There are reportedly 81 million people in this country that fit into the definition of being a “millennial.” It is also reported that over 80% of this group of people are not able to enter the housing market and purchase a home at this time…and…maybe not even in the foreseeable future. Find out why…read more.
1] This group will be replacing the baby boomers.
2] They are typically born between years 1982 – 2000.
3] As I said before, there are 81 million of them in the U.S.
4] They have typically been plugged into technology devices since the age of 5.
5] Most of them as it has been suggested will have 5-6 career changes during their working years .
Here are there problems: Short on savings and burdened by debt!
Most American millennials will struggle or even give up trying to be a “first time” home buyer. One report I read stated that most lack adequate savings for a down payment toward a 1st mortgage. That report indicated the rental market may be strong within this age group for many years. Some have college student loans in excess of $75,0000-$100,000 being reported on the day of their graduation.
Another factor is the steady rise in home values over the last few years across much of the nation. Just a few years ago, I could show fix-r-upper homes [Foreclosures & Short sales] in the $80,000-$100,000 price range. Today its hard to find something in the $150,000’s in the market.
Another report I read a few weeks ago indicated that the majority of millennials aspire to own a home. This mindset and financial realities can be troublesome to say the least. Even those that are diligent at putting back monies every pay check…are still falling short of the normally 25% down for conventional mortgages.
There is some hope.
FHA is a way for a cash strapped borrower to obtain financing. The good part is that FHA guidelines allow a buyer to put little to no personal money down, instead they require a seller to contribute 3-5% of the selling price back to the buyer for their closing costs. Not all sellers like that requirement and either reject flat out, or stipulate it gets added on top of the previously agreed sales price.
Another method is gifted money from a parent or relative. Years ago this was not allowed by most lenders, instead they wanted the actual borrower to earn the down payment themselves, as a way to minimize their risk of default. That has now made a complete turn around.
There is some hope, however the scary part for most millennial’s is dim for at least another 9 years, which is the time frame most student loans get repaid. Others with only moderate income, simply have to put the extra pennies away in savings, for years and hope that affordable housing will be available.