The Washington, DC area is indisputably a fantastic place for millennials (those ages 18-35) to live and it is getting better by the day. With our new title of Bon Appetit’s Restaurant City of the Year, a plethora of boutiques and bars, ample parks and trails, and fitness studios galore – it’s a mecca for millennials. In fact, Business Insider recently ranked as Arlington #2 and Alexandria #3 in their national survey of the best cities for millennials and Washington, D.C ranked as #9. #1 is Cambridge, MA in case you were wondering!
But how does that translate to the millennials’ place in our real estate market? Well, there are a few factors at play.
As a member of the millennial generation, here’s how I see it.
LOVE, MARRIAGE & FAMILY
Traditionally, buying a house has been a right of passage that occurred most frequently around the time that a couple got married and decided to start a family. They would start out their young adult lives renting in urban environments, either by themselves or with roommates. Then, once they tied the knot (in their twenties), they would buy a nice little starter home in the ‘burbs.
Well, we millennials are waiting longer than ever before to get married and start families. In the District of Columbia, the median age for men to get married is 32 – for women, it’s age 30. Only 23% of women and 28% of men living in DC proper are married (as compared to 48% and 52% nationwide).
So, what’s the impact of this delay?
People are undoubtedly renting longer.
While some are still waiting to buy until they settle down with their partner or are starting a family, we see more single men and women buying condos or townhouses on their own as they become established in their careers. Similarly, we are seeing more unmarried couples buying property together.
Once a couple gets engaged and married (now likely in their thirties), they are opting to stay in the city instead of buying the starter house in the suburbs.
What was once a starter home is now some couples’ second or third property they purchase.
- First, they might buy a one or two bedroom condo in the city.
- Then later when they have a baby or young kids, they buy a two or three bedroom townhouse in a quieter, yet still walkable and urban environment. This intermediary urban townhouse has become the new starter home.
- As the kids grow older, the family moves-up into the four to five bedroom “forever” home.
Other millennials bypass the starter home completely.
As with many in Gen X, they may go right from renting to buying their forever home when they reach their 40s. If you find yourself on this path, keep in mind that buying now might be easier than you think. Many loan programs enable you to buy with a small downpayment or with a less than stellar credit history. If you would like us to connect you will a lender who can help, just let us know!
What does this all mean?
Well, in most cases, the traditional small single family starter home in the suburbs is now considered less desirable and often overlooked. Urban, walkable locations are “in” among millennials. I don’t see that trend changing for a large percentage of millennials as they grow older or expand their families. The one exception is if they want to buy new construction. A brand new house seems to be the one thing that will get many millennials to move further out than they originally thought they would!
As more and more millennials move into the DC area and more notably, remain in DC (or other close-in urban suburbs) longer than they have in generations past, these millennials are facing FIERCE competition for housing.
All of the things that make our area such a great place to live for millennials are also making it very difficult for them to buy.
The walkable, urban lifestyle has become so desirable that it is driving prices upwards, especially in the hottest neighborhoods.
Prices are going so high that even when millennials want to buy, they are simply priced out of the game.
Ironically, as this demographic has embraced the urban lifestyle, they have opened their parents’ eyes to the benefits of a more convenient life and less space The DC area is also ranked as one of the best places to age! While this is good news in terms of their parents accepting their choices, it also means some millennials are competing with their parents or their parents’ friends for the same types of properties!
THE BOTTOM LINE?
So, what’s the market like for millennials? Upward mobility and high wages in the local job market are a good sign, but rising prices and hyper-competitive market in sought after locations pose challenges.
But ultimately, the housing future looks bright for my generation.
Raised on real estate shows on HGTV, the American Dream of homeownership is very much alive for millennials. While they are waiting longer to buy, they are making good returns when they do thanks to the increased appeal of the walkable neighborhoods in which they have invested.
These choices allow them to “move up” and make a profit in just a year or two in many cases.
These returns are occurring much faster than past generations (like Gen X, which got burned by the housing market crash in ‘08 – making it harder for them to buy the forever home). Making smart, well-thought out decisions when it comes to if, when, where to buy almost always pays dividends.
If you a millennial thinking about making a move, or even if you just want to chat, don’t hesitate to reach out. We’re happy to talk you through the options available to you and help you find that perfect home for this stage of your life. Or, if it’s not the right move for you – we’ll help you make that decision too.
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