Millennials, tired of being locked out of the market, are ready to jump in...no matter the rate!
Taken from the geniuses over at Inman.com, this article reflects a very interesting survey showing the loops that millennials are seemingly ready to jump through to achieve the American Dream- homeownership!
Millennials doing millennial things
We have some good news regarding rates for 2024- a far cry from the constant rising that 2023 saw, where we peaked at over 8% just a few months ago! Nonetheless, even if rates go the other way- back up to 8% (or beyond)- millennials seem ready to just jump in and do it. I am seeing a thawing market here on Staten Island with all of the good news- I've picked up 5 or 6 buyers alone since January 1st! People are out in the market looking to purchase. Homes I've had for sale for a few months are seeing renewed interest. 2024 is looking to be an exciting time for Real Estate!
Looking to learn about the housing market? Reach out at any time HERE or feel free to setup a Discovery Call. In the meantime- let's talk about this crazy survey!
Millennials Going Nuts
Let's dive into what exactly millennials are looking to do- and is this trend emerging on Staten Island as well?
#1: How High Will They Go?
#2: What Are They Doing To Save Money?
#3: Is This Happening on Staten Island?
#1: How High Will They Go?
From the article: “More than 3 in 4 millennial homebuyers (78 percent) would consider accepting an interest rate that’s higher than the national rate of about 7 percent,” the survey read. “What’s more, 65 percent would accept an interest rate of 10 percent or more, while 23 percent would accept a rate of 15 percent or more.”
Wow. As a Staten Island Realtor, I can tell you that 2023 was completely lackluster. Why? Rates, rates, rates! Midway through 2022, rates crossed the 3% mark, 4% mark, 5% mark and even 6% mark quick. Sellers, whom since 2021 were throwing their houses on the market at ridiculous prices (and then getting those ridiculous prices) were left in a whirlwind. Realtors, many of which had no experience in a normal market, were caught in said whirlwind as well. Houses simply weren't selling. A buyer wouldn't mind overpaying at a ridiculously low interest rate with insane competition. But now with prices the way they were AND a 7% interest rate? Nope. Houses sat. Realtors quit. Buyers didn't buy.
Fast forward to 2024. Buyers are ready to go- apparently through hell or high water. Let's look at some staggering stats from the survey:
"Millennial homebuyers aren’t willing to stop with higher interest rates — of the 1,000 survey respondents, 80 percent said they’d pay above asking price, 85 percent would purchase a home sight-unseen, 27 percent would live near an airport and more than 60 percent would purchase a fixer-upper with asbestos (67 percent), mold (62 percent) or termite issues (62 percent)."
Yes- asbestos, mold or termite issues! Times are tough! According to the survey, 78% of millennials still believe owning a home is part of the American Dream- and are desperate to make that happen.
#2: What are they Doing to Save Money?
It's no secret- buying a house costs money. Yes there are grants. Yes there are different types of loans (you don't have to come up with 20%- it's a myth!) But no matter which way you shake it- you need some money up front. Especially in a market like Staten Island, where the average sale price for December 2023 was $720,000. Don't forget- we're also battling record high inflation and just overall difficulty to get by. Saving money, for many, is simply out of the question. So, how are we getting said money?
According to the survey, this is how we're doing it:
"To be truly competitive, millennial buyers said they’d get another job (32 percent), move to a rural area (21 percent), rent a room in their future home (17 percent), skip other debt payments (16 percent), or create a GoFundMe (15 percent) to afford housing costs."
So they're willing to get another job- that's a lot to take on. Even more to take on? The fact that they'd be willing to rent a room in their future home! Another piece of craziness? Skipping debt payments so they can pay their mortgage! Talk about spreading yourself thin to make a dream happen! One last bit from this article regarding saving statistics:
"To get their savings up, millennials said they’re cutting back on spending (36 percent), taking on extra jobs (36 percent), moving in with family (23 percent), taking money from retirement funds (17 percent) or receiving gifts from family and friends (14 percent)."
Either way you shake it- millennials are making moves so they can (actually) move.
#3: Is This Happening on Staten Island?
I don't have empirical research on this- kill me now. But I'm down in the trenches night and day working with sellers, buyers, renters, investors and whatever else exists out there. I'd say, from my personal experience in this realm- yes.
Millennials are definitely cutting back, picking up extra jobs and saving money for houses. They're also asking family for money, which is a big thing on Staten Island- it's not uncommon in the slightest for the family of a young couple starting out to gift them some significant funds in order to crack that threshold for a reasonable down payment on their first house- it's just difficult out here without that!
You want some empirical research? Fine, I'll oblige- 3 out of the 6 buyers I picked up this month are receiving significant gifts from their family in order to get them on their feet! Like I said- 50%!
With that being said, it's also perfectly normal and common for a buyer to dig in, work hard, cut back, save up and push their dreams back in order to get enough for that down payment.
So it's happening. Millennials are sick of sitting on the sidelines and are ready to get their white picket fence that comes with a hefty monthly bill. The question is- what will the rate be!?
I, Joseph Ranola, am an Associate Broker at Matias Real Estate, located at 418 Port Richmond Avenue.