Is Home Ownership Still Affordable?

Millennials venture into the housing market and combat a variety of obstacles

by Shea Costales

If you’ve been paying any attention at all to the housing market, you know that prices are escalating at an unprecedented pace. These increases are affecting many different demographics, but are most commonly freezing out Millennial buyers. As a Millennial who shares the common American dream of homeownership, I am alternatively encouraged and dismayed by the recent developments in housing.

The numbers don’t lie: Homes are more expensive than they have ever been. And thanks to our generation’s focus on “winning” above all else, the purchasing market is incredibly competitive, with homes being snapped up almost as soon as they are listed. Buyers are going into shocking amounts of debt to purchase homes that, a few years ago, were worth a fraction of the current price. In expensive areas like Southern California, the only homes that the average Millennial can afford end up seeming like too much for too little. They are often in dangerous neighborhoods, at lengthy commutes away from employment, or are outdated or damaged, requiring thousands of dollars in remodeling costs.

Between 2011 and 2017, home prices across the nation grew an average of 48 percent, while the average income rose only 15 percent. By those figures, I would have been better off buying a house straight out of high school with my Little Caesars wages than waiting until I was a college graduate with a job in my field! And speaking of education, that is unfortunately one of the reasons why it has become so difficult for Millennials to purchase homes. Our generation is saddled with more student debt than any generation before us. This requires us to set aside large portions of our monthly income to make those payments, leaving little left in our budget to put towards a home.

But somehow, Millennials are still finding ways to afford homes, or at least to justify the benefits of home ownership against the mounting costs. Thirty-six percent of all homes purchased in the U.S. last year were bought by Millennials, roughly two-thirds of them first-time buyers. In addition, many builders are starting to respond to the demands of Millennials who want responsible, sustainable housing.

Marissa Kasdan of KTGY points out, “Millennials opt to work for companies sharing their philanthropic principles. They extensively research the origin of their purchases. Their lifestyle choices reflect the things they value most.” When we know a builder shares our commitment to protecting our fragile planet and has outfitted their homes for maximum energy-efficiency, incorporated native plants in landscaping, or taken great care to avoid sending tons of material to landfills, we can easily rationalize a higher purchase price.

The full integration of technology into a home also draws Millennial buyers in droves. We want our homes to communicate with our smartphones, allowing us to turn lights on and off when we’re on vacation, check our security cameras remotely, and play the same music in every room in the house simultaneously. Builders are starting to adapt to this desire, incorporating high speed Internet, smart home assistants, in-wall speakers, and more.

Millennials aren’t the only ones demanding innovation in new housing. No conversation about Millennials can be complete without also discussing Baby Boomers. Their desires can be remarkably similar. Builders such as Pardee Homes recognize that Boomers, too, are interested in sustainability; as Matt Sauls points out, “The pool complex at Altis, for instance, will be perfectly situated to provide privacy to its residents, while at the same time using solar panels to provide both shade to swimmers and power generation to heat the pools.”

As many members of this generation are approaching or enjoying retirement, they’re looking to downsize with new homes that offer maximum amenities and minimum maintenance. Many 55+ communities are now equipping their homes with technology as diverse as Amazon Echo units and master bedroom emergency buttons that immediately summon medical or law enforcement personnel.

In truth, the fates of Boomers and Millennials in the housing market are complexly intertwined. We are the ones buying the homes our parents and grandparents are selling. Everyone wants the best deal and the most sustainable, tech-infused, and low maintenance house possible; but how to achieve an outcome that pleases all parties still remains unclear.

In spite of the sometimes seemingly insurmountable odds against us, I still have hope that a larger part of the Millennial generation will soon be able to afford to buy homes that will suit our needs. Over the next five years, 66 percent of us are expected to buy a house. If all goes well, home ownership will stop becoming a pipe dream and return to being an achievable American dream.

Shea Costales is an Assistant Editor at Builder and Developer Magazine. She may be reached at shea@penpubinc.com

 

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