As with most other major metropolitan areas across the U.S., millennials reshape the housing market in the Twin Cities and beyond. The impact this massive generation of would-be buyers has already had – and will continue to have for some time to come – needs to be examined in a number of ways, because some real estate professionals in the Land of 10,000 Lakes say conditions are unlike those they’ve experienced before.
Because of how hot the Minnesota housing market has been, thanks to massive demand from a generation of adults finally seeing homeownership as a viable option for themselves, it’s now quite common for a current owner to go from hosting an open house to closing the sale within just two or three weeks, according to the Twin Cities Pioneer Press. Experts say that happens when markets heat up as the Twin Cities have, because buyers know they need to go above and beyond to stand out from a crowd of similarly qualified bidders.
Consequently, real estate agents are now advising their clients to turn in mountains of paperwork that wouldn’t have been required even a few years ago, and for many millennials that’s just as well.
Consequently, real estate agents are now advising their clients to turn in mountains of paperwork that wouldn’t have been required even a few years ago, and for many millennials that’s just as well. Millennials have been given plenty of reason to be wary of taking on debts of just about any size – and the financial sector in general – since the Great Recession limited their financial options in ways that haven’t affected a generation so singularly since the 1930s.
A LITTLE GUIDANCE GOES A LONG WAY
Because so many millennials had to start their lives as financially independent adults with such adverse circumstances – mountains of student loan debt, a tough job market, lower incomes even for those with jobs, etc. – might not have felt truly ready to buy a home. As a consequence, agents are needing to be more proactive about providing guidance regarding what’s required of buyers, especially in the current market.
In the Twin Cities in particular, things seem to be a little more difficult on millennial buyers than they might expect, according to recent data from Realtor.com. In the second quarter, the market was listed as the fourth-toughest market for millennials to buy in, largely because there’s a more significant shortage of starter homes in the area versus other similarly sized markets.
A STARTER HOME PROBLEM
Homes priced at less than $250,000 – which are most often sought by young people because of the lower down-payment requirements – are hard to come by, and anecdotally, these shoppers face tough competition not only from each other, but also from investors who are ready to make cash offers. While only a little more than 1 in 7 people in the region are millennials, this population makes up more than 1 in 4 page views on Realtor. com from the region.
Moreover, local observers say that builders aren’t really doing as much as they perhaps could to meet that demand for starter homes in particular, according to Minnesota Public Radio. Many developers are, instead, focusing on putting up homes that price out north of $300,000 – in fact, local data suggests the median home price of a home built in the last year came to about $450,000, which makes it hard to meet millennials’ needs.
Of course, buying a home is always going to be a big investment and a significant journey, especially for a generation that has little to no experience. When young people are looking to buy a home anywhere in Minnesota, it’s typically a good idea to consider the benefits of a home warranty. These products can help both buyers and sellers protect themselves financially during and even after the sale is completed, by helping to cover costs when repairs or replacements are needed for things like home heating or cooling systems and major appliances.
With that in mind, it’s important to talk to your clients about the benefits home warranties can provide, among the many other aspects of real estate sales. It’s also important to remember that an upgraded home warranty is the best way for a buyer or seller to protect themselves from out of pocket expenses around mechanical systems in a home.