Shaun Martin and his wife, Jennifer, have been house-hunting in the Denver market for nearly a year now, but they don’t want to buy just any house for the coveted title of homeowners. They want their dream house and they’re bypassing the fixer-upper home in their quest to find exactly what they want.
“We want a house that’s in move-in ready condition,” said the 43-year old investor who flips homes for a living. “Good pipes, good electrical, good bones, all brand new.”
Problem is, the Martins have unexpected company — and lots of it.
Millennials, which are the fastest-growing segment of homebuyers accounting for 37% of the overall housing market, don’t want to take on renovation projects or deal with contractors, Mariani said.
“If they see unusable kitchens or bathrooms, they’re going to take a pass,” she said.
Just ask Katie Schenk. She and her fiancé, Jonathan, recently bought a newly-constructed townhouse in Howard County, Md. “We didn’t want to buy something we’d have to dump money into to fix up or repair,” said the 25-year old brand marketing manager.
At 2,500 square feet, their three-bedroom, two-and-half bath townhouse is also nearly twice the size of a traditional starter home.
“We both work from home and there’s no end to that in sight so we needed the space. He gets the whole main floor and I get the whole upstairs,” Schenk said. “There’s also outdoor space for our dog who likes to run around and play when he gets hyper.”
Schenk wanted a home that would both suit their current lifestyle and meet their future needs as they plan to stay put for at least 10 years. That’s well beyond the typical three to seven years that previous generations stayed in starter homes before taking profits from the sale and investing in something more substantial and permanent.
Dee Olateru is also thinking long term.
She recently put a deposit down on a brand new three-bedroom, two-and-a-half bath townhouse — which even boasts a two-and-a half-car garage — in Minneapolis, Minn. She plans to move into this model home this summer, once the construction is complete.
“It suits my immediate needs and is a place I can grow into if I have a family,” said the 36-year old single consultant. “It’s a much nicer place than I would have expected for my first home.”
At nearly $500,000, it’s also nearly twice the price Olateru envisioned paying for a first home, but with a solid job and steady income in an incredibly strong labor market, she isn’t concerned about stretching her budget.
“I’m not going to be house poor,” she said.
Rick Sharga, executive vice president of RealtyTrac, a real estate information company, said millennials are in a unique position.
“Young adults are able to leapfrog normal homebuying patterns even with prices going up due to a combination of low interest rates, low down payments, and hoards of cash,” he said. “Keep in mind that during the pandemic, over 50% of young adults were living at home with their parents, not paying rent, and not making student loan payments, so they were able to save money for down payments on more expensive properties.”
Does this mean that the starter home is officially a thing of the past? Not necessarily, said Sharga.
“I think that once inventory comes back to market, we’ll see the return to more traditional home buying patterns,” he said. “But I’ve never seen this kind of activity in the 25 years I’ve been in the industry.”
Personal Finance Journalist Vera Gibbons is a former staff writer for SmartMoney magazine and a former correspondent for Kiplinger’s Personal Finance. Vera, who spent over a decade as an on air Financial Analyst for MSNBC, currently serves as co-host of the weekly nonpolitical news podcast she founded, NoPo. She lives in Palm Beach, Florida.
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