While the housing market is an ever-changing thing, count on the experts at Realtor.com to dig deep, research and report on buyer trends in order to offer what’s new and next in homebuying. Here are a few predictions to watch for in 2017.
Next year, more than half of all homes will be bought by first-time home buyers, according to an exclusive survey of buyers by realtor.com®. It’s a seismic shift from 2016. And here’s the kicker: Most of those newbies will be millennials.
In sharp contrast with 2016, when only 33% of people planning to buy a home were first-time buyers, 52% of buyers with their eye on a home purchase next year will be first-timers. And 61% of those are under age 35.
“This represents an ‘Oh, shift’ moment in housing,” says Jonathan Smoke, chief economist for realtor.com®. Smoke’s team analyzed responses from active shoppers on our site who plan to buy a home in the spring or summer of 2017. “With so many first-time buyers in the market, competition will be even fiercer next year for affordable starter homes in the suburbs. Those looking to buy may want to consider a winter home purchase in order to avoid bidding wars and higher prices spurred by a potential increase in millennial buyers.”
What motivates—and scares—millennial buyers
Although a shortage of homes for sale will continue to dog the market, first-time buyers are more worried about financial issues, according to the survey. Topping the list: coming up with a down payment (37%) and finding a home within their budget (30%). With all the emphasis on financial issues, millennial buyers want to make sure that their money is well spent: Making a sound financial investment is a top goal.
This new generation of first-time home buyers is focused on safety, privacy, and more space, indoors and out. That’s because millennials’ top reasons for buying a home are that they’re getting married or moving in with a partner, growing tired of their current living space, or planning a lil’ addition to the family. Or perhaps all three!
So it’s no wonder that millennial buyers prefer single-family homes (39%) or townhomes (34%). Just 15% are interested in multifamily homes, and 10% in condos.
Suburbs appeal to millennials and boomers alike
So, let’s see, where can you buy a big house with a yard in a safe neighborhood? You probably guessed it: the suburbs! First-time home buyers identify the suburbs as their No. 1 preferred location (43%). In fact, so do 50% of all respondents.
“The majority of home-owning Americans live in the suburbs, so the popularity of the suburbs isn’t a new phenomenon,” comments Smoke. “But the increasing preference by millennials represents a shift from the more urban locations where many of them have been renting.”
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