Spotting The Millennial Homebuying Myths
The Savvy Synopsis
So, tell me what they want--what millennials really, really want? Whether you are a millennial ready to buy a home or preparing to sell to one, what are the typical feelings amongst millennials when it comes to buying a home? What myths and realities are actually at play here in the Triangle when it comes to millennials trying to buy a home?
When you think millennial, you might think of someone young and trendy or you might think of someone you know who is a millennial and whatever character traits they have or you might just think about you and what you most want. What do millennials want when it comes to buying a home? What are they most interested in?Think millennials are all going after the hip condos downtown with lots of walkability? Some might, but most millennials that Angie and her team are working with are looking for a home that they can grow into long-term. The majority of the millennials are looking toward the single-family home now, yes, even in the suburbs. Remember: millennials are not 21-year-olds anymore! Many of them have a kid or two and are well into their careers, which may be why millennials are becoming responsible for more than half of home purchases.
What stands in the way of buying a home for millennials? Student debt is often talked about in the news, but is that what most holds them back? Angie’s seen low credit scores and credit card debt become the bigger barrier. Sometimes finding the right mortgage lender and financing options will help. But is it enough to compete with the buying power of the Baby Boomers?
Certain areas and price points will have multiple offers on a home. Competing can be tough, especially when going against a buyer who has more cash on hand or stronger loan packages. If you’re a millennial, try to think of ways to make your offer stand out.
Is waiting for a recession to come a homebuying strategy worth considering? Angie says to be cautious of this thought process. The Triangle market has continued to be strong due to a strong sellers’ market and limited inventory. Whether you are a millennial or baby boomer, this is likely not a strategy you’ll want to implement here.
Listen to the full episode to hear two millennials talk all about millennial homebuying myths and realities or click on the timestamp below to hear more about a specific statement.
1:13 - Myth or Reality: Millennials primarily want the cool downtown apartments or condos.
4:44 - Myth or Reality: Walkability is supreme.
6:45 - Myth or Reality: Student debt is holding millennials back from buying a home.
8:56 - Myth or Reality: Millennials can’t compete the with buying power of Baby Boomers.
10:44 - Myth or Reality: Millennials are waiting for a recession before buying.
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Note: This is an automated transcription. Please forgive the robots as they tend to make some (a lot of) mistakes...
Speaker 1: (00:02)
It's time for the savvy real tour podcast. I'm Walter Storholt alongside Angie Cole, the owner and broker in charge of acole Realty serving you throughout the triangle, teaching you about the ins and outs when it comes to buying or selling a home. You can find the team online by going to eight Cole realty.com that's a C O L E realty.com or by calling nine one nine five seven eight three one two a that's (919) 578-3128 and now it's time for one of the top realtors in the triangle, Angie Cole and the savvy real tour podcast. Angie millennials are predicted to be responsible for more than half of all home purchases in the next year. So I think it's important to know which of their desires will help drive the market, but our preconceived notions about millennial desires, indeed myths and not actually fact. And what do millennials really want? That's what I want to pose to you. Cause you've got boots on the ground experience to kind of give us some good knowledge here, Angie, because we make these kinds of assumptions about different age groups and whatnot and sometimes they aren't. Right. And I have a feeling that some of these myths might not actually be reality. One myth definitely goes that millennials want the cool place, you know, they want hip downtown apartments and they're not into the suburbs and not in a single family homes. What's been your experience with what millennials really want in that regard?
Speaker 2: (01:28)
I would say that's 100% a myth. You know, we, of course we have some millennials that that's their desire. They want to be in the mix. They want to be close to, you know, restaurants at downtown lifestyle. But I'm really finding a lot of millennials who are thinking about the next steps. Maybe they are recently engaged, maybe they've been married, maybe they're just having their first child. And so I feel like most millennials that we're working with are looking more for longterm how they can grow into a home. Um, having that back yard, you know, so I would say that the majority of the millennials that we are working with, they actually are going more the route of the single family home lifestyle. And I think it's important to note too, that, you know, millennials, you know, we've been talking about this word millennial for quite some time, but millennials are no longer the 21 year olds. Right? I'm, I'm a millennial and I mean, I don't want to tell my age, but I'm 35 and a half. So, you know, so I'm not trying to be downtown, you know, go into the clubs late night. Um, I would prefer to be in a single family home, you know, where there's other neighbors with other children surrounding, you know, maybe having the amenities with a clubhouse and a pool. So I feel like that scope of things have definitely changed for millennials.
