Over the years, millennials have earned a reputation as a group of people who aren’t interested in purchasing homes. However, recent trends suggest that this stereotype is fading into the background, as millennials are starting to buy homes and invest in real estate. These changes in the market are occurring while the housing market continues to flourish, and only about half of Americans are interested in owning stocks.
What changed? Millennials. So, let’s investigate why millennials are investing in real estate.
#1 Millennials Don’t Trust the Stock Market
Simply put, many millennials are skeptical of traditional financial ideas, due to financial conditions in which they grew up. Most millennials lived through the Great Recession, where stock values plummeted significantly. And even now, job options are scarce for many millennials, even with a college degree.
Living through financial distress changed the way millennials think about their finances. In fact, in a study asking participants to choose which type of investment (stocks, real estate, commodities, bonds, and cash equivalents) has performed the best since 2000, millennials were the most likely to cite real estate as the highest performing investment.
#2 Millennials Saw the Housing Market Crash and Recover
As a group that came of age during the Great Recession, millennials also witnessed the housing market crash, due in part to subprime lending. To give a bit of perspective, millennials saw the overall prices of homes drop an astounding 18% in 2008 alone.
While it has taken several years for the market to recover, millennials are now seeing that a strong recovery is possible. Markets in cities popular with millennials are experiencing enormous gains in value, and it’s leading them to purchase real estate.
Although millennials are waiting a bit longer to purchase property than previous generations, there is still a healthy number of millennial first-time homebuyers. First-time homebuyers now make up 47% of the real estate market, and those buyers are an average age of 36.
#3 Homes Are a Tangible Asset
Millennials want to feel like they are getting good value for their money. Since stocks are not a tangible asset that can be used and touched, many millennials are less likely to trust them.
Among the many benefits of purchasing a home is that you can see, touch, and use a home. For a generation that tends to lean more visually than previous generations, this is important.
Additionally, there are no longer strict requirements for people to put down large amounts of money for a deposit on a home. And, with the rise of online real estate platforms, millennials can quickly purchase a home without having thousands of dollars on hand.
#4 Millennials Are Growing Older
Older generations are looking to downsize and save money, but millennials are doing the opposite. While millennials catch a lot of flak for not wanting to grow up, it’s happening. They’re getting older, they’re establishing themselves in their careers, and many are having children. The next logical step for many millennials is to purchase a home.
Furthermore, with the potential to experience positive returns on their investment, many millennials are interested in purchasing a hard asset they can also call home. So, as more and more millennials jump on board with real estate, you can expect continued growth of the real estate market.
Graystone Investment Group
Graystone Investment Group is an experienced real estate wholesaler in Tampa Bay. We serve local and international clients who flip homes in as little as 30 days, as well as clients who hold high cash flowing rental properties.
Unlike other wholesaling groups, we provide clients with a turnkey process at no extra charge. We find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years.