March 31, 2016
If you’re looking to buy or sell a home in Florida this year, you might notice that it’s a different crowd shopping around alongside you this time around. Young people, colloquially known as millennials, are becoming more intentional about homeownership and looking to become first time homeowners. As this millennial generation grows older and the current home lending environment makes for a compelling argument to purchase a house, young working professionals are taking notice.
Below are five factors millennials are citing as a reason they’re now considering homeownership.
Florida has proven to be a great state for young people searching for jobs. The unemployment rate in Florida has not only consistently remained below that of the nation, but Florida was recently recognized as the country’s leader in terms of pure job growth. This is an impressive feat considering the size of its population. Jobs mean income, and income means spending potential, a key factor for home purchasing decisions. Orlando currently leads the state of Florida in unemployment, helping bring the state’s overall unemployment to below 5%.
In an economy where job growth is strong and people are generating income, loans of all types are getting paid back. For millennials these loans are chiefly composed of student loans. With the extra disposable income made available as incomes rise and loans are paid back, many young professionals are looking to grow their savings by investing into a new area of potential: homeownership.
Apartment rental rates have been soaring in the U.S. since the housing crisis. “Rents continue to rise, “ says Whitney Fite, noting that Millennials’’ realization they’re throwing money away without building equity is driving them to think more seriously about homeownership. As rent prices continue to rise, young professionals have started wondering why they should continue to pay an unnecessary premium for housing. In some of the more popular Florida neighborhoods including Miami, Orlando, Jacksonville, and Tampa, rising rents are prompting millennials to look into the option of buying a home of their own. This is especially the case when monthly mortgage payments are often more affordable than an equivalent home’s rent. Tampa in particular has been noted by many for its disproportionate cost of renting in comparison to buying.
The number one reason Millennials will come to the market this year is due to the low interest rate environment. Mortgage interest rates continue to stay incredibly low. As nice as this might be, it only leaves room for interest rates to move in virtually one direction – up. This also means that those who lock in a 30-year fixed mortgage now can take advantage of these low interest rates for the entirety of the life of their mortgage loan. Even if today’s real estate prices are considered somewhat high, the low interest rates are making homeownership more attractive.
Technology is an incredible asset to the home buying process, allowing young home buyers to quickly search through, view, and tour multiple homes without leaving the convenience of their computers. Online tools allow first time Florida home buyers to geolocate and filter homes for sale using a number of factors including price, square footage, location, school district, and features. To top it off, not only do online tools allow younger homebuyers to examine more homes in a single hour than was previously possible in even a week, they enable first time home buyers to search for their dream home at any hour, day, or time convenient to them.
As the economy improves and young professionals reach financial maturity, it can only be expected that they will seek opportunities to grow their equity by choosing homeownership. Whitney Fite, SVP, Strategic Accounts, ultimately notes that “the number one reason millennials will come to market this year is due to the low interest rate environment”. When homeownership becomes possible for this group, they often take the leap.