Millennials have homeownership advantage in Central Indiana
The face of first-time home buyers in Central Indiana may look a bit younger these days as millennials enter the market in force. With Indianapolis' impressive income-to-home-price ratios, Indianapolis-area millennials are in an enviable position as they steer away from renting and increase the first-time home buyer market share. Now more than ever, first-time home buyers have powerful tools and resources at their disposal to help them buy a home -- and REALTORS® are innovating themselves to keep pace with these tech-savvy buyers.
While the misconception is that younger generations are happy to rent for life, the data tells an entirely different story. It’s true that recent years have shown a slight decline in millennial home ownership, thanks to high student loan debt and poor employment outlook. Yet several sources cite that 2015 may be a watershed moment for millennial homebuyers. The New York Times, in a March 6 article, indicates there are several reasons to be optimistic about millennials – the unemployment rate is down, more young people are moving out of their childhood home, interest rates are manageable, and one third of millennials are saving up for a down payment.
The 2015 National Association of REALTORS® Home Buyer and Seller Generational Trends study found that the largest group of recent buyers was the millennial generation, those ages 34 and younger, who composed 32 percent of all buyers. Generation X, ages 35 to 39, followed closely behind with a 27 percent share. Millennials also outpaced the combined percentage of younger boomers, ages 50 to 59, and older boomers, ages 60 to 69, of 31 percent.
Clearly, the value and importance of home ownership isn’t lost on younger consumers. Owning a home is a good long-term investment and can be cheaper than renting, especially in Indiana. Homes in Indianapolis are less subject to the highs and lows of the real estate markets, and the median home price is lower than the national average. This makes Indiana home ownership a more stable investment and allows people to save for a larger percent down payment.
The promising national numbers are only magnified in Central Indiana when accounting for our traditional affordability. According to the Metropolitan Indianapolis Board of REALTORS® (MIBOR) 2013 study of home buyers and sellers, Central Indiana's first-time home buyers’ market share was suppressed from the norm of about 40 percent. That matches what happened nationally. But take our affordability and the buying power of the current low interest rates and you have a great recipe for millennial buyers to bring that market share back up in 2015.
Metropolitan Indianapolis Board of REALTORS®