Starter homes were largely viewed as a dying fad, but millennials are showing renewed interest. They believe the starter home may help turn them into a homeowner more quickly.
Six in 10 millennials recently surveyed by Berkshire Hathaway HomeServices expressed an interest in purchasing a starter home, seeking a place that may require some TLC and that they could fix up over time. Such homes tend to be more affordable and may offer them the ability to build credit and become a homeowner sooner, the company’s latest Homeowner Sentiment Survey reveals.
Millennials say the top reason they’re staying on the fence in moving forward on a home purchase is because they’re struggling to save to buy their dream home. Of those holding out for their dream home, half of respondents cited the desire to go through the home-buying process only once and 37 percent said they don’t want the hassles of renovating an older home.
But others are giving a second look to homes that may require a little more work.
“Starter homes can provide first-time buyers with independence and an attainable investment,” says Gino Blefari, CEO of Berkshire Hathaway HomeServices. “The process of buying one – while never easy – may not be as difficult as it’s perceived to be.”
Overall, current and prospective homeowners -- particularly millennials -- are growing more optimistic about the direction of the housing market, but they are expressing some concerns too, Berkshire Hathaway HomeServices’ latest Homeowner Sentiment Survey shows.
Sixty-six percent of current homeowners and 63 percent of prospective home buyers say they view the real estate market favorably. Millennials, ages 18 to 34, were the most optimistic generation with a 74 percent favorable view of the real estate market, the survey showed.
Still, while sentiment is high, consumers expressed some concerns, most notably about the direction of mortgage rates and how upticks may impact their ability to buy a home. Seventy-six percent of current homeowners and 79 percent of prospective homeowners cite increasing interest rates as a chief challenge affecting today’s housing market. Furthermore, 44 percent of homeowners and 70 percent of prospective buyers say they would feel anxious if mortgage rates were to rise. A majority of respondents said higher mortgage rates would make it difficult for them to buy a home.
“People feel good about real estate because housing is doing well in many markets across America,” says Gino Blefari, CEO of Berkshire Hathaway HomeServices. “Although the idea of a rate hike can grab headlines and initially create some unease, it’s important to remember rate increases are often the mark of an improving, healthy U.S. economy. That is the case today.”
Source: Berkshire Hathaway HomeServices