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Friday, Sep 22, 2023

Many Young People Are Giving Up on Home Ownership

Good news for apartment investors but maybe not so much for real estate agents comes from a report by Apartment List, an apartment listing firm, that 12 percent of renters in their 20s and 30s surveyed in San Diego County say they expect to be renters forever.

Some say they don’t think they’ll ever be able to afford a house.

A common misperception is that people in their 20s and 30s prefer renting because of what they saw during the Great Recession when many wound up owing more on their house than it was worth or lost homes to foreclosure, said Igor Popov, chief economist at Apartment List.

“We find that was not the case,” Popov said. “The vast majority of people that are currently young adults want to purchase a home.”

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Asking the Parents

Among the majority of young adults who do hope to buy a home or condo eventually, most look to their parents for help with the down payment.

On average, young homebuyers expect their parents to come up with $9,000 of the money they need for the down payment.

Those making $100,000 or more expect to hit up their parents for an even bigger chunk of money — $30,000 or more, Popov said.

Even then, it could be a while for young adults to enter the home-buying market.

Not Saving

According to the Apartment List survey, 45% of potential buyers among the younger set haven’t started putting money aside on their own for a down payment.

“We’re just seeing a slower entry into the market,” Popov said.

Student loans are one reason young buyers are struggling to save money to buy a home.

Forgive the debt and the percentage of San Diego millennials ready to buy would rise from 24% to 28%.

At the current rate that they’re saving money for a down payment, just 24% of millennials will be ready to come up with the 10 percent down payment for a median-priced starter home in the next five years, according to the survey.

High Rents Also Hurt Home-Buying

At this rate, its unlikely young adults will likely catch up to previous generations in home ownership, the Apartment List study concluded.

“With rents so high, it is not surprising that it’s difficult to save for a down payment,” Popov said.

Median monthly rents for a one-bedroom apartment among San Diego County cities in October ranged from a low of $1,300 in El Cajon to a high of $2,970 in Coronado, according to Zumper, an online apartment listing service.

The median monthly rents for a two-bedroom apartment ranged from $1,590 in El Cajon to 4,380 in Coronado, Zumper reported.

Open Concept in Demand

While it has nothing to do with who can afford to buy a house when, the online home marketing firm Zillow came up with this little nugget — homes with so-called open concept layouts are getting more popular.

Open concept is where walls are removed to combine the kitchen, living room and dining room into a single great room — a concept that was big in the 1970s.

Five years ago, listings accounted 2.1 percent of all for-sale homes. That’s risen to 4.8 percent this year.

There’s a catch. Homes with formal dining rooms sell for more than those without them, according to Zillow.

San Diego was one of five metro areas in the country in which listings mentioning open layouts were on the rise, reaching about 5 percent in 2019.


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