The housing market is in pretty good shape. After the economic downturn that sent home values into a downward spiral, buyers have returned to the market and helped push up home prices. However, supply continues to be a factor in not only the housing market as a whole, but the tight supply is hampering younger homebuyers from entering the market.
It’s not that so-called millennials, those born between 1982 and 2004, are not interested in buying a home. A study by Apartment List found that 80 percent of millennial renters would like to purchase a home. However, buyers across the country are sending prices skyward, which can make many houses unaffordable for younger people looking to purchase their first home.
Further exacerbating the problem is a lack of affordable entry-level housing. It’s a problem that builders have tried to address, but their solutions have not been especially successful. Younger homebuyers have not always been the focus of builders. But recently, new homes have been constructed with cheaper materials and fewer amenities in the hopes of targeting first-time buyers who may not have as much money to spend as others in the market. But the limited supply has even these homes going for a premium.
In May, homes spent just 27 days on the market, and 1.96 million homes were on the market leading into June, a drop of 8.4 percent from the same period in 2016. Home sales last month were up again after a drop in April, but the tight supply and high prices have forced many millennials to continue to rent. Millennials also face other obstacles to purchasing a home. While home prices have increased, younger adults are finding it harder to put aside money for a down payment. Student loan debt paired with an inability to find jobs paying enough to put money into savings is keeping millennials from entering the housing market. According to the Apartment List study, 72 percent of those surveyed who said they were waiting to buy listed, unaffordability as the reason they were not planning on buying a house right now.
Will supply ease soon, and do you think millennials will start to be more active in the housing market? Let us know in the comments.