The real estate industry as a whole is at a crossroads in 2018 because millennials, or Generation Y, are currently the nation's largest group and they are reporting a set of challenges that is far different than what previous generations experienced.
Prices are increasing, inventory is shrinking, and coming up with the money to afford a home is becoming overwhelmingly difficult. Basically, millennials are finding it impossible to find a home that meets their needs and even if they do find such a property, it's likely they won't be able to afford it anyway.
Despite these hurdles, however, millennial home ownership is possible on Cape Cod. While you might have to make some sacrifices or take your time waiting for the right listing to come along, you can make it happen.
Millennials Want to Buy Homes
The dream of home ownership is alive and well among millennials, as 86% of people in that generation want to purchase a home, with 35% planning to make the purchase in the next year and 57% wanting to do so within two years. In fact, millennials make up about 60% of first-time home buyers and 30% of home buyers overall.
The desire to own a home and start putting money toward your investment, rather than your rent paying your landlord’s mortgage, is definitely there. So, the question remains: why aren’t millennials buying homes at a more rapid pace, despite obviously having the appetite for home ownership?
What is Stopping Millennials From Buying?
Lack of inventory is a primary cause for the gap in millennial home ownership. People can’t buy homes that aren’t for sale, and since there isn’t much on the market, at least compared to what other generations had to choose from, homes that are put up for sale often go for an inflated price.
Another reason why millennials aren't able to purchase homes is money, as 36% are unable to come up with the cash required for a down payment. In fact, a recent study suggests that although most millennials would like to buy a home in the near future, 68% of people in that age bracket have saved less than $1,000 and 44% have saved nothing at all.
The hot rental market is a significant reason for the lack of savings, as millennials are having to spend more of their monthly income on temporary housing, leaving very little to put towards the purchase of a home. There's also the lack of stable work available for many millennials, which is what 17% cite as the reason why they haven't made a home purchase.
Credit history and the inability to pay off existing debt is forcing some millennials away from the housing market. Of course, if you can't afford to pay your student loans and credit cards, there no way you'll be approved for a mortgage. Reports suggest that 26% of millennials have a poor credit history, 13% can't pay off their existing debt, and 9% can't deal with their student loan payments. In addition, 25% of millennials find it tough to qualify for a mortgage with their current credit and employment situation.
Other reasons for millennials not entering the housing market include the rising cost of real estate, the increasing mortgage rates, and the inability to find a home they like in a desirable location. All of these factors come together to create a challenging market to get involved in, despite the definite desire to do so.
The Numbers on Cape Cod
If you’re looking to buy a home on Cape Cod, you should be aware of the current numbers in the area. So far on Cape Cod in 2018, we're seeing a median home value of $409,800. This median value is up 6.4% from last year, and estimates suggest that values could increase another 4.5% by this time next year. In 2017, the median sold price was 400,000, up from 375,000 the previous year.
The increasing home values might suggest that it'll be difficult to find a home to buy on Cape Cod, but it all depends on where you look. For example, buying a home in Forestdale, which is on the south end of Sandwich, means you're entering a market with a median home value of $315,500. This number is far less than the median home value in neighboring East Sandwich, which is $431,600.
You won't have access to waterfront homes or even waterview homes in Forestdale, but this is the type of sacrifice an increasing number of millennials are making in order to afford a home. Nationally, 89% of millennials would buy a house in a less desirable location if the home meets their needs. Rather than a home on the ocean, you could look into pond homes nearby, which still offer swimming and fishing opportunities, albeit on a smaller scale.
Meet with your real estate agent and have a look at what is available throughout the Cape to see if you can find something that meets your needs. While you might have to commute a little further to work or you might not be within walking distance of your favorite restaurant, you can surely find a better bang for your buck if you don’t close yourself off to only a few neighborhoods during your search.
Making the Right Sacrifices
Much like any other generation, millennials have an idea of what their dream home would features. Unlike past generations, however, millennials are willing to give up some of their dream features merely to be able to afford a place. For example, 84% of people from this generation would give up on a characteristic like a garage or brand new kitchen, while just 25% of baby boomers would do the same.
Come up with a list of features that are must-haves and another list of features that are luxuries that you can live without. That way, you can develop both an ideal home profile and a starter home profile that will get you into the market. After all, there’s nothing that says you have to stay in the same home for the next 50 years, as an increasing number of millennials understand that they might have to build equity in a smaller or less-than-ideal home before moving up into their dream home later on.
Home Ownership is Possible
Just because the market is making home ownership more difficult doesn’t mean you have to give up entirely because there is hope. Speaking with a professional not only about the current homes on the market but about what it’s like to live in a variety of neighborhoods and what you can do to improve your chances of being approved for a mortgage is well worth your time. You can also pick up some buying tips and learn about the local real estate market through these conversations.
The more you put the odds in your favor, the easier it will be to move into your Cape Cod dream home in the future.