For all the sh** we give millennials about not being serious about anything in life, data is showing that here in the Bay Area, they are taking home ownership quite serious. 2018 closing data is showing that buying a home is actually trumping nearly every other early life milestone – such as getting married, having children and even traveling in some instances.
Bank of America conducted an insight survey on millennials nationally and the concept of homeownership was the top priority or life goal for millennials surveyed, ranking out around 70%. Marriage was the next highest ranking life goal, with 50% of those surveyed saying it it was their top priority, followed by having children.
Equating homeownership with personal and financial success appears to be the driving motivation for this group. Strong guidance coming from corporate culture in encouraging workers to invest in their futures and put down roots, as well as parents assisting with down payments and/or co-signing for financing to help their kids qualify.
In the San Francisco and surrounding markets, many millennials are held up in the buying decision or process by the down payment they “think” they need, as well as myths about how much of a down payment is truly required, credit scores, and private mortgage insurance. Many younger buyers that I speak to feel that they need “perfect” credit to buy, or have misconception of what exactly affects credit. Others had no clue until we spoke that down payments can be as little as 5%, in some situations, and that getting “in” the market now and letting appreciation momentum do the rest of the work for them in building equity is actually better than waiting to save up a larger down payment. Perhaps most eye-opening for myself in these conversations with future/aspiring homebuyers are the gaps in knowledge on the debate of renting vs owning. Many still feel that renting will be either just as or even less expensive than owning in the long run. For these situations, I share “rent vs own” illustrations that show the tax benefits and long term wealth creation from owning real estate in this market.
For more information on the benefits of owning over renting, or clarying myths about the barriers to entering the market, contact me anytime!