Who's Buying Houses Now? A Look at Chicago's Generations of Buyers
If you are a millennial, home buying and settling into a mortgage may not have been a dream in the past. Now, as you grow older, statistics show that you are finally ready to nest and find the perfect home. When is the right time to act on that impulse? According to experts, both nationally and in the Chicago area, you shouldn't wait too long to fulfill your dream.Millennials have become the largest generation of homebuyers, per Ellie Mae, a company that interprets mortgage data. In January, Millennials accounted for 45 percent of all home purchase loans, an increase from 42 percent a year earlier. More Millennials are entering the market and seriously house hunting. However, the path to home ownership is rarely simple or easy, whether you want to buy in Chicago or elsewhere.
According to CNN, Millennials are the biggest group of new home purchasers. If you are in this group, you will be competing with older generations of current homeowners and borrowers with more experience and better credit.
Chicago Millennials Rule the Market
Millennials are becoming the most active home buyers in the Chicago area, with the trend increasing so far in 2017. Those of you in this generation will play a huge role in the housing market, as you will soon edge out baby boomers as the primary demographic for real estate agents to target.
Rising interest rates could derail Millennials' newfound desire to purchase homes. You are sensitive to rate increases, which have been creeping up from historic lows. That, however, is only impetus to encourage you to get settled into a home ahead of expected further rate increases.
Compared to a year ago, 43 percent of Cook County mortgages went to buyers under 35. In the city of Chicago, they accounted for 41 percent, in contrast to 38 percent of purchase loans at the national level.
Rising rental costs also play a role if the motivation for you to buy now. As rents increase, the investment potential of home equity becomes more appealing. For example, 50 percent of new purchases in the Chicago area were first-time buyers, many of them Millennials.
What Millennials Want
Here are some things that are important to millennial buyers.
- Authority Matters. Millennials want their Realtor or builder to be an expert who helps them solidify their choices. High tech and individuality are important to your generation.
- Small Living is OK. You are fine with starting small as you juggle your desire to own a home with the realities of student debt and retirement savings.
- Multi-Use Spaces. Open, multi-purpose areas with laid-back interiors appeal to you.
- Green Gadgets Rule. Millennials have electronic contraptions that need lots of outlets to recharge. Quick Internet coupled with green gadgets like programmable LED lighting and energy-efficient heating and cooling systems are ideal, while reclaimed materials used in construction are also highly appealing to this generation.
Millennials face a tighter lending market than the more forgiving environment 10 years ago, as the banks are toughening up lending practices and criteria. On the other hand, now is the time for you to take advantage of low lending rates, which are expected to rise as the Fed continues to ratchet up rates to normalize the national economy, slowly moving away from the quantitative easing policies that kept rates low.