Novak, 30, communications manager, says she and her partner software executive Reid Gridley, 29, looked at about 14 listings before bidding on a three-bedroom bungalow-style home in the Overlook district of the city. The couple concluded the contract to purchase the property in January, about two months after the search began, for $ 610,000.
Home ownership was not a priority for the couple before the pandemic, says Novak. But that changed as global contagion approached the start of its third year.
“We have always seen our home as a kind of stepping stone between travel and work, but the pandemic has really changed that dynamic for us,” says Novak, who is part of a thriving population of millennials buying high-end homes. high across the country. “As we both work from home and need more space, we have begun to consider home ownership as an investment in our future.”
Studies have shown that the millennial generation, born from 1981 to 1996, has been slow to embrace home ownership, with many young Americans in their 20s and 30s reluctant or unable to buy a home.
But after years of waiting on the sidelines, this generation is now pouring into home ownership at a record rate, accounting for the largest share of all homebuyers in the United States in 2020, 37 percent, according to a survey by the National Association of Realtors (NAR). And now that they have surpassed the baby boomers to become the largest generation of living adults in the United States, real estate experts predict that demand will remain strong for years to come.
While their impact is felt across all sectors of the real estate market, it is most pronounced at the top end, brokers say, with millennial purchasing power fueling rising house prices in some of the more expensive real estate markets. of the country.
High-tech locations from Boston to Seattle, with a growing population of educated, high-income young professionals, are seeing most of the business, brokers there say. But real estate professionals in more affordable metropolitan areas like Nashville, Orlando and Providence, RI are also seeing an influx of affluent young buyers pushing home prices higher due to dwindling supply.
He says his team, which sells luxury homes in Washington, DC, Maryland, and Virginia, had 21 customers contracting homes last year, up from four in 2020. these customers ranged from about $ 400,000 to about $ 3 million, Weiss says.
While much of that sales activity has taken place in the popular Capitol Hill, 14th Street, and Georgetown districts, Weiss says that dwindling housing stocks in Washington have also pushed buyers into affluent areas of Maryland and Virginia.
“We have never seen this kind of impact from younger buyers before,” says Weiss, who has been selling real estate in the region for over 30 years. “The huge number of customers in their 20s and 30s looking to buy homes is making this market much more competitive, especially in the mid to high range.”
High rents, low mortgages
The millennial growth comes as the United States remains in the midst of one of the sharpest spikes in home ownership in decades.
Home sales increased to a 15-year high in 2021 as low mortgage rates and a protracted pandemic helped fuel greater demand, according to NAR data. Home prices also grew at a record pace across the country last year as buyers in many markets struggled with dwindling inventory and a faster pace of sales. The average price of existing homes in 2021 hit a record $ 346,900, up 16.9% from 2020, according to the real estate group. The average price of existing homes in January reached $ 350,000, up 15.4% from the same period in 2020, according to the real estate group.
Jessica Lautz, vice president of demographics and behavior at NAR, says aging millennials – those born in 1990 and approaching 30 – are starting their first years of home buying and will likely continue to increase home sales in many places.
“They are reaching the age to form families and settle down,” Lautz says. She says buyers who bought their first home in their 20s are in an even better position to upgrade to larger homes with higher price tags. “They are now entering the pinnacle of their careers and have the equity to buy homes, especially high-end homes.”
Anand Parikh, 33, and his fiancée, Megha Patel, 32, began looking for their first New York home last fall when the lease for their rental apartment was ending. The couple initially began looking for a larger rental apartment, but abandoned the idea after enduring poor supply and a sharp rise in rental prices.
“The rental market was pretty competitive,” says Patel, a lawyer. “And the prices were going up to the point where we knew it would be smarter, financially, to own them.”
The couple signed a contract in January to purchase a three-bedroom home in Boerum Hill, an affluent area of Brooklyn, where the average price of condominium and co-op units sold in 2021 reached $ 1.275 million, according to the Corcoran Group. Spanning 1,400 square feet, it includes a large outdoor balcony in a building with a fitness center and yoga studio.
New York City is in one of its strongest real estate periods, with condominium and co-op sales volume reaching nearly $ 7 billion in the fourth quarter of 2021, the highest of any fourth quarter on record, according to Compass data. .
“The larger space was important to us,” says Parikh, partner of a real estate investment and development firm. “We just got engaged and wanted a place to grow up.”
Mallory Bogard of Serhant brokerage helped the couple find their new home. She says they are indicative of what she is seeing in the growing number of younger homebuyers impacting the city’s housing market.
“They are overturning conventional ideas about what a starter home means to new buyers,” says Bogard, who estimates that 70 percent of his customers last year were millennials, nearly double the previous year. “Millennials are richer than previous generations of first-time shoppers and more savvy due to a better understanding of technology and this is helping them have a greater impact on this market.”
According to the National Association of Hispanic Real Estate Professionals (NAHREP), Latin home ownership rates are recording some of the strongest spikes in the United States, with the number of Hispanic homeowners reaching 8.8 million in 2021. The industry group, which compiled data from the Census Bureau, says Latinos added a total of 657,000 new owner families between 2019 and 2021.
The Urban Institute predicts that by 2040, 70% of net new homeownership families in the United States will be Hispanic. And while Hispanics make up about 18% of the country’s population, the research organization says they accounted for more than half of the country’s home ownership growth in the decade leading up to the pandemic.
Much of this growth has been fueled by younger buyers, says NAHREP CEO Gary Acosta, who predicts Hispanic purchasing power will increase exponentially as the demographic age reaches their first years of purchase. of houses.
“Hispanic millennials are starting to enter their early 30s, which are typical years for first-time home buyers,” Acosta says. “So this will translate into continued strong growth in home buyers and make this demographic a likely supporting force in the housing market.”