millennial home buyers
In doing research about whether Millennial home buyers will buy more homes than Baby Boomers, I found an interesting article posted by Forbes. These numbers in the referenced paragraph below were a surprise to me, no doubt. I’m a believer in adapt to your circumstances and evolve with the times.
“Millennials will continue to make up the largest segment of buyers next year, accounting for 45% of mortgages, compared to 17% of Boomers and 37% of Gen Xers. While first-time buyers will struggle next year, older Millennial ‘move-up buyers’ will have more options in the mid-to upper-tier price point and will make up the majority of Millennials who close in 2019.
For a state whose motto is Eureka, we Californians surely are dragging our feet to raise the minimum wage, which presently is $9.00 per hour. Eureka! those in the 18-to-34 age group known as millennials proclaim, I have a job; followed by: Uh, oh, too bad I don’t earn enough money to support myself. Businesses don’t want to pay them more because it cuts into profits, yet as businesses grow, typically sharing profits with employees is not part of that plan. And, if you suggest they could pay more to employees, corporations will accuse you of Socialism.
There is a lot of talk about how millennials can’t afford to pay back student loans, and how that huge mountain of debt is holding them back from buying a home. A more basic problem is most of them still live at home because they can’t afford to move out. C.A.R. reports the Pew Research Center says millennials are less likely to be living independently in 2015 than they were during the Great Depression.
U. S. Census Bureau data shows the millennial population has grown by 3 million since 2007 but the number of young adults living at home has increased. The national unemployment rate for this age group has dropped from 12.4 in 2010 to 7.7, which is a significant recovery, yet millennials still live at home.
Bottom line: Millennials can’t afford to pay rent and they certain can’t afford to buy a home. Which is particularly disturbing because in some parts of Sacramento today it cheaper to buy a starter home than it is to rent. We need buyers for the starter homes so move-up buyers can buy a bigger home. We can’t sell all of our starter homes to investors because that will dramatically affect the quality of our neighborhoods . . . oh, wait, we already did that with Blackstone.
I don’t need to tell you that times have changed. I left home when I was 15. Sure, somehow I managed to make it through high school, and I lived independently of my family my senior year, but that was 45 years ago. I could not wait to turn 18 and be completely independent. But I could also live on minimum wage, and I managed to buy my first home in my 20s. In retrospect, I was incredibly fortunate. It’s gone downhill today for millennials.
I met with tenants last week who presently attend Sac State and live in the Med Center. They can’t afford to rent a home through a property management company because they would have to show they earn 3 times the rental amount. Zillow says the average rent in Sacramento is $1,200. That would mean a tenant would have to earn $43,200 a year. Who makes that kind of money?
Most of the rentals in Sacramento are handled by property management companies because the rental laws are so incredibly complex that mom-and-pop operations fear they can’t properly handle rentals, and they would probably be right.
I bet you’re asking questions. I know many of us are, and you don’t have to be a Sacramento Realtor to ask these questions. Why can’t we raise the minimum wage to $15.00 an hour? If won’t fix everything but it’s a start. Moreover, why do we have to wait for state government to tell us to do the right thing?