A lifestyle survey shows millennials top the list of those canceling home-buying plans.
At the start of 2020, 11% of renters said they were ready and planning to buy a home this year, according to a recent survey conducted on RENTCafe.com. Conditions were looking up for Gen X renters, 15% of whom were making plans to buy a home this year, as well as for 14% of Older Millennials.
However, the pandemic has obstructed the path to homeownership for 43% of renters ready to buy, our survey results revealedThe survey, which ran at the end of May 2020, asked 7,000 renters about their housing plans before and after the coronavirus hit.
One in Ten Renters Were Ready to Buy a Home
43% of prospective home buyers who said they changed their plans quoted economic uncertainty as the top reason for doing so, followed by loss of income as the second most cited reason. Given the unprecedented times we’re living in, even the few renters who were determined to make the commitment to buy a home this year are now getting cold feet. Moreover, as many as 50% of Older Millennials, the most likely demographic to become homeowners, were forced by the pandemic to let go of their dream.
The Math
11% were planning to buy a home. 43% canceled those plans.
Is the net impact 0.43 * 0.11 = 0.0473?
I suspect that is on the low side but even a 5% impact is significant.
Of course we are dealing with surveys as well. And we have not seen a sustained 43% decline in sales.
We will know much more in 6 months or so.
Other Plans
Half of Baby Boomer renters expressed no intention of ever buying again. The less costly, more convenient renting lifestyle may play a role. With renter households over 60 increasing considerably in the past decade, Boomers seem to be getting more and more comfortable with renting.
1/4 of Renters Will Never Buy a Home
Reflections on Moving
Moving is a pain in the ass.
I speak from recent experience having just driven a U-Haul from Illinois to Utah these past four days.
That applies moving from house-to-house or apartment-to-house or any other combination. But a owning a house ties you down. If we do not like Utah we can try another place. That is not so easy if you own a house.
We left with an unsold house but we do own it free and clear, except of course for property taxes which are monstrous in Illinois: $15,000 a year on a $400,000 home.
Until I am convinced I have found the home I want to die in, put us in the never buy again category.
It Takes 3 Weeks to Escape Illinois
Why 3 weeks? That’s how long it takes to reserve a one-way U-Haul outbound.
“Everyone is leaving. No one is coming,” a U-Haul agent told us a few weeks ago.
For discussion, please see It Takes 3 Weeks to Escape Illinois
Why Utah?
I discussed Utah in my October 5, 2019 post Escape Illinois: Get The Hell Out Now, We Are
Mish
Location x3. In the Washington, DC area, we have hot rentals that Millennials love due to their location near DC Metro stations, but move an hour and a half outside the beltway to the countryside and you can rent a whole house for the same price as a room (about $800 a month). These stories of young people giving up on housing are scary and they seem to crop up every few years, but, for us with cash cows, ‘so far, so good’ and we’ve not seen any drop in demand for housing (selling or renting). It helps that DC is basically a parasite on the body of the United States and lives off other people’s taxes, but hey, I don’t set policy, I just take advantage of it! I myself live in three different countries depending on the season (in Covid-19 free Greece at the moment, it’s nice in the mountains).
Property taxes in here in STL would be about $5k for a $400k home. I can’t imagine $15k/yr!!!
We had planned to move up in house and have since tables those plan post-Covid. Too much uncertainty.
SO is a RE agent in Triangle area NC. Been very busy, currently has two “Cash” buyers from NYC bidding on homes she had listed.
If you don’t have cash or a pre-qualified loan ready to go around here (at certain price points) you are left in the dust. Out of state plates on every other car.
It’s not a good thing, unless you are selling and moving somewhere else.
Assuming there is anywhere else left to go that meets your requirements and has an affordable place for you.
“It’s not a good thing, ….”
No direct effect of The Fed robbing everyone else until they can no longer afford a roof over their heads, just so they can hand the stolen loot directly to negative-value-add, deadweight leeches in “financial centers”, ever are.
