Millennials are leading a new trend that has begun to emerge. Home prices skyrocketing for starter homes. Many first-time homebuyers are skipping the starter home and moving right into their dream home.
What’s a Starter Home?
According to the National Association of Realtors (NAR), a starter home is a one or two-bedroom home. Prices vary widely by market. Starters on average cost $150,000 to $250,000 while trade-up and premium homes cost upwards of $300,000.
Finding Their Forever Homes Now
A recent CNBC article revealed that there are many factors that delayed older millennials (ages 25-35) from buying a home earlier in their lives. The Great Recession and larger education costs forced many to remain living in their parent’s homes or to rent.
With the economy continuing to improve, many millennials have been able to break into better-paying jobs which has helped spur down payment savings. So, as the dream of homeownership comes closer to reality, many millennials are saving for their forever homes.
According to the latest statistics from NAR, 30% of millennials bought homes for $300,000 or more this year (up from 14% in 2013). Diane Swonk, Chief Economist at Grant Thornton weighed in saying, “They rented for longer. Now they’re going to where they want to stay.”
More and more millennials are settling down, getting married, and starting families, which is a huge factor driving them to look for larger homes.
Increased competition in the starter home market has also been a driving force in waiting to afford their dream homes. Inventory in the starter home market is down 14.2% from last year, according to researchfrom Trulia. This has driven prices up and has led to bidding wars.
Many first-time buyers who were originally looking for starter homes are realizing that for just a little bit more of an investment, they could afford trade-up or premium homes instead.
Therefore, if you plan on purchasing your first home this year, contact the Indigo Skye Group and we will get together to determine how much house you can afford and learn about your options. You may be pleasantly surprised.
Related Article: Renters Under 50 Want to Buy a Home.
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