campus housing

Millennial Subcategory:  “Baby Boomerangers”

One of the factors holding back the housing market is the (relative) dearth of first-time Buyers.

Typically, such Buyers account for 40% of all residential real estate sales; the last few years, however, the percentage is closer to 33% (one-third).

What accounts for the slippage?

Three Theories

Given that the average age of first-time Buyers is 31 years old, let’s first stipulate that the group we’re discussing is what demographers have labelled “Millennials” — so-called because they’re 20 to 35 years old (born 1980 to 1995), and came of age around the turn of the century.

Why are Millennials lukewarm about taking the plunge?

Here are the three theories I’ve heard most often:

One.  They’ve seen their older cohort — Gen X’ers — get burned by the post-2006 housing crash;

Two.  A tight job market makes it tougher to save for a downpayment and qualify for a mortgage;

Three. Millennials are saddled with record levels of student debt, which limits their ability to service yet more debt (see, “Theory #2”).

Raised Expectations

However, in addition to the above, I’ve heard one more theory:  thanks to a boom in luxury student housing on campuses nationally, Millennials are used to newer buildings with lots of amenities.

In the Twin Cities, that trend is certainly evident in and around the University of Minnesota’s main and West Bank campuses the last five years or so.

Presumably, the theory holds, such post-grad Millennials are foregoing “rough around the edges” starter homes and condo’s for newer rentals more reminiscent of their college digs.

Either that, or they’re camping out in their parents’ basements (the latter group has been dubbed, “Baby Boomerangers”).

P.S.:  And no, those theories are not mutually exclusive . . .

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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