Many analysts are trying to provide answers for this year’s disappointing home sales volume. One factor that has been maintained is the lack of participation from young home buyers, which may be supported by statistics compiled by the National Association of Realtors®. Highlights from the National Association of Realtors® 2013 Profile of Home Buyers and Sellers cites the median age of home buyers was 42 years old (increased from the median age of 39 reported in 2008, when three-fifths of all home buyers were under 45); and the median age of the first time home buyer was 31 (increased from the median age of 30 in 2008, when 54% of first time home buyers were reported to be between the ages of 25 and 34).
Millennials, typically described to be between the ages of 18 and 34, have recently been the focus of much financial analysis. There is a consensus that millennial economic participation has been impacted by employment and a challenging job market. Along with a burdening student loan debt, many millennials have decided to delay family formation; not to mention forgoing home purchases for rentals and moving back with mom and dad.
David Jacobson, in his A July 16th Money article “10 Things Millennials Won’t Spend Money On” (time.com/money) described millennials as a financially savvy group who, like the generation of the Great Depression, has learned from the Great Recession. When it comes to housing, Jacobson states that it is not a lack of desire for homeownership, but rather just a matter of affordability. He cites a Harvard Joint Center for Housing Studies finding indicating that homeownership fell 12% among those younger than 35 during the period between 2006 and 2011; and an additional 2 million are living with their parents. Even though he describes improving economic conditions, Jacobson attributes the prohibitive cost of housing to the combination of economic challenges along with recent changes to the mortgage industry.
Emily Parkhurst, the Digital Managing Editor of the Puget Sound Business Journal, provides additional insight in an August 1st blog post (Zillow data shows millennials don’t buy houses). Identifying herself as a millennial by saying “I’m that 32 year old non-homeowner they’re talking about…” she shares her frustrating experience with selling her husband’s condo with an underwater mortgage. Having purchased the condo before their marriage, and then having to make job related moves, they tried selling it via short sale and then trying a deed-in-lieu; but after more than three years, she states, “It’s been an insane back-and-forth with no promise of resolution any time soon. Why would I ever sign up for the possibility of that again?”
Although homeownership may still be a challenge for many, including millennials; the “Tiny House Movement” may be viewed as an affordable alternative to traditional housing. Another take on manufactured housing (mobile and double-wide homes), the Tiny House Movement was described by Randy Stearns of TIME (Tiny Houses With Big Ambitions; May 29, 2014) as “…efforts by architects, activists and frugal home owners to craft beautiful, highly functional houses of 1,000 square feet or less (some as small as 80 square feet).”
Maybe the Tiny House may not solve all of the problems in the real estate industry, but the concept of mobile, tiny efficient housing seems to be catching on not only with those who are downsizing – but also as mobile apartments for millennials.
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.