Millennials are in a big rush to buy a home and it’s causing home prices to shoot even higher.
Older millennials are particularly keen to purchase homes right now, but home prices have been rising higher than inflation year-after-year.
According to a recent CoreLogic report, home prices went up by 3.6% last year, and the US may see house prices increase by as much as 5.4% in 2020. CoreLogic’s chief economist reports that home sales have risen as mortgage rates have been low while family incomes have been increasing. This combination of factors has brought many millennials back to the real estate market. Now, however, home prices are on the rise and it’s becoming even more difficult for the millennials who don’t own a home to afford one.
More than half of millennials already own a home, but many other millennials are having a lot of trouble affording one. Mortgage debt is a serious responsibility to take on, which is too much for many millennials already worn down by student loan debt. For those that don’t yet own a home, a tight budget, lack of savings, and high debt are what prevents many from buying a home, according to LendEDU.
Finally, one of the bigger factors at play is the simple fact that starter homes are becoming more scarce. The average modern American family is small, with one or two children, and homes of an affordable and appropriate size are becoming more difficult to come by. The situation is made even more difficult by real estate investors who bought roughly 20% of all starter homes in 2018. These investors then rent the homes out and/or resell the house at a higher value, while some just flip them quickly. These factors have fostered a market of fierce competition.