The New Housing Market
Updated: Jul 26, 2022
2021 was a distinctive year for the housing market for many reasons. The market expanded tremendously, with an estimated 6 million homes were sold just last year. Homebuyers entered the market with historically low housing inventory along with a substantial increase in house prices. Homes were selling at a rate that has not been seen since the late 1990s and is now on track for the highest level of home sales in 15 years. So, who is buying homes, what is their approach to home buying, and why are they buying?
Millennials are the new homebuying generation and are the fastest-growing portion of home buyers. From young tech professionals to people wanting to start a family, millennials are racing to own homes. Their generation has outnumbered baby boomers and applied for more mortgages than any other generation last year. They accounted for 37% of the overall U.S housing market, with 82% of younger millennials (ages 22-30) and 48% older millennial buyers (31-40) holding the biggest share of first-time homebuyers (NAR, 2021). In addition to buying homes, millennials are also shaping the real estate market. They have high standards for what they want in a home, and according to www.squareyards.com, “developers should keep a close eye on their preferences since they will shape the real estate market incoming months.” The millennials have officially put down the charcuterie boards and have stepped into the world of home-buying.
There is no argument when it comes to the statement that millennials have a much different home buying approach than that of the generations before them. Due to the covid pandemic, online options for buying a home grew to be more diverse and easier to access and navigate. From property listings being posted online, to virtual real estate tours, the entire process is now offered through the internet. For a majority of millennial home buyers, their first step was to look online at properties for sale, and while others first contacted a real estate agent, still 95% of buyers used online tools at some point in their search process (NAR, 2021). It is even possible to research and apply for home loans online (JBKLUTSE, 2019). The mortgage industry is becoming more modernized, and millennials are adapting quickly.
While it has been said that millennials were late to the home buying process due to student loans and credit card debt (Forbes, 2019), they now have a growing desire to own homes. Buyers who purchased a home last year, not only wished to own a home of their own, but also wanted to move because of changes in jobs, family situations, and the need for a smaller or larger living area (NAR,2021). The pandemic forced households to spend more time at home, which drew buyers into the housing market due to the increasing demand for housing services. Lower interest rates likely also stimulated the housing demand.
The housing market grew tremendously in 2021. Millennials made up a majority of the market due to the urge to buy homes because of changes in their lives, and they used online tools to navigate the entire process. However, while starting your home search online is convenient, the best practice is to get in touch with a loan officer to get a pre-approval. This is a significant preparation tool when starting your homebuying journey. A pre-approval shows you’re a serious buyer, helps your offer stand out, and can ultimately help speed up the transaction. Most importantly, a pre-approval identifies how much ‘home’ you can afford. This step saves you valuable time and allows you to target your home search to your price level. The housing market is growing and changing each and every day, start your pre-approval today so you can be one step
closer to the home of your dreams.