Skip to content

Why Millennials Still Have Difficulties Finding a Home

April 12, 2017

Image

Despite historically low interest rates and a growing economy, millennial homebuyers still run into obstacles when trying to buy a home.

These days, millennial buyers simply can’t find a home to purchase.

Inventory remains tight

According to the National Association of Realtors, housing inventory increased 2.4 percent in January to about 1.7 million homes, which is equal to a supply of about 3.6 months. However, inventory levels still remain at their lowest point since the NAR started tracking the statistic in 1999, and have declined year over year for the previous 20 months.

Many millennials now find themselves in the challenging position of wanting to buy a home, but there aren’t any to purchase. A housing shortage directly affects millennial buyers in three ways.

First, having fewer available homes makes it difficult for buyers to take advantage of low interest rates before future hikes.

Second, a low supply prevents millennials from building more equity and wealth, as they may have to wait months or years to finally find a home, The Washington Post stated.

Finally, low inventory drives up home prices. Millennials finally think they can afford a starter home, but competition between other prospective buyers eventually puts a home out of financial reach. Not only are starter homes becoming more expensive, but they aren’t lasting long on the market.

Why inventory is low

There are several reasons why builders have been struggling to keep up with demand. Chief among them is NIMBYism (Not In My Backyard), when neighborhood residents rally against and often block or downsize development projects, commonly for lack of parking, increased traffic, and a fear of losing neighborhood character.

The 2016 Economic Report of the President estimated that land use restrictions cost the U.S. around $1.5 trillion in lost productivity. At the same time, a Building Industry Association poll in San Francisco – a city heavily affected by lack of supply – found that 71 percent of San Franciscans do not believe building more homes would increase affordability.

This tight regulation, approved by public sentiment, come together to raise home prices and make things more difficult for Millennials looking to buy homes.

Millennials can prepare ahead of time

Given tight inventory, millennials have to act quickly when they find a home. Getting a mortgage preapproval is one way millennials can quickly close on a home, because they have all the necessary paperwork taken care of ahead of time.

Preapprovals typically last 30-60 days. If millennials want to buy a home during the spring or summer, they should meet with a lender soon to start the process.

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: