Home ownership and the millennials

Castles in the Sand

It pains me to say this, and I hope it’s not true, but there are signs that the face of home ownership is starting to change. Housing was always the driver of the economy, both purchasing homes and the purchases that were associated with homeownership, but home ownership may be taking a time out.

More than 10 years after the financial crisis hit the housing market, it has not recovered on a national level to the same degree as the economy in general. According to the Census Bureau, last year there were a combined 5.4 million new and existing homes sold. This is about the same as in 1998, where we had 50 million fewer people living in the country. I don’t know why we’re surprised to learn that we still have a hangover from the financial crisis since housing was the primary reason for the financial crisis and the careless lending practices of government-backed Fannie Mae and Freddie Mac.

Now there is another little wrinkle in why the housing market has not picked up – millennials.

Millennials, those born from 1981 to 1995, were supposed to be the hope of the housing market when they reached the age when people usually purchase homes, only it’s not happening. The homeownership rate among households headed by someone under 35 was 35.4 percent as of the first quarter of this year. The Census Bureau goes on to say that, by comparison in 1999, the homeownership rate for this age group was about 40 percent.

The speculation is that the financial crisis hit this generation hard. The unemployment rate was high and it took millennials longer to get a foothold in the workforce, build careers and deal with college debt, leaving purchasing a home at the bottom of their list.

In addition, there has been a renewed preference for city living, which is where the higher paying jobs are and lower homeownership rates. And finally, this generation witnessed something that no one thought would ever happen – owning a home did not guarantee a good investment, complicated with a loss of incentive based on the 2017 tax cuts.

After all that good news, let’s see what’s happened in April in Manatee County based on the reporting of the Realtor Association of Sarasota and Manatee:

Sale of single-family properties did well in April compared to last April. The number of closed sales were up 3.9 percent. The median sale price was up 1.6 percent to $315,000, however, the average sale price was down 3.5 percent to $390,612. The median time to contract was 48 days and the median time to the sale of the property or closing was 92 days. The month’s supply of available properties was 4 months down 7 percent.

As far as condos, Manatee County closed 0.7 percent fewer this April compared to last year. The median sale price was also down 4.1 percent to $196,500 and the average sale price was down 7.8 percent to $236,127. The median time to contract was 43 days and the median time to the sale of the property or closing was 88 days. The month’s supply of properties was 4.7 months, down 4.1 percent.

Overall, the single-family properties are holding well over $300,000, an important a benchmark, and although condo sales are down in value, they’re not down substantially in numbers closed. The really interesting numbers are the amount of available properties going down for both single-family and condos. Four months of availability is low. It’s good news for sellers, not so good for buyers and not really good for a vibrant market.

Are we entering a new era? If we are, new isn’t always bad, it may just a realignment of our priorities and expectations. Real estate markets are dynamic and that’s a good thing. Maybe we were standing still for too long.

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