The American Dream is still attainable for the millennial generation, despite pessimistic sentiments toward the housing market. Trulia’s Housing in 2017 report revealed that millennials’ aspiration of owning a home has fallen from 80 percent to 72 percent in the past year. Approximately 83 percent of millennials are planning to purchase a home, but not in the new year; 72 percent say they will not buy a home until the end of 2018.
The idea of homeownership is within reach for millennials, but multiple obstacles are discouraging potential buyers from entering homeownership. Those obstacles include saving for a down payment, poor credit history, qualifying for a mortgage, rising home prices, inability to pay debt, not having stable employment, rising mortgage rates, and limited housing inventory.
Ralph McLaughlin, Chief Economist for Trulia, told DS News that despite mortgage rates being lower than they were in 2014, home buying millennials will still feel the impact when applying for a mortgage. “While we don’t think that rising mortgage rates will affect homebuyers much, rising rates will have an impact on those on the cusp of being able to qualify for a mortgage—many of which are likely to be millennials. Still, rates remain lower than they were two years ago. The higher rates then didn’t seem to affect buyers much then, so we’re not worried about rising rates,” he said.
A lack of inventory has been a crippling factor in homebuying among millennials. While 2016 was a year of low inventory and high competition, 2017 is expected to show an increase in housing inventory and moderate price appreciation.
McLaughlin expects to see a rise in homeowners over the next few years, and he encourages real estate agents to engage in candid dialogue with millennials when it comes to the homebuying process. “We’ll likely see a slow and steady increase in the share of all homebuyers who are that age over the next five years. Real estate professionals should focus on having honest conversations with them about whether home buying is actually a good financial investment given their personal situation,” he said. “Millennials tend to move around a lot simply because they’re young, so in some situations, it may be better for them to rent. Having honest conversations with millennials and giving them sound advice, even if it isn’t in the immediate best interest of the real estate professional, is more likely to reap benefits in the long run for both the professional and young prospective homebuyer.”