Blog posted On December 18, 2018
As Millennials segue into homeownership, housing professionals are studying whether or not their preference for city living will continue. While Millennials have tended to rent near city centers early in their careers, some forecasters suspect once marriage and children come into the pictures, they will migrate to suburbs to purchase homes. However, recent data from the Journal of Planning Education and Research shows Millennials are 21% more likely to buy their first home in an urban area compared to Generation X counterparts.
The study reviewed a random sample of 100,000 first-time home buyers born between 1980 and 2000, narrowed the data to those who took out mortgages for the first time within a 10-mile radius of the 50 largest metropolitan areas. The data was collected over 15 years to analyze trends over time. The study also found that despite record-high levels of student debt, Millennial first-time home buyers tend to have a higher median credit score than previous generations of first-time home buyers. Additionally, the median age of first-time home buyers has decreased slightly, from 35 in 2001 to 33 in 2014. Despite coming of age in the Great Recession, Millennials have been proactive about their individual financial recovery.
The closer Millennials chose to buy near city centers, the less likely they were to own a car, suggesting a propensity for the use of public transportation. From the study, “the number of cars sharply reduced the odds of buying one’s first home in a city center. Owning one car corresponded with 21% lower odds, and those who owned two cars had 41% lower odds of purchasing homes in city centers.” Thus, Millennials may choose to live near city centers because of their reliance on public transportation, which is typically less accessible in farther suburban areas.
Urban home buyers may have different types of financing needs over suburban home buyers. Most suburban home buyers are seeking single-family homes, or a standalone structure with no shared property. In denser, urban areas, there tend to be less single-family homes available. Urban home buyers may be shopping for townhouses or condominiums. A townhouse is usually an attached single-family unit where the homeowner shares at least one wall but owns the property in front of and behind the unit. A condominium is a single-family unit within a complex with shared walls and common areas.
Whether you are shopping for a home in a suburban or an urban area, working with the right mortgage lender is imperative to ensuring a smooth transaction. Mortgage financing options will vary depending on the type of home purchase, and an experienced lender will be able to find the right solution for any type of home you choose.