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We recently explored why millennials are choosing to live St. Louis. This week, we want to look at how they’re participating in the market. When looking at millennial homebuyers in St. Louis and across the country, a new analysis by Realtor.com offers some interesting findings. As a demographic, millennials are frequently stereotyped, especially when it comes to home buying. They make up a significant part of the market though, so it’s useful to understand how they participate.
One of the major assumptions about millennials is that they want to be in the center of popular cities — flocking to urban areas and enjoying the job market and wealth of things to do. A key element of this stereotype isn’t just that they prefer cities, but that they’d choose renting over buying in them. As a generation carrying some hefty loan debt, many observers believed they would forgo homeownership to avoid taking on more debt.
Interestingly, the data revealed that many of these stereotypes were not playing out in the market. The numbers show that millennials are buying homes, and that’s a great thing for the market. The trend shows they’re buying more homes than ever, and that’s likely to continue. Millennials now hold the largest share of new mortgages by dollar volume at 42%. How are they doing this despite larger prices? One main reason is that they’re making smaller down payments. As millennials get older and develop their careers and finances, it’s proving true that homeownership is a true priority.
How Do They Compare?
One of the main differences between millennials and other generations like Gen Xers and Baby Boomers is their timeline. While many buyers in older generations bought homes quite young and after marriage, millennials often take a different approach, with many more unmarried couples purchasing homes together. Compared to Gen Xers, they’re purchasing cheaper homes and putting less down. While homeownership among millennials is still about 8% behind that of Gen Xers at the same age, it still reflects a desire to buy that many unexpected.
These findings are especially true in St. Louis, both in the city and surrounding suburbs. Data shows that in 2018, millennials made up over 50% of new mortgage holders in St. Louis.
One key draw is that monthly homeownership costs tend to be less than the national average. In St. Louis, the average cost is around 25% percent of the median income for millennials, while nationwide it hovers around 31%.
St. Louis, no doubt, has many qualities that appeal to millennials. It’s great to see that they’re actively participating in the market and making up a larger and larger percentage of homebuyers. Did these findings contradict any of your assumptions or did they confirm what you already believed? Let us know.