Rising rents push millennials to buy a home

Compared to prior cohorts, millennials have been slow to buy a home, but with rents soaring into the stratosphere homeownership now seems more advantageous.

At least that’s what a recent national survey found: The survey revealed family needs and rising rents are motivating millennials to jump into the market, even though they’re well aware the inventories of homes for sale in Santa Clarita and pretty much everywhere hover at record lows.
This year, the typical spring buyer is hunting for a three-bedroom, two-bath home with a garage and up-to-date kitchen, according to the survey released recently by realtor.com.

“Although record-low inventory and high prices make this housing market unique, some classic features still top most shoppers’ wish lists,” said Danielle Hale, chief economist for realtor.com. “At the same time, we found some clear differences in priorities.”

For instance, older buyers are concerned with privacy and being able to age comfortably, while millennials place more emphasis on family needs, stability, and personal expression.

The survey provided insight into both the most sought-after homes as well as the motivations underpinning what shoppers are looking for.

The survey found many commonalities among homebuyers of all ages.

In fact, 44 percent of all respondents said they were looking for a three-bedroom home and 93 percent of respondents wanted at least two bathrooms.

Additionally, 27 percent of all buyers rate a garage as one of the most important home features, ahead of an updated kitchen, 24 percent, and open floor plan, 20 percent.

According to the survey, more than 20 percent of buyers 55 years and older said that privacy – having a space solely of their own – was their main goal for purchasing a home. That was followed by their motivation for physical comforts at 18 percent and stability, at 15 percent.

By contrast, family needs took precedence for younger buyers. Fulfilling family needs took the top spot for millennial buyers, at 17 percent, followed by stability at 14 percent and personal expression at 13 percent.

Only 12 percent of buyers younger than 55 cited privacy as their chief priority. Only 9 percent of 35- to 54-year-old buyers and 6 percent of 55 and older cited personal expression as a main goal for purchasing a home.

Twenty-three percent of buyers between 18 and 34 years old reported rising rent as a trigger for their desire to purchase a home – more than any other option. This corresponds with steep increases in rents across the country in recent years, especially in many high-cost urban areas that have become magnets for millennials.

HUD data shows that rents were up in 85 of the top 100 metro areas, including nine metros where rents were up by a double-digit percent from a year ago.

Among millennials who expressed a home-style preference — 11 percent didn’t — contemporary and colonial homes took the top spots, each favored by 10 percent of respondents.

On the other hand, ranches are the most popular home style for buyers 55 and older, favored by 28 percent, followed distantly by contemporary homes at 12 percent. Only 6 percent of millennials favor ranch homes.

For the full results, visit www.realtor.com/research/rising-rents-push-millennials-to-become-homeowners/.

M. Dean Vincent is the 2018 chairman of the Santa Clarita Valley Division of the 10,300-member Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.

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