Real Estate News – “Millennials appear to be in no rush to ditch their parents’ homes. Perhaps they should be. …”
Millennials Should Consider Leaving The Nest
As we begin the new year, one of the things we need to be aware of is the fact that there are many potential real estate owners still sitting on the sidelines in our current market. A great many of those folks are members of the generation known as “Millennials”. Just as this generation hit the age where most people are beginning to buy homes and real estate, the real estate news all turned sour and the market crashed. Everyone was scared off except for the most savvy and liquid investors. All the real estate news was about foreclosures and most traditional buyers were simply firghtened away.
Many millennials are still living with parents or have taken to renting while they watch the real estate news and market conditions, trying to decide when is the best time to enter the market. Well, the truth is … that time is most probably right now. No timing is perfect, and no market is ever perfect. The fact is there are always ways in which conditions could be better. But the cold , hard fact is that they may not be better in the foreseeable future than they are right now.
The housing market has rebounded over the last few years. Yes, prices are rising. However, interest rates are still relatively low. The Federal Reserve has just instituted a 1/4 percent rate hike for the first time in years, and we expect it to continue this type of small periodical interest hike over the coming year. This action will eventually be felt in mortgage interest rates.
A condition of steadily rising prices … and steadily rising interest rates … clearly indicates that right now is probably the best time for anyone considering entering the real estate market as a homebuyer for the first time to get down to it and take action.
Here is an article by Steven Russolillo of the Wall Street Journal about this very concept. The WSJ requires registration for you to view the articles, so we’ll share it with you as it appeared in the Real Estate News section of Realtor.com.
“If, for instance, 30-year mortgage rates rise by one percentage point a year from now and home prices rise by another 5%, a monthly mortgage payment could jump by around 18%. Rising prices and interest rates may please the older generation, but not the one that hasn’t yet begun climbing the property ladder. The fear of missing out—or FOMO, as the kids say these days—should prompt millennials to act now.”
Any Real Estate Market Is A Double-Edged Sword
As usual, there are two sides to every story. In real estate there is the Buyer’s side and the Seller’s side. They are not always in alignment. Right now, Sellers are enjoying rising prices. Those rising prices can be intimidating to Millennials thinking of entering the market. The fact is, however, that they will probably only get higher over the next few years. The same is true of interest rates. On the other hand, many millenials are also made “gun shy” by student loan debt.
The bottom line here is this: trying to perfectly “time” a market is a receipe for getting left behind. Real estate markets and cycles take time to develop, and millennials who could dive in now but who sit out our current market waiting for “better conditions” could very well find themselves waiting a decade or so for things to turn more favorable than they are now.
Real Estate News.