The property market in the USA has been on the rise recently. The buoyant economy certainly has a role to play in this. The Fed has still kept the interest rates pretty low to encourage investment and the demand for properties for sale in the USA is still higher than the supply.
However, there’s been a distinct lack of interest from Millennials in the property market. While rising home prices are good news for home sellers who are eager to sell apartments in the USA fast, it is not necessarily what Millennials want.
The national realtor, Redfin, reported that affordability was a big thing among home buyers, especially among those in their 20s and early 30s. While 28% of buyers across the country said prices were rising or were too high, among buyers aged 35 or younger, 32.5% reported that affordability was their biggest concern.
Younger people – Millennials – are finding it hard to save money for home purchases, and find it hard to keep up with the rising home prices. While salaries across corporate America have increased since the last few years, it hasn’t been enough to keep with the rise in home prices.
An average home buyer in the USA looks to buy homes that are 2.6 times their annual pay, which is the highest it has ever been. This is in spite of the higher rates of employment and low mortgage rates.
Indeed, a sizeable number of Millennials prefer to live with their parents. In fact, according to the Pew Research Centre, 36% of Millennials live with their parents, which is the highest it has been in a while – indeed, the highest in over 130 years.
The trend of Millennials – young people in their 20s or early 30s – living with their parents was brought about by the Great Recession of 2008. Since then, staying with parents has become the most popular living arrangement for young people between the age of 18 and 34.
This is certainly not a positive development for the real estate industry. Millennials are the biggest section of the US population and certainly one would want them to show much greater involvement in the property market than they have been showing currently.
There is also a new trend among young people in America to delay marriage and having kids. This is certainly bad news for homeownership in America.
Home sales have declined by 3.2% in July, according to the National Association of Realtors. The number of listings have decreased by 5.8% from a year ago.
In California, the most populous state in the country, home sales were down by 13% in July. Sales of single-family homes and condos – which are the sort of properties preferred by first time buyers – have declined by 18% compared to a year earlier.
All of this points out to the fact that while the property market does seem robust right now, because of the non-involvement of Millennials in the home buying process, there could yet be a slowdown in the future.