Homeownership remains a priority for younger consumers despite tight housing inventory and stiff competition for homes, conditions that are driving up prices in many markets. In Berkshire Hathaway HomeServices' latest Homeowner Sentiment Survey, released recently by Berkshire Hathaway HomeServices Gallo Realty, a full 71 percent of prospective homeowners - a demographic composed largely of Millennials - believes now is a good time to buy a home, and 63 percent remain steadfast in their ideal preferences for a home.
Not surprisingly, consumers are gaining a deeper understanding of market conditions: 72 percent of prospective homebuyers acknowledge that homebuying has become increasingly competitive with a shortage of listings in many markets across the U.S.; 76 percent of prospective Millennial buyers expressed concern about overpaying for a home; and 76 percent said finding a competitively priced home is a challenge.
Several factors have contributed to the current housing shortage in many markets. For starters, new construction ground to a halt during the Great Recession, while population growth and household formation continue to blossom. Builders are increasingly hitting stride on new construction projects in a wider range of price points, but demand still outstrips supply in markets such as Miami, Philadelphia, Chicago, Los Angeles and San Francisco. The vast Baby Boomer generation has contributed to the shortage, as many are reluctant to sell. In the survey, 73 percent of Boomers said they hesitate to list their homes because home values are rising. Another factor reflects convenience. Four out of five Boomers said they would rather not shop for a new property at the moment.
"The world seems to be waiting on Millennials to make a move in all facets of their lives," said Gino Blefari, president and CEO of Berkshire Hathaway HomeServices. "Our data suggests younger generations remain very positive about homeownership and remain in the game in markets where competition for good, reasonably priced homes can be tough."
Blefari said rising home prices likely will move more Boomers off the fence as they retire, downsize, and move to other markets. "Home values have mostly recovered from the downturn, and homeowners may have more equity than they're aware," he explained. "Equity gives people latitude to make important changes in their lives."
"Through September, our local market is experiencing about a 17 percent increase in sales of single-family homes year-to-date over last year," said Gallo Realty Broker Andrew Ratner. "With lower-than-normal inventories, the market is getting competitive, so buyers need to be putting their best offers forward."
Increased competition has sparked creativity among consumers looking to stand apart in the market:
• 45 percent of prospective homeowners say they are willing to cover closing costs.
• 36 percent of Millennial buyers will send a personal letter to sellers.
• 58 percent of Millennials said they would put down more of an earnest deposit to show their commitment to sellers.
• 31 percent of Millennials indicated they would offer above asking price to secure their home.
"Buyers, more than ever, need the assistance of a Realtor in this market. Our sales team can guide them in ways to be creative to get their offers through," said Ratner.
Overall, consumer favorability toward real estate and its prospects remains high, as lower mortgage rates and the prospects of rising home values continue to buoy enthusiasm. A full 72 percent of current homeowners expressed a favorable feeling toward the real estate market, with 51 percent pointing to low mortgage rates and 44 percent citing price appreciation for their optimism. Respondents also showed a greater understanding of mortgage rates, with 61 percent of prospective buyers and 63 percent of current homeowners expressing confidence in their knowledge of current rate levels, jumps of 2 and 4 percentage points, respectively, from the spring Homeowner Sentiment Survey. Full survey details are available upon request.
Berkshire Hathaway HomeServices Gallo Realty is an award-winning, full-service real estate firm that has been serving the resort region since 1979. The firm has three main offices, located in Lewes, Rehoboth Beach, and Bethany Beach, with two satellite locations in the Lewes area. The company is independently owned and operated. Visit www.GoToGallo.com for details.
Berkshire Hathaway HomeServices, based in Irvine, Calif., is a real estate brokerage network built for a new era in residential real estate. Visit www.berkshirehathawayhs.com.