Survey of 2,200 Homeowners Reveals Five Major Differences Between Millennials and Their Elders; Some Have Big Implications on Housing’s Future
SEATTLE — May 16, 2016 — Millennials who rent or live in their parents’ basements get all the attention. What about the ones who have already achieved the American dream of homeownership? Redfin (www.redfin.com), the next-generation real estate brokerage, recently surveyed more than 2,200 homeowners of all ages across the country to find that millennials think quite differently about their homes’ value—both monetary and emotional—than their elders do. Those differences have large implications for the housing market as more millennials become homeowners. One thing is for certain: a persistent shortage of homes for sale is yet another thing we can soon blame on millennials.
Five Ways Millennial Homeowners Are Different
- Millennials are more bullish about home prices. Eighty-six percent of homeowners under age 35 believe prices will rise in the next 12 months. And while 24 percent of homeowners 35 and older think prices will stay about the same, only 11 percent of millennials agreed.
- Millennials are less concerned about affordability. Sixty-three percent of millennials said they’ll be able to afford living in their city a decade from now, compared to just 51 percent of those aged 45 to 54.
- Youthful wanderlust prevails. More than half of millennial respondents said they’ll leave their current home within the next five years, while just about a quarter of baby boomers plan to move out that soon.
- Millennial homeowners are more likely to be “house rich” in the future. The last time annual 30-year mortgage rates topped 5 percent was in 2010. So it’s no wonder that among respondents to Redfin’s survey, no millennial homeowner had a mortgage rate above 5 percent. With home loans so cheap, millennial homeowners are privileged to inherit some of the lowest borrowing costs in modern history. Rock-bottom fixed-rate mortgages will make it easier for young homeowners to build equity compared to earlier generations. For millennial homeowners, cheap borrowing and bullish price expectations will lead to a mass generational rethink about when and how to trade up from a starter home.
- Millennials are more likely to become landlords. Once they move, 28 percent of millennials plan to rent out their home rather than sell it. By comparison, only 4 percent of homeowners 55 and older want to be landlords.
“For the lucky few millennials who can afford to buy in the current bull housing market, there’s a lot of upside to holding on to their starter homes,” said Redfin chief economist Nela Richardson. “Rising rents, short tenure clocks, bullish price expectations and rock-bottom mortgage rates make housing a good permanent investment for millennial homeowners. This preference by millennials to rent out their home instead of selling it will likely ensure that the chronically low supply of homes for sale remains a persistent feature of the U.S. housing market.”
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Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the customer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the industry’s most accurate home-value estimate, the Redfin Estimate. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commission. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $31 billion in home sales, and saved customers more than $335 million in fees, and counting.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center.