Photo: David Sawyer/Flickr
A severe national shortage of homes for sale is likely to snarl spring homebuying plans for some US Millennials.
And record-low inventory levels and high demand are driving up home prices in most major “Millennial hotspot” housing markets, according to a report released today by Realtor.com.
Yet while the overall number of Millennial homebuyers has been slowly on the rise in recent years, it is still “underperforming.” In other words — many Millennials are looking, but they’re not buying.
“Millennials want to buy, but record-low inventory is making it extremely difficult,” says Danielle Hale, chief economist for Realtor.com, in the digital release.
The combination of low inventory, escalating home prices and high demand have made San Jose, Seattle, WA, Salt Lake City, UT, Minneapolis, MN and Omaha, NB the most “challenging” housing markets in the country for Millennial homebuyers.
“Our analysis shows millennials are facing challenges in both established markets such as San Jose and Seattle, as well as more recently popular areas like Omaha and Salt Lake City,” says Hale.
The housing shortage is proving to be more acute in these top five metros compared to the rest of the country. Supply in these five metros is nearly times lower than the rest of the country.
Compared last year, active listings in these five metros are by 8 percent below the national average and prices are 8 percent higher than the national average.
Despite the difficulties, first-timers are optimistic and more than willing to weather the challenges this spring has to offer.
Unsurprisingly, Millennials are likely to have the most difficulty time buying in the the tech hub of San Jose, CA, one of the hottest housing markets in the country. San Jose’s median home price is $1.2 million compared the national median price of $280,000. And the inventory shortage in San Jose is pushing non-tech industry workers to outlying markets in search of affordable housing.
But there are a few silver linings on the horizon for Millennial homebuyers.
“The economy is carrying significant momentum, and job creation remains very robust, providing ways to expand savings for those who have swatted away student debt, and allowing young buyers to qualify for bigger mortgages. There are new mortgage products coming onto the market providing more options to first-time and young buyers who can’t come up with a big down payment,” Realtor.com Director of Economic Research Javier Vivas tells BuzzBuzzNews.
To determine which Millennial “hotspot” housing markets could prove to be the toughest for Millennial homebuyers, Reatlor.com analyzed the largest 60 metros with significant Millennial populations. (Millennials averaged 14.6 percent of the total population in these markets compared to the national average of 13.4 percent.)
Each market was deemed a “Millennial hotspot” due to their strong economies and high-paying jobs — two major lures for Millennial buyers. Also, based on search data, Millennials in these markets accounted for an average of 25 percent of total home searches — higher than any other generational group.
Metros were then ranked based on housing availability and affordability.
Click here to read the entire release.