How the American Dream has Changed for Millennial Buyers

Owning a home has been considered the American Dream since before the 1940’s, and for generations since. However, the continued escalation of home prices, limited inventory, and more than $1.5 trillion in student debt among young consumers means the American Dream, though still achievable, may not come as easily as it did for some in previous generations.

There are some large hurdles for someone to overcome to own a home, but that is nothing new, If you go back to the ‘80s, and the early ‘90s, many people truly had the hopes of having homeownership, but they saw barriers that existed then that don’t exist today.

Those barriers included interest rates of 17% or more in the late 70’s to mid-1980s and much lower income than people have today. So, there was a perception that homeownership was not achievable even back then. There is an absolute path to owning a home that exists. There are just different obstacles in today’s economic environment. You just have to be better prepared with a plan.

 

The State of Modern Homeownership

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Homeownership peaked at about 69% before the Great Recession, according to recent statistics. The current rate is closer to 65%. The dream of owning your home is indeed alive, but it’s changing [with regards to] what things have to happen in order for somebody to become a first-time homebuyer and while the homeownership rate among Baby Boomers is in the 70-75% range, for millennials, that rate is closer to 50%.

 

However, just as with previous generations, the prospective homeowner of today needs to plan and work with a good loan officer to make the dream a reality. You have to look beyond the eye catching advertisements on social media and other mediums. While having a low interest rate is indeed important to a transaction even the lowest rate will not matter if you do not have a loan officer with enough experience to get you to the table on time and guide you through the process.

With discipline, if you step back from the noise, you truly can buy a home. It just may require more planning and patience.

 

Though there are low down payment programs, sellers are often looking for buyers who can bring mostly cash to the table so that there are no concerns about USDA, FHA, or VA inspections and a recent Case Schiller study shows that the use of those programs are down from recent years.

Currently buyers are not only bringing all cash offers (23% in May 2021) but also making offers with escalation clauses promising to match any higher offer. Some of this took place in 2004-2006 but not to the degree that it is happening now.


Why Buy?

Unlike a rental, an owned home can also become the center of a person’s financial wherewithal, some experts pointed out. With an owned property, a consumer starts building equity that can be used as a source of credit (once enough equity is built up), rather than relying on higher-rate credit cards or personal loans.

Owning a home also has tax advantages and stability—a property owner cannot evict a person or refuse to renew a lease—that an apartment does not have. However, some will opt to rent because they have been outbid on multiple properties. Having the right Real Estate Agent who can advise you of the options available to you and guide you through the procedure of putting in a successful offer is key.



Article Written By: Kevin Berju, NMLS #137213 PhillyMortgageTeam@afncorp.com 

American Financial Network NMLS # 137213

Looking for a Lender in Philadelphia? Contact the Philly Mortgage Team. Click below.




 

Kevin Berju starts Philly Mortgage Team with over 25 years in the mortgage industry. Prior to working with residential and commercial mortgages, Kevin graduated with a business degree from Temple University, owned his own business, and worked as an agent for years in both commercial & residential Real Estate. With Kevin’s diverse knowledge of the real estate and mortgage industries, his clients are thoroughly guided throughout their home buying or refinance process. As a result of his knowledge, attention to detail, responsiveness to his clients, and exceptional work ethic, Kevin was awarded the Five Star Mortgage Professional recognition in Philadelphia Magazine for the past successive years as well as reaching the top 1% of all originators country wide since 2012 as designated by Mortgage Executive magazine.

As a mortgage professional for over 2 decades, Kevin is an invaluable resource for both first-time and experienced home buyers. With his accomplishment of the Certified Mortgage Planning Specialist designation, Kevin is placed in an elite group of the top 5% of mortgage professionals in the industry. Looking to Purchase or Refinance in Pennsylvania, New Jersey, or Florida? Kevin Berju is the Lender for You!

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