Forget rising mortgage rates – millennials are becoming homeowners at a faster clip thanks in part to increases in the rent they have to pay for housing. That’s according to a new survey by Realtor.com, which found that, in addition to rising rents, millennials are purchasing homes to address the needs of their families.
Realtor.com polled more than 1,000 active home buyers online to come up with its results. It found that, among millennial buyers, 23% cited rising rent as a reason to buy a home. That is more than any other reason cited in the survey. It also comes as rents around the country are increasing, particularly in urban areas where the cost of living tends to be higher. Relator.com pointed to Department of Housing and Urban Development (HUD) data revealing that rents increased in 85 of the top 100 metro areas, with nine metro areas seeing rents jump double digits from last year.
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The rise in rents comes at the same time that mortgage rates have been marching higher and home prices are also on the rise. While mortgage rates that are higher could shut a lot of first-time buyers out of the market and could lower the number of home loan refinancing applications, millennials entering the market could bode well for the spring real estate season. After all, millennials have been shunning homeownership as they deal with record student loan debt and other debts and expenses.
According to Realtor.com, millennials in the market for a home are looking for contemporary and colonial homes the most, with 10% of survey respondents signaling that those are the types of houses they are in the market for. For those 55 and older, Realtor.com found that ranches are the preferred home type with 28% of survey responses. Only 6% of millennials want a ranch-style house, noted Realtor.com.
“Although record-low inventory and high prices make this housing market unique, some classic features still top most shoppers’ wish lists,” said Danielle Hale, chief economist for Realtor.com, in a press release announcing the results of its latest survey. “At the same time, we found some clear differences in priorities. For instance, older buyers are concerned with privacy and being able to age comfortably, while millennials place more emphasis on family needs, stability, and personal expression.”
While millennials and their older counterparts are looking for different things out of their home purchase, they do share some commonalities. Realtor.com found 44% of all survey respondents want a three-bedroom home, while 93% are looking for two or more bathrooms. Of the poll takers, 27% want a garage, which is slightly ahead of the 24% that want an updated kitchen and the 20% that are clamoring for an open floor plan.