loans topped $1.6 trillion at the start of 2020,
T market is underbuilt by about 4 million homes, based on current according to the U.S. Department of Education. Most millennials coping with
inventory. this type of post-college expense aren’t thinking about buying homes—
But although the thirty-something crowd may want to contribute to according to a NAR survey, 50 percent of homeowners age 35 or younger
that supply shortage, some of them aren’t ready yet. The financial website said they waited at least a few years before taking the plunge.
Investopedia offers five reasons why millennials can’t yet ask for keys to their Debt or no, it now takes a long time for millennials to come up with the typical
new home. 20 percent down payment needed for purchase: almost 12 years for anyone
AFFORDABILITY. How much home a person can buy is generally limited to with student debt versus eight years for those without.
25 percent of their monthly gross income. The nationwide median new home TIGHTER LENDING STANDARDS. Banks have toughened up credit underwriting
purchase price was $327,000 as of September, according to U.S. Census rules to reduce risk, including not bending on the 20 percent down payment
Bureau Housing and Urban Development (HUD) — about double that amount rule. Not surprisingly, it is taking millennials longer to accumulate enough
if trying to buy in a pricey market like California. Meanwhile, a millennial’s cash.
annual salary averaged $47,000, HUD reports. Pencil out all the figures and a BIG CITY LIGHTS. According to Pew Research, as of 2018, 88 percent of
single-person or even a two-person household usually can’t meet the payment millennials now live in metropolitan areas. Many live in regions with a larger
threshold. proportion of renters to homeowners, pushing up rental prices. In addition,
There are lower-priced areas of the U.S. where a millennial household could millennials seem unwilling to commute or even own a backyard. Home sales
make such an income work. “The question is whether millennials are willing within five miles of the center of any of the 10 most-dense cities are above
to relocate and leave jobs, friends, and family in order to buy a home,” foreign levels from 2000. But sales drop to 50 percent below 2000 if they’re for homes
exchange trader Aaron Hankin says. more than 10 miles outside a city.

MILLENNIAL MORTGAGES IN SEPTEMBER All millennials
Older millennials
Younger millennials
90%
80%

70%
60%

50%
40%

30%
20%

10%
0%
Refinance Purchase Conventional FHA VA Other
Note: Older millennials fall between 30 and 40 years old, younger millennials between 21 and 29 years old

Buying time. The number of millennials who are taking on a new or refinanced home loan, and the type of loans they’re going for (conventional,
FHA, VA or other) has held steady for several months and is expected to remain there through at least next spring. SOURCE: ELLIE MAE

26 GREEN BUILDER November/December 2020 www.greenbuildermedia.com

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