Young people in their early 30’s are jumping back onto the real estate bandwagon, but they are savvier buyers today because of the housing collapse. Experts are calling them the “Subprime Generation,” because many of them had their first taste of home ownership during the housing crisis.
When real estate market news reporters say Millennials are holding back the real estate market, they aren’t telling the whole story. Younger Millennials may be held back by high student loan debt or lower wages, but older Millennials often have more established jobs. They were simply beaten down by the housing collapse. As home owners regain equity or rebuild their credit after a foreclosure, they can step into even nicer homes than they had prior to the nightmare at the corner of Wall and Elm streets.
According to a report by Real Estate Economy Watch, young people born between 1978 and 1982 had the lowest home ownership rate in 2012. However, just 5 years earlier, people in the Subprime Generation had the highest home ownership rate in history for the 25-to-29 age group. People in their early 30s are the oldest of the Millennials. They were as much burned by the housing collapse as their slightly older Generation X peers.
- Lowering housing costs
Experts are now expecting a turnaround as higher rental prices squeeze young professionals. Throughout the country and in California, rental prices continue to go up. According to new data from TransUnion cited by a recent article by REwired, the average rental prices rose from $1,034 from in the third quarter of 2012 to $1,072 or almost 4 percent one year later. Of course, in states such as California and New York, rental costs are considerably higher.
- Flipping over new construction
Young buyers don’t want to settle. They may have had bad experiences trying to fix and flip homes. For young step-up buyers in Milpitas, San Jose and Silver Lake, California, there are a lot of new home construction options that fit their higher design standards. Young step-up home buyers like being able to choose design options such as flooring, cabinets and fixtures without the headaches that come with foreclosures and short sales.