The great thing about the Internet is that there are so many ways to seek out information and research trends and the news. The problem with it is that it's easy and free to publish information, which tends to fragment information into lots of smaller bites. This is especially true with SEO, Search Engine Optimization, as a goal. Writing an article with a single topic focus is usually better for search engine exposure.
In my news feeds and resources about housing, I also have to watch employment and economic trends. This week it's been interesting reading about the Millennial Generation and their time in jobs and even their home buying plans. It took four different recent articles to piece together my impressions for this one. Two of them deal with the time today's younger generation stays in a job before moving to another, one deals with their plans for buying a home, and the last addresses what some call the "five-year rule for buying a home."
It's obvious that there is a lot of attention on this younger generation, as the first time home buyer market has been depressed for a while now. As first-timers were a significant force in home price appreciation, their lack of participation is considered a big damper on an improving market and economy. So, what's the story?
Stan Humphries, the chief economist at Zillow, has been tweeting about the Millennial Generation and their future home buying plans. One graph published shows the results of a survey showing a whopping 85 percent of respondents expect the median age of first time home buyers to rise in the coming years. More of them are expected to stay at home with their parents longer, while there will be a corresponding decrease in new household formation in this age group.
Another article over at moneyning.com speaks to advice received by a first time buyer. The major point family and friends made was that you shouldn't buy unless you stay in the home for five years or longer. They called it the "five-year rule." This isn't a new concern, as the closing costs and commissions involved in selling a home to buy another have always been high enough to require some time in the home to build equity and enjoy appreciation.
The advice to offset these limitations hasn't changed either. Avoiding buying the most home you can afford is first. This way you may be able to pay extra payments toward your mortgage to get to break-even sooner. Another newer trend relates to our current housing situation. Some buyers are buying a home with a plan to move in less than five years, but moving without selling. They intend to rent out the home for income rather than selling at a loss.
Two other articles about changing jobs are only slightly different in the number of years their data says today's Millennials stay in a job. One states 4.6 years, while the other says 4.4 years. Surprisingly, this is actually longer than in the past, up from 3.5 years in 2002. One survey says that 91 percent of Millennials expect to stay in their current jobs for less than three years. If this group adheres to the five-year rule, there's not going to be a lot of home buying going on.
From a real estate investor's point of view, I see some good years ahead for rental property owners. They'll need to be selective, as this generation knows what they want. Buying the right homes which appeal to their lifestyles and where they will be employed should keep occupancy and rents high. I'm not wishing for continued bad news for home prices and overall purchase numbers, but I can certainly take advantage of the situation.