First-time buyers skip starter houses and go straight for bigger homes
Shaun Martin and his wife Jennifer have been looking for homes in the Denver market for almost a year, but they don't want to buy just any home for the coveted homeowner's title. They want their dream home and bypass the fixer upper house to find exactly what they want.
"We want a house that's ready to move into," said the 43-year-old investor, who owns homes for a living. "Good pipes, good electrics, good bones, all brand new."
Trouble is, the Martins have unexpected company—and lots of it.
"More and more millennials are abandoning starter homes and opting for turnkey properties," said Olivia Mariani, vice president of marketing at Curbio, a home improvement real estate company.
Millennials, who are the fastest-growing segment of homebuyers and make up 37% of the total housing market, don't want to take on renovation projects or deal with builders, Mariani said.
On January 20, 2022, a house is listed for sale in Chicago, Illinois. Nationwide, existing home sales in December fell 4.6% from the previous month. This drop in sales is mainly due to a shortage of homes on the market. (Photo by Scott Olson/Getty Images)
"If you see unusable kitchens or bathrooms, take a pass," she said.
Just ask Katie Schenk. She and fiancé Jonathan recently bought a newly built townhouse in Howard County, Md. "We didn't want to buy anything that we would have to invest money in to fix or repair," said the 25-year-old brand marketing executive.
At 2,500 square feet, their three bedroom, two and a half bath townhouse is also nearly twice the size of a traditional starter home.
“We both work from home and there's no end in sight so we needed the space. He gets the whole ground floor and I get the whole top floor," said Schenk. "There is also outdoor space for our dog who likes to run around and play when hyperactive."
Schenk wanted a home that would fit both their current lifestyle and their future needs as they plan to stay there for at least 10 years. That's well beyond the typical three to seven years previous generations spent in starter homes before taking profits from the sale and investing in something more substantial and permanent.
A house for sale is seen in Washington DC, United States, on December 12, 2021. Annual growth in US home prices remained strong in October at 18 percent, the highest in the index's 45-year history, according to CoreLogic's Home Price Index. (Photo by Ting Shen/Xinhua via Getty Images)
Dee Olateru also thinks long-term.
She recently put down a down payment on a brand new three bedroom, two and a half bath townhouse in Minneapolis, Minnesota that even comes with a two and a half car garage. She plans to move into this model home this summer once construction is complete.
"It meets my immediate needs and is a place to grow having a family," said the 36-year-old single counselor. "It's a much nicer place than I expected for my first home."
At almost $500,000, it's also nearly double the price Olateru wanted to pay for a first home, but with a steady job and steady income in an incredibly strong job market, she's not worried about stretching her budget.
"I will not be house poor," she said.
Rick Sharga, executive vice president of RealtyTrac, a real estate information company, said millennials are in a unique position.
"Young adults are able to skip normal home-buying patterns even when prices are rising due to a combination of low interest rates, low down payments and hoards of cash," he said. "Remember, during the pandemic, over 50% of young adults were living at home with their parents, not paying rent, and not paying student loans, allowing them to save money for down payment on more expensive properties."
The story goes on
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