What Advantages Do Millennial Buyers Have in this Real Estate Market?
Home prices are at an all time high, and interest rates have slowly inched up from the lowest in 2012, from average 3.38 % to 5.25%. Many millennial buyers, new to the home buying or investment market in general, find themselves competing against empty nesters for the same housing inventory or investment products. Some lament not being able to enter the housing market when interest rates and prices were all time low 2008-2012. Many were still in school at the time.
But the truth is, millennial buyers have some unique advantages as real estate buyers and investors.
Interest rates are still historically low. In the 80s, we have seen double-digit interest rates, and the Boston market has survived the highs and lows. The robust housing market in Boston has historically seen stable returns, and the housing market is still seeing relatively healthy demand. Even when rates were 8-10% back in the 90s, we have already seen strong housing demands in Boston. So how can we complain about 4-6% (and many can get lower interest rates by owner occupying their property) when generations of buyers before us plunged at the market.
While some lament the days of 3% interest rates in 2012, thankfully the difference between 3.38% and 5.25% is minimal when translated into monthly payments, and especially with average inflation rate of 2% annually. The inflation always works in our favor. The lending environment now is different from that of the early 2010s, and we do have some unique advantages in this current climate that we don’t see in other periods of real estate market.
On the purely investment side, the millennials also bring unique viewpoints and skill sets into the real estate business. It is a common perception that this generation prefers to rent instead of buy, and the landlord business is commonly associated with “older people.” However, the millennials are in a good position to bring innovations and tech-based systemizations into the real estate business. Check out our Members Exclusive Section for our innovative strategies for thriving in this market as home buyers and investors.
The millennials also have social media at their disposal and are more connected than ever before. Think of the last time you heard of someone who found a roommate or rental apartment using social media. This new generation is re-defining what it means to be home owners, renters and investors. This generation also has the potential to change the real estate industry with our proficiency with technology and social media. We are at the forefront of the latest real estate social media revolutions. The millennials approach real estate and home design differently from previous generations. Our connectedness and proficiency with technology brings a tremendous wealth of resources that can be used in real estate.
Also, the millennials are particularly in tune with what I called the “Hipster effect” in real estate. In the past 10 years, we have seen rapid transportations in urban hubs such as Kendall Square, Union Square, Central Square, Davis Square, Assembly Row, Boston Landing, Station Landing, Jamaica Plain, etc, just to name a few. Developers have noticed this trend and are increasingly designing housing in ways that cater to millennia’s needs and aesthetics. This generation has more and more to say about the housing development and increasing buying power to dictate what the market wants. Not to mention that as buy-and-hold investors, millennials also have an edge because they are much closer in age and lifestyle to their prospective tenants.