It sounds, from all the comments above, like there is a boom in demand in smaller communities and people flee the cities. Presumably that means there is a shortage of demand for homes in cities. It a Covid world, that makes a lot of sense.
“put us in the never buy again category.”
…
Stay Liquid
As I age I find shedding “stuff” makes things less stressful.
The reasons to “buy” overpriced “assets,” have never extended beyond trying to get a little closer to the Goldman boot one is doing one’s best to lick. As long as the Junta and Fed can do so, they will do their best to rob everyone else for the benefit of Goldman and similar leeches. So the closer you stay to them, the more crumbs of loot are likely to fall on you.
This strategy has definitely work so far along in the Great American Robbery Of All Competent People experiment. Once the looting starts running into hard limits, that strategy of tying oneself up so Goldman can abuse one at will, may well backfire, though.
So, like all else in dystopia, it’s really a bet that The Fed will be able to keep looting past the end of one’s own lifetime. Aligning oneself with The Fed, in the “Head, Fed wins; Tail Fed robs the winner of all his winnings and them some” game which is all that financialization has ever been, so to speak.
A friend just sold her home in South Dakota, it was on the market for about a week.
Rural areas kicking butt as folks flee urban hot spots.
But did she sell to a local previous renter?
Some welfare queen from New York spending the latest excuse for having The Fed pump up his welfare check, on further contribution to homelessness around the country; has very little in common with whether currently renting milennials (and other cohorts) will stop renting and become homeowners.
After all, those renting milennials, are exactly the ones The Fed has to rob, in order to be able to fund pumping up the “asset vaijues”, hence purchasing power, of welfare queens who have mostly been handed at least one “home.” already. So I have a hard time seeing how those millennials somehow, even if they wanted to, would suddenly be in a position to go out and buy a place, where they previously could not.
Northeast housing demand is off the charts. Some neighborhoods are hitting 2008 bubble levels.
Every part of the economy is in such a state of flux that anecdotes about trends in this area or that area are of no use in forecasting beyond Friday. We can guess at the trends, and that is indeed kind of fun. But guesses are not forecasts.
All we can say with any certainty is that the world five years from now will be far different than it was on January 1, 2020.
Only anecdotal, but I know a lot of multigenerational families living together, two or three generations either sharing a house or two homes on one lot.
Real estate is all LOCAL.
In my part of W/Central FL, there is incredible demand right now. My wife is a realtor and she has never been busier. People are re-locating here from cities everywhere.
Never understood Florida. Good luck with a hurricane season during covid.
You’re right, CO, FL is very unique. Even our most die hard Floridian friends admit that FL is and always has been a magnet for, shall we say, “unusual people.” All you need to do is read any Dave Berry book to understand. Gotta say I love it in the winter though!
Home sales for this spring in my town were UP from last year. This is astonishing since major corporations have been moving out of the state. A net loss of middle and upper class jobs does not support an expanding housing market.
Not sure on your math there:
“The net impact is 0.43 * 0.11 = 0.0473
If accurate, there will be about 5% fewer sales.”
Assuming you are just counting sales to renters, then the above is a drop of 5% of sales due to millenials alone backing off ? The 11% of renters though is “all who were going to buy of all ages”, and the 43% reconsidering seems to be an average of the lot. In other words 43% of all purchases that all renters were planning are being reconsidered.
?
Yes – I do not know what the real math is.
The 11 % of renters may be more accurate. 43% seems wildly high
I suppose 43% reconsidering wouldn’t mean they will all decide not to buy.
That’s interesting, more people must have cancelled plans to sell because houses are absolutely flying off the shelf.
None of this article resonates with Western NY.
Do you have a bunch of local guys there who formerly rented, but went and bought a place in the past few months?
My wife is a realtor, the first half of this year has been her best 3 years. Most of her clients are trying to take advantage of low rates, many are renters in Buffalo, who want out of the City. Not only is the math of this article under suspicion, but the theory. Since when should “never” be used?
And how about Eastern NY? People buying second homes are a small population.
If people are abandoning Eastern NY for Western NY, the real estate market overall is still a doozy.