Millenials Buying More Homes Than You Think
Recent buying trends by Millennials across the country are dispelling years of reporting that suggested the demographic had all but forsaken the housing market.
A report conducted by Zillow found that, based on a survey of 13,000 respondents, half of U.S. homebuyers in 2016 were under 36 years old and were often seeking single-family homes in the suburbs.
The report also noted that Millennials differ from previous generations in the home-buying process, relying more on social media, friends’ experiences and online reviews of realtors. Whereas older generates sought agents with expertise and information, the younger generation seeks someone they can trust and can advice on strategy.
However, Los Angeles continues to be hard place to move into due to affordability and availability issues that can bar first-time buyers from entering the market.
In the Hancock Park and Mid-Wilshire area, the median price for a single-family home has steadily grown over the past year, rising to about $1,700,000, according to a report by Multiple Listing Services Los Angeles Estate (MLS).
Although the median costs in the more specific region of Larchmont has fluctuated slightly over the past two years — holding steady at about $1,200,000, according to Realtor.com— that cost might still be preventing Millennials from joining the neighborhood.
The rising cost does not appear to be deterring buyers away entirely, based on the 10% increase in overall sales within the Hancock Park-Wilshire area according to the MLS report. But Millennials seeking the area might be having a hard time being a part of that story.
Realtor.com analyzed the top 60 metropolitan areas within the U.S. that self-described Millennials are looking at and found Los Angeles county to be the sixth most viewed at about 1.2 times the national average.
Larchmont is over 1.3 times the national average.
Agencies such as TRG Realty, which serves the in Hancock Park and Larchmont area — and whose website features video tours and employs younger agent — tend to attract clients of a similar age, according to the Zillow report which stated that 29% more likely to use video for listing and showing their home.
“Our clients recognizes our fun, unique approach and a personal touch with neighborhood experts,” TRG’s Brita Kleingartner said. Kleingartner said that the times they did have older clients come in they had been referred to TRG by their children or grandchildren.
And although clients might be seeking these areas out, they might be just out of their reach as Kleingartner’s experience has been with Los Feliz, which shares similar characteristics, including a high walkability score, with Larchmont Village.
“Los Feliz is a very special area of Los Angeles. Walkability is in huge demand for buyers and renters alike and Los Feliz provides that” Kleingartner said. But “because the prices (