Madison millennials among the tops in home buying
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The jury is still out on whether millennials are starting to buy homes in greater numbers nationally, but Madison is one of the top 10 markets in the nation when it comes to millennials taking out a mortgage.
A strengthening economy with full employment, historically low interest rates, and relatively affordable housing are typically ingredients for a strong housing market, and that’s the case here. While a widely held perception is that millennials are not part of the home-buying mix — especially due to daunting student debt and the experience of seeing their parents or other relatives lose their homes to foreclosure during the Great Recession — local realtors say they are definitely starting to buy homes after putting off the decision.
Their heightened interest has further aided Greater Madison’s housing recovery, which has been in full swing for the past two years.
Playing the percentages
James Imhoff, CEO of the First Weber Group, notes that American home ownership rates have fallen from the upper 60th percentile to 60%, and it’s mostly attributable to millennials delaying their purchase of a home from their mid to late 20s to their early 30s. Millennials are the 75 million-strong generation born between 1981 and 2000 (or 1995 or 1997, depending on the source), and the oldest are now 35.
That’s not to say they are opposed to the idea of home ownership, because surveys by the National Association of Realtors and the American Bankers Association indicate that 87% to 89% of them still have the American Dream of homeownership in sight. “They have put off their family formation and they have a universal feeling that they like to be flexible,” Imhoff notes. “They don’t want to be tied down. They are happy living in an apartment until they start to get to that age where they are going to form a family.”
Thanks to an influx of millennials to Madison, largely driven by good-paying opportunities at Epic, other high-tech businesses, and the city’s attempts to create a millennial-friendly culture, Madison realtors are in an ideal position to capitalize on the beginnings of millennial family formation.
“It isn’t just Epic,” states Imhoff. “It’s probably driven 20% by Epic but then all the similar high-tech businesses that are formed in Madison are just huge. We’ve got Zendesk there now. We’ve got all kinds of things that are cropping up. The tech businesses that started 10 to 20 years ago in Madison that were new startups tied to the University and biotech and whatever, a lot of those are taking off now. Certainly Epic is a driver, but they are not all of it. There are a lot of these people out there. They get paid pretty well.”
David Stark, president of Stark Company Realtors, says there is both empirical and anecdotal evidence to suggest Madison millennials are beginning to buy homes at a good clip. First, home-buying activity in the lower price ranges, defined as anything under $300,000, is very intense in Madison and in Dane County. “A lot of that is first-time homebuyer activity, and first-time homebuyers tend to be younger,” Stark says. “We can deduce from that statistic that a lot of them happen to be millennials.”
Another interesting stat came from Realtor.com, which published a list of the top 10 U.S. cities where millennials are buying houses. Madison ranked No. 7 with 46% of area mortgages in 2015 taken out by people within the millennial age range.