March 19, 2016 |
With mortgage interest rates at one of the lowest in recent history, more people are jumping into the home ownership pool than ever before. There are other factors for this recent trend, as well. For instance, the cost of renting, according to Trulia is almost 23% higher than owning a home, as stated in a recent CNBC report.
Millennial home ownership hit an all-time low in 2014 of 36%, but that is on the rise as we head into the summer months of 2016. More of this generation is looking to invest and build equity rather than throw away rent. Many millennials are getting married, starting families, and/or looking for a more permanent address. These young families are more interested in stable schools, quiet neighborhoods, and safety that come with suburban home ownership.
So, who are these “millennials” that are talked so much about? Other than being the largest generation in history, with a reported 80 Million members, they are also the first tech generation. The more formalized definition varies across sources, but for the sake of generalization, a millennial is someone born between 1980 and 2000, according to Time magazine. The Millennial generation, based on the definition, are between 16 and 36, today. The older half of this group is entering a pivotal time in their lives, when they are transitioning from solo dwellers to co-habitats, young married couples, and/or newer families.
The chief economist for the National Association of Realtors, Lawrence Yun, says, “The median age of a millennial home buyer is 30 years old, which typically is the time in life where one settles down to marry and raise a family,” he said. “Even if an urban setting is where they’d like to buy their first home, the need for more space at an affordable price is for the most part pushing their search further out.”
With a third of Millennials saying they would rather buy a home than get married, the large financial commitment is not as scary to this generation of buyers as it was previously. But the competition for single family units is higher, as new construction is not focusing on starter homes as was the case in previous decades. Millennials are also clear to say the first home they buy is not their ‘forever home’, rather a 5 to 10 year investment until they can upgrade. These factors are important when marketing and selling to this generation.
The New Jersey housing market was hit particularly hard by the recession, followed by two large hurricanes that devastated homes throughout the area. After years of perseverance and rebuilding, the New Jersey market is catching up and surpassing the rest of the US.
With median home prices in the mid-$400,000 for the Tenafly, New Jersey area and a bit lower (in the mid to upper $200,000s) throughout Englewood, New Jersey, their proximity to Manhattan provides a manageable commute. The area also boasts some of the country’s best schools, shopping and dining conveniences of suburban living, and makes this area very desirable for this home buying group.
As New Jersey continues to recover and improve, it is likely to see more 30-somethings moving to the ‘burbs. These first time home buyers are looking for the conveniences and amenities that less urban communities offer, especially with the allure of gaining equity in a property. The effect of Millennials moving away from the city will also domino into more trendy shopping and dining offerings, as is evident in the new Closter Plaza development. These effects will further increase home values and help bolster growing communities.