According to a Fannie Mae poll published yesterday, more than 80% of Americans in the 18 to 34 year-old age group consider now an unfavorable moment to buy property. Their dismal view is shared by the general public: just 25% of Americans—the lowest level ever—felt it was a good time to acquire a home right now
It’s not a good time if you can’t afford it
According to Redfin, the median home sale price reached an all-time high of $365,000 in January. That's a 16% rise from last January and a 28% bump over January 2019.
The soaring cost of houses underlines the severe demand–supply imbalance that emerged in the housing market during the pandemic.
The demand for houses increased as a result of historically low interest rates and the desire to avoid your oboe-playing neighbor at all costs.
However, despite this, the number of available properties has not grown—not even close. In reality, the 910,000 houses for sale at the end of December was the smallest since record-keeping began by the National Association of Realtors in 1999.
Redfin reported that January was the most competitive month in US housing market history.
However, young people are feeling the pressure harder than most. The reasons why include:
The Vanishing Starter Home
The number of homes 1,400 square feet or smaller in the United States has fallen to its lowest level in 50 years. Problem being, that is the ideal size for a starter home. Starter houses made up just 7% of construction in 2019, down from 40% in 1980.
Battle for the Suburbs
Suburbs with a higher share of children—neighborhoods where millennials are most interested in buying homes–– is where home prices are rising the fastest.
Many Millennials believe they're the main character in every tale, but in this case, they are. Many of them will reach age 32 this year, which is the median age for first-time homebuyers in the United States. Thus, “As millennials go, so goes the housing market,” says Nicole Bachaud, Zillow economist.