Millenial buyers are starting a new trend. With home prices continuing to increase in Santa Fe, NM and with home inventory still in a l0 year low, many first time home buyers are leaping into their dream home purchase and skipping the traditional path of buying a starter home.
What’s a Starter Home?
In Santa Fe, New Mexico, a starter home may frequently be a condo as single family home prices continue upward due to limited supply. According to the National Association of Realtors (NAR), simply put, a starter home is a one or two-bedroom home (sometimes even a small, three bedroom). “Prices vary widely by market but starters on average cost $150,000 to $250,000 while trade-up and premium homes cost upwards of $300,000.”
Finding Their Forever Homes Now
A recent CNBC article highlighted the issues delaying older millennials (ages 25-35) from buying a home when they were younger. Both the housing market collapse along with the debt of higher education costs changed when now older millenials could enter the housing market. Their choice was limited to renting or living in their parent’s house.
Now with a healthy economy and greater demand for employees with skills and education, many millennials have better paying positions and are not saving for a down payment. What is different is some are saving for their dream home.
The latest statistics from NAR show 30% of millennials bought homes for $300,000 or more this year (up from 14% in 2013). Diane Swonk, Chief Economist at Grant Thornton weighed in saying, “They rented for longer. Now they’re going to where they want to stay.” They are focusing on where they want to work and the kind of home they want as they begin marry and start families. A small starter house is not the solu
More and more millennials are settling down, getting married, and starting families, which is a huge factor driving them to look for larger homes.
Increased competition in the starter home market has also been a driving force in waiting to afford their dream homes. This has driven prices up and has led to bidding wars.
Many first-time buyers who were originally looking for starter homes are realizing that for just a little bit more of an investment, they could afford trade-up or premium homes instead.
If you plan on purchasing your first home this year, let’s connect to determine how much house you can afford. You may be pleasantly surprised.