Millennials slowly entering the housing market

Unemployment, rising college enrollment and declining marriage in the Millennials (ages 18 to 31) have attributed to a whopping 36 percent of the nation’s young adults living in their parents’ home in 2012, according to a Pew Research Center analysis of U.S. Census Bureau data.That’s a record total of 21.6 million Millennials living in their parents’ home — the highest share in at least four decades.

As more of these young adults enter the housing market, I’ve noticed that they are better educated about the home buying process than ever before. Everything is at their fingertips and they’re savvy about what they’re looking for.

Many younger buyers are concerned about their job security. They are more cautious before purchasing a home and want to make sure they’re going to be able to continue to make payments prior to making a commitment.

I am finding that buyers tend to have a different mindset then they did several years ago and have a more realistic view about what they can afford. Many are more prepared and have more modest expectations about what is in their budget. Most are no longer coming in to buy a home with large car payments.

If they visit my office, I encourage them to decrease their credit card debt and work to increase their credit ratings to better qualify them for a mortgage. As we’ve all experienced, the mortgage companies have tightened up and qualifying is more difficult. They look closely at the debt to income ratios and so it’s important to be aware of that before applying.

The preapproval process is so much more important than most realize. It helps them go about the housing search realistically. And just because they qualify for an amount, doesn’t mean they should purchase at that price. I remind them they will want some money to go out and furnish their new home and occasionally go out to dinner!

I think many Millennials are playing a “wait and see” game, trying to see if mortgage rates will go down again. But even with the recent slight increase, mortgage rates are still incredibly reasonable and housing prices continue to go up in most markets. I suspect that the longer they wait to enter the market, it could ultimately cost them more money.