Millennials in the Home Market
Much has been made about how millennials—“a group of 80-million-plus young adults born roughly between 1980 and 1996” according to the New York Times—are reshaping the world as they enter adulthood. One of the most adult decisions they can make is, of course, buying a house.
We spoke to First Bank’s mortgage team about how Generation Y approaches the American dream.
How are millennials thinking about the housing market?
They’re concerned about interest rates going up, and so they’re trying to get into the market now with the lowest possible down payment.
The USDA, if the area allows it, offers loans for up to 100% with no down payment. The FHA offers a loan that’s 3.5% down with down payment assistance. And Fannie Mae has loosened some guidelines. They offer a 95% loan that allows the remaining 5% to be a gift from someone who isn’t the homebuyer.
Are millennials nervous about buying homes, given what happened to the housing market a few years ago?
Some are nervous because they don’t have the jobs they thought they would have. But many millennials are eager to get into the market before prices go back up.
What are millennials looking for in a home?
Many of them are looking for the convenience of being close to urban amenities. They’re not as interested in the suburbs. They’re looking for open space to entertain—an open floor plan.
It’s also worth noting that millennials are more likely to have pets than children.
How do millennials approach the home buying process?
They’ve often done their homework and educated themselves about mortgages on the Internet. And some are going to places like Zillow.com to see what the estimated housing prices are in their potential neighborhoods.
Any advice you’d give to millennials?
Understand that it’s not as easy to flip a house as it once might have been.
But if you do find a house that you want to add to or renovate—say by creating a more open floor plan—we can help you by rolling the addition or renovation costs into your loan.