It’s like when you’re playing the Game of Life and you jump ahead to start a career instead of going to college. It doesn’t seem fair that you should get the best house and the best salary, but somehow you do.
Young people who get started later in life aren’t buying starter homes anymore. They are skipping ahead to the dream house. If you think the circle drive, huge backyard, and chandelier in the entryway isn’t something you deserve until you’ve put in some time in a starter home, keep reading.
Find out below why and how millennials are beating the system and jumping straight into dream houses.
Who Are Millennials?
It depends who you talk to, but a general definition places millennials as those born after 1981 and before 1996. Some include people born as early as 1978 and then divide millennials into “older” and “younger” subsections.
However you swing it, these 20-40 year-olds do life their own way — and we aren’t talking about the board game. This is real life. From lifestyle and health choices to growing up slower and working hard, millennials have figured out what they want and how to get it.
Millennial Lifestyle Choices
Millennials are conscious about their health. It makes sense because they are also the most stressed out of all adults.
They make specific choices about the food they buy and where it came from, wanting to know that it’s organic, whole grain, all natural, or full of fiber. Millennials choose vegan or gluten-free meals over a traditional fare, and they pay attention to the ingredients and chemicals.
They also focus on working out and staying strong. It’s important to take care of your bodies, and millennials combine this with their commitment to the environment. They walk or bike to work instead of driving, accomplishing two goals at the same time.
Millennials and Prolonged Adolescence
So many accuse millennials of prolonged adolescence, or not maturing as fast as previous generations. Many are living with their parents until well into their twenties (and beyond), but some make the conscious choice to do so. If parents will put up with them past age 18, why not stay and save some money?
Millennials are making conscious decisions to do life differently than their parents. They are also deferring marriage and family life until later. They’re waiting until their thirties to get serious about finding a spouse and having children.
Fewer millennials get married and fewer get divorced than their older counterparts. Their parents divorced even later in life (called a “grey” divorce). The young people who do get married stay married, while those who only live together have less stable relationships than they used to.
It’s possible waiting until later in life to get married means you’re more sure about your partner. Millennials want to be sure about their important decisions.
Thoughtful choices like these give them an edge in the real estate market, and they make forever homes possible.
During the 2008 recession, millennials had to take any job they could get. This means careers got sidetracked.
Once you get a job in an industry, it’s hard to break out. Employers see you have experience in one area, and they don’t want to train you for something new.
But now Millennials are breaking out of their ruts and moving up in their careers. While research shows they still make the least of all four adult age groups, they are making more than they did before. This means they can do more with their money (like spend a third of the annual dollars in the US).
What Is a Dream House?
When we say dream house we’re not talking a luxury home with a helicopter landing pad and an infinity pool in the front yard. While palaces with outdoor grand staircases and extra architectural features sound great, it’s not quite what millennials are going for.
So much of real estate depends on location (not be cliche). Millennial trends show they prefer quality over quantity instead. If $350,000 can get you a smaller (2000 square foot) house with a modern kitchen and a historic neighborhood, millennials are all for it.
It goes up from there. Price all depends on what part of the country you’re buying in. But nicer details like fireplaces and good craftsmanship are important to millennials. They plan to spend a long time in these houses, so they want to buy something they can love for years to come.
Typical dream houses, or forever homes, have more than 2,500 square feet. They need to have room to grow, whether that means into a family or into a career (or both). They are newer and don’t need as many repairs, either.
For the most part, a dream house is one that can accommodate a growing family for many years ahead. Millennials don’t want the hassle of moving again to meet their needs. They want to invest in something that will last — doesn’t everyone?
What Did A Starter Home Mean Before?
A starter home means that it costs under $150,000 ($200,000 in places with a higher cost of living). And it’s often under 2000 square feet.
It’s also a place where first time home buyers can spend around five years, before moving on to a larger, nicer home.
Starter homes might need some repairs, and the usual house is economical, without the high-end appliances and fixtures. Young people on starting salaries can afford them, and they are a way to invest in something to create equity. That equity helps you buy a dream house later on.
Before a dream house was the first home buying step for millennials, starter homes were the prevailing choice. But not anymore.
Why and How Millennials Are Buying Dream Houses
There are lots of choices millennials have made that gave them a leg up in the real estate market. We outlined them above. They are:
- Saving money by living with parents
- Starting families at the same time they are buying their first home
- Spending more on bigger investments
These are all big reasons why millennials choose to jump ahead of the starter home and go for their dream house instead. In fact, the largest group of home buyers according to a study by the National Association of Realtors was millennials, at a whopping 36%.
There’s also a shortage of starter homes on the market, so young home buyers don’t have as much of a choice. The amount of small homes on the market is declining three times faster than larger homes. Even the starter homes that are available are bigger than before.
But even if circumstances line up and it makes sense to buy a bigger house, how can millennials afford to pay for it?
It used to be that young people didn’t have enough money to buy larger homes. But when millennials had the disadvantage of the recession and then a flooded job market, they rolled with it. They stayed at home a little longer and focused on socking it away.
A down payment on a house is a decent chunk of change, unless you’re Tom Cruise. While not all lenders require 20% down anymore, it puts you at a big advantage if you have thousands of dollars to invest at the beginning.
And millennials have learned to save that kind of money. Perhaps they learned from their parents, the baby boomers, who are a big surprise with their savings deficit.
Meanwhile, we can all learn a lesson from millennials, who are leveraging their money at the right time. If the idea of moving a few times before you find your forever home doesn’t sound right for you, take a page out of their book and save for awhile first.
Then you can claim your dream house and get to work on those other dreams of yours.
The Right Mortgage
What do you think of when you picture dream houses in your head? If you’re not sure, millennials have another advantage, besides their immense savings and lifestyle choices. They know what they want.
This is real life, not a board game. Young people can and do choose houses that their families can grow in. It means saving a little (or a lot) more and living at home longer, but getting what you need in a home for years to come.
If you’re ready to find your dream home, contact the Tammy Lindley team today for a mortgage that’s right for you.