Apartment List: 79 Percent of Millennials Want to Buy a Home, But Can’t Afford One
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Skyrocketing prices and appraisals are good news for Dallas homeowners who want to sell, but what about those who want to buy? According to data just released by Apartment List, 79 percent of Millennials who are renting would prefer to own a home, but cite high prices as the biggest barrier to homeownership.
The data, which comes from 30,000 Millennial renters surveyed by Apartment List, shows that those who want to own a home are putting off their purchase until at least 2018. But if housing prices continue to rise, could the affordability gap grow, too?
Many Texas transplants look at our housing market as an affordable one, but what about those who already live here? And while we are seeing job growth in our region, what about the kind of wage growth that enables whole segments of the population to save the kind of dough it takes to put 20 percent down?
According to Apartment List, more than 40 percent of Millennials aren’t saving a dime each month for a down payment. Of the remaining respondents, many aren’t saving enough to make their homeownership goals a reality on a reasonable timeline. In Dallas, at current reported savings rates, it will take a Millennial six years to save enough for a down payment on a median priced home. Compare that, though, to San Francisco: It would take 28 years for Millennial to squirrel away enough!
So, are we resigning ourselves to becoming a generation of renters? That’s a good question. Here are the implications, according to Apartment List:
The past decade has seen large numbers of millennials move to San Francisco, Denver, Seattle, and other cities along or near the coast, driving up rents and home prices. These cities have strong employment opportunities and access to great recreational activities, but the high cost of living may make it difficult for renters to save enough for a down payment on a home. Most worryingly, many do not seem to realize their financial predicament – three in four renters plan to purchase a home within the next five years, but their savings trajectories suggest that they may need a decade or more to afford it. Fortunately, the picture looks better in other parts of the country, which means that homeownership may still be within reach for those living in these parts or who are willing to relocate out of the pricey cities.
In the coming years an unprecedented scene will unfold: many millennial renters in expensive areas want to settle down there, but what will they do when they realize they can’t afford it? Some may choose to delay settling down and having children, while others will migrate to family-friendly cities on the interior of the country. Given the size of the millennial population, either scenario will have a profound impact on homeownership and renting in our society.
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Yet the mantra du jour seems to be that “millennials want to rent! they want to walk/bike, live near hip shops and restaurants, be flexible to move as their tech careers progress. live near transit stations! this is the future and we must rush to meet/create it now!”
And so, thousands/millions of eastern European block style apartments are built to house this predicted wave. Urban mixed use high density developments get cities’ approval because “hey, we want to be hip, too! this will show the world (or at least the other surrounding communities) that we can attract the cool kids.”
But wait — we’re finding out they want homes????? You mean they’ll reproduce and want neighborhoods/schools/amenities? Ooh, they might leave us as their coolness matures. Oh well, won’t there be other cool kids behind them to fill the block apartments (which may not look too “cool” as their construction ages).
So we’ll have a glut of awful apartments and single family homes become even more price-inflated, forcing more people to live in those awful apartments, and price people out of home ownership altogether. We’ll be similar to Europe, and for some people that may be cool. But at least they have architectural character there.
Dallas single family homes aren’t price inflated, and we’ve already built them 100 miles in every direction and they are also falling apart. At least when one of these apartments dies, it’s only takes up 1 block instead of 300 acres of failure.
And Dallas neighborhoods don’t have amenities.
One area offering a dramatic differential from national trends is Houston.
A couple of years ago, it was reported that the median oil patch employee earned $200,000. Many of those bought housing reflecting that affluence.
Now that Houston has many mortgages underwater both literally and figuratively, there will be a massive number of low cost homes available there.
The once oppressive traffic in Houston is undoubtedly less viscous, as many cannot afford to put gas in their expensive autos.