Depending upon which definition you accept, so-called “millennials” are those born from around 1980 to the early 2000’s. Essentially, they’re the group sandwiched between Generation X and Generation Z. Why is this important at all? One of the reasons is this group will very soon have a major impact on our economy, even more so than the Baby Boomers who were born in the mid-forties, fifties and sixties as the millennials begin to supplant their baby booming parents and grandparents. They’ve just started opening up their wallets, but, so far, have not had much of an impact in the housing market. This may change soon.
The biggest obstacle in buying a home is coming up with the down payment. Yet more loan programs are coming into the market with lower down payment requirements. The FHA program, which requires a low down payment, is one of the most widely available mortgage programs and is not restricted by location or first time homebuyer status, although first timers make up the biggest class of buyers who finance their purchase with an FHA mortgage.
Millennials may also not be ready to buy right now because they’re still very young in their careers and it might make sense to sign a 12 month lease instead of getting a 30 year mortgage. This younger group is still deciding what part of the country in which to live and making sure their career is on the right path. These are decisions we all make and looking back most of us can relate to renting while young.
Eventually however, these consumers will move from renting to buying and when they do they’ll start snapping up homes and stoking a fire under the housing market. They’re not buying right now, but both lenders and real estate agents know they’re coming.