Speaker 1: (02:47)
We don't have to open the Pandora's box conversation of, uh, you know, the, the full breadth and width of, uh, you know, misinterpretations of millennials. But it is funny when a teenager, you know, I've, I've seen it multiple times when like, uh, teenagers in the news or a teenager does something, and even my folks have done this where they'd be like, Oh, millennials. And they'll look at my folks will look at me and be like, ah, your millennial generation. I'm like, that's not, there are not millennials, current teenagers. That's a whole different group blaming.
Speaker 2: (03:15)
Right, right. They're, yeah, they're, they're younger than us. I mean, we were getting old. Now millennials is, uh, we're, we're aging. So
Speaker 1: (03:22)
those are starting to ache, you know?
Speaker 2: (03:23)
Yeah, right, exactly. But you know, going back to, you know, millennials being responsible for, you know, more than half of the home purchase in 2020, I'll 100% agree with that. I'm seeing that, you know, individuals are purchasing homes at a younger and a younger age, which is amazing right there. They're seeing the value in buying a home, putting that money towards a mortgage for a longterm investment versus putting that money, you know, towards a rental payment where you're paying someone else's mortgage. So I am seeing a lot of individuals who are buying at a younger age also, you know, in the past, you know, the, I think it was customary for maybe the lady to get married, then they buy their first home. Right. But this day and age, you know, women are running with things, you know, men too. And you know, a lot of individuals are buying a home before they take those next steps with relationship changes. So they're buying at a much younger age and uh, you know, that's so smart. That's really smart as far as spending their money that way.
Speaker 1: (04:25)
Yeah, that's a great, that's a really great point and definitely have seen some of our friends do that as well. Hey, just because you're single doesn't mean you can't go ahead and buy your home. And a lot of lot of us have taken that step. So I'm going to imagine based on your answer of the, you know, the downtown conversation or the cool apartment, you know, angle that uh, this next one might be a myth as well. Cause there's this myth out there that, you know, walkability is like Supreme. If you can't walk to the grocery store or daycare or work, et cetera, then millennials not going to be interested in the property. But I kind of view that as hand in hand with the first one. That's not really true is it?
Speaker 2: (05:00)
Yeah, I don't agree with that. When you know, there was this new thing that came out, it's probably been about maybe three years or so ago, but it was all about the walkability and there was this rating. So based on location, what is surrounding? Yeah, yeah. There was this walkability and at first when it came out, you know, as a real estate professional, I was like, Oh gosh, what does this mean? I didn't even really understand this. And I have seen that no one cares about the walkability rating or score. Very seldom is it even mentioned on listings. Because you know, most people or most buyers when they're looking to be, are looking, first of all to purchase a home. You know, they do their own research, they know where they want to live. And so this random score rating really means nothing. I mean, it really doesn't.
Speaker 2: (05:47)
So going back though to the walkability, I mean, yes. Are those conveniences nice to be able to walk to places just for, you know, easy access and just to life. Sure. Um, but it's very, very seldom that I hear someone say, all right, I want to buy a home and I must be able to walk to this place, this, this place in this place. If anything, it's actually more of maybe, um, the baby movers that I hear this from more than our millennials here hear. Yeah. I, I've, I've, you know, we worked with many buyers where they no longer able to drive, but they still are very active. So maybe their eyesight's bad so they can't drive. Uh, but they are still very active and they love to get out there and go for walks. And it's very important to them to be able to walk to grocery stores or convenience store or whatnot, um, based on where they plan on purchasing. So I wouldn't say that that's something that is a must for most millennials. I would call that one a myth.
Speaker 1: (06:45)
All right. So we're, uh, we're two myths down so far. Now a little bit different direction here. You know, student debt is a huge conversation in our country of course. And this is definitely one where millennials are impacted. Millennials have a lot of debt right now due to student loans and many still trying to pay those off or many millennials still just finishing things like grad school. Uh, I can just raise my hand, uh, in, in terms of our family there, you know, so there's this kind of feeling out there that yeah, millennials are gonna make up a big portion of the buyer pool. Bud student debt's really going to hold them back. They're not going to have enough safe to purchase a home. It's going to hurt them. When it comes to getting mortgages. Do you see student debt and debt in general being a real big problem for millennials buying homes right now?
