Will this be the year that millennials finally start buying houses? This is the question the real estate market seems to ask every spring.
According to the National Association of Realtors, the level of first-time buyers has been suppressed since 2011. But last year, the share of first-time home buyers — which likely includes many millennials — grew to 35 percent, a 3-point increase over 2015 and getting closer to the historical norm at 40 percent of the market.
Washington area real estate agents are reporting that potential buyers for this year’s spring market include members of the first wave of the millennial generation. Those are the ones entering their early- to mid-30s who graduated from college right as the recession took hold. As a result, they have had a hard time finding work that paid enough to cover their student loans, rent and saving for a down payment.
As the economy recovered, so did these early millennials. Now they are building careers that can more realistically support homeownership. With increased financial stability, these millennials are also at a stage where they are more likely to get married and start families, a time in many people’s lives when they get serious about settling down and buying a home.
If you’re a millennial in Washington and think this might be your year to buy, here are a few things to keep in mind:
• Different neighborhoods: If you’re looking for a deal on your first home in Washington, you’re going to have to think outside the box in terms of neighborhoods. You might dream of living in a hip, high-end urban enclave or a leafy D.C. suburb, but for the average millennial first-time home buyer, the more well-known neighborhoods remain out of reach. A real estate agent can help you understand which locales have similar characteristics as some of your favorite famous spots but have yet to be discovered by the masses. This is where you’ll find the best deals.
• Embrace “millennialism”: In other words, even if you’re a millennial who has started a family, don’t immediately feel like you have to flee to the suburbs. With all of the residential development added to the Washington landscape in recent years, it’s more convenient than ever for families to continue city living in condos, co-ops and townhouses that offer easy access to all of the amenities that D.C. has to offer, including dining, shopping, parks and transportation.
• Be prepared: One of the biggest factors that has been holding millennials back from becoming homeowners is the financing. With lower salaries, meager savings and soaring student debt, it’s been tough for millennials to get to a place where they could purchase a home. If you want to buy in Washington’s competitive market this year, you should make sure your credit is in order and explore all of the financing options available to you. There are many assistance programs at the federal, state and local levels that support first-time home buyers. Most important, you may not need to have a huge down payment saved up. With FHA financing, you may only need to have 3.5 percent of the sales price.
• First, not forever: Millennials tend not to be as tied to a property as their predecessors. More and more millennials are viewing homeownership as an investment and are not afraid to own for shorter periods of time before putting their home back on the market. As millennials wait longer to marry and settle down, many are buying on their own and still want the freedom to move across the country for the right job offer or other lifestyle change. Savvy millennials simply want the financial benefits of homeownership, as well.
• Leverage technology: Millennials are also often called digital natives, having been the first generation to grow up with the Internet. This spring, millennial buyers should use this knowledge and expertise to their advantage to search listings, call, text and email with an agent and get alerts to homes going on the market in their price range and desired neighborhoods.
With all the tools available to us today and a rising tide of opportunity, 2017 could be the year we start to see millennials enter the real estate market with strength.
Jon Coile, chairman of Rockville-based multiple-listing service Bright MLS (formerly MRIS), writes occasional commentary on the Washington area housing market.