Photo: Robert Clark
Steep increases in rent have many US Millennials ready to ditch their landlords this spring homebuying season.
Some 23 percent of Millennials are reportedly shopping for a home due to rising rents but tight inventory could derail their plans, according to the results of a recent survey of active homebuyers by Realtor.com.
It is estimated that US Millennials spend about half of their income on rent while they’re in their twenties — substantially higher than previous generations.
“We know that life-cycle events trigger housing market moves, but data from our recent survey shows that a notable number of millennial shoppers decided to start shopping for homes as a result of rising rents,” says Realtor.com in the digital release.
Over the last year, rents were up in 85 of the top 100 metro areas, which tend to be “Millennial magnets.” Nine of those metro areas posted double-digit annual rental price appreciation.
But unlike older buyers (over 55) who say they are chiefly buying a home for more privacy, Millennial home shoppers cited “fulfilling family needs” and stability as their main motivations for buying — following rising rents.
But Millennials entering the marketplace may find their enthusiasm quickly deflated by high home prices and historically low inventory levels. Bidding wars are commonplace as the supply of entry-level or starter homes dwindles, and Realtor.com says this spring’s market is likely to be “more competitive than most.”
“Record-low inventory and high prices make this housing market unique,” Realtor.com Chief Economist Danielle Hale says in the digital release.
Despite the state of the market, more and more Millennials are entering the market as first-time buyers. The Millennial homeownership rate is currently 36 percent and registered the largest gains among all generational groups in 2017, according to recent Department of Housing and Urban Development (HUD) data.
And with over an estimated 70 million Millennials nationwide, their presence in the marketplace will shape the US housing market for years to come.
Realtor.com sponsored the March survey of more than 1,000 active buyers to provide insight into both the most sought after homes as well as the underlying motivations of buyers.
Click here to read the entire release.