Speaker 2: (07:30)
Once again, I would have to say that's a myth that has not been our biggest hiccup when it comes to getting millennials. Prequalified. Uh, the biggest hiccup has been just the overall credit score. And so that's in line with, you know, someone making late payments. That's been more of the hiccup versus just as large amount of debt. Um, and there of course are so many different types of loans out there that even though maybe you don't have a lot of cash at hand, there's a lot of different options for 100% financing. So, you know, I know many first time home buyers are in the mindset that, Oh, why must have, you know, 10% 20% down payment in order to buy a home, or I can't do this all together. And that's so untrue. Uh, once again, there's, you know, a hundred percent financing with USDA areas, so underdeveloped areas, there's also a hundred percent financing. If you are a VA, there's a a hundred percent financing through many different credit, like state employees, credit unions, different credit unions. They offer conventional a hundred percent financing. So there's so many options where there is no money down. So do not let that hold you back. But yeah, I, I, I'm not seeing so much that the debt is the issue more so it's the credit score. So be smart. Pay your bills on time because it can hurt you when it comes to qualifying for a home.
Speaker 1: (08:51)
Very cool. Interesting to hear. Again, boots on the ground experience. Now you talk about different generations and the baby boomers we know very competitive, strong buying power from those folks. And there's another myth that says millennials can't compete with those older generations and they're going to lose out on getting home. So even if you know they're not just limiting themselves to the hip downtown apartments and even if that's not an issue and you still can't compete with the older generations and that's going to cause problems for the generation.
Speaker 2: (09:21)
So I would say this is my first reality. I would say that, and this is not, you know, across the board of course, but I am seeing the biggest, I guess, trouble or hurdle that we're running into as representing millennials is their buying power per se. There are just certain areas and certain price points where a home goes on the market and there are multiple offers and it can be super frustrating for our buyer and for us as well. If our buyer does not have extra cash at hand to potentially go above asking price or maybe their loan is not as solid as someone when you're, you know, competing against like those older generations. Because you know, of course if we had the exact same offer and one for example maybe is an FHA three and a half percent down, but the other loan is 20% down conventional, more than likely a seller will be more drawn to the conventional 20% down because it shows that that is more solid of a buyer. So yes, we are seeing that millennials are getting into kind of, you know, competing with these older generations and oftentimes the older generations are winning out because again, they have more cash at and they just have a stronger loan package.
Speaker 1: (10:37)
That's really interesting I think to look at some of these things. So yeah, there you go. That one is a little bit more of a reality. All right. Then there's this one last uh, myth or reality I'll ask you out there and we talk about the uncertainty in the market in general, but also uncertainty in the, um, you know, real estate phase of things as well. And there is some thought that millennials are just sort of gonna wait for a recession. Like prices have come up so much that millennials are like, eh, let's keep renting for a little while. We'll wait for a recession, then we'll jump into the home buying game. Do you hear that feedback from, from folks?
Speaker 2: (11:13)
I have heard that feedback, um, from millennials and older generation. So I wouldn't say that's a strictly a millennials that are having this feeling or mindset to wait for the recession. But guys, I want to remind you that we are talking about the triangle market here. And you know, typically there's this bell curve that every like seven or so years there is a real estate recession. The recession is not happening. It is not, there is so many studies behind it that, well, first of all, the reason being that we're not going to see a strong housing recession is because we're in such a strong seller's market with such limited inventory. So although, you know, other areas might be affected by this so-called recession in our area, there's no way for it just to plummet because we don't have the inventory. It'd be different if we had a six months supply of inventory. Things start to, you know, slow down then it could be a big crash across the board. But we're not going to see that. Hopefully I'm not wrong there, but I'm almost certain we're not going to receive a recession like we did, you know, in the past. So don't wait around for that to happen.
Speaker 1: (12:21)
Yeah, it was a different animal back in 2008. So that dramatic of a drawback, uh, you know, may not happen. And timing, uh, is a very difficult thing to do. Timing these ups and downs because it's so unpredictable. So be careful there. That's, that's really, really important. You've been listening to the savvy real tour podcast. I'm Walter store Holt alongside Angie Cole. She's the owner and broker in charge of Aiko Realty here in the triangle. And if you have questions for Angie, we invite you to go online to a Cole realty.com listen to past podcast episodes on the website, read the blog and all the great information, including the option to find a home right there on the website. That's a Cole realty.com and you can also call Angie with your questions. (919) 578-3128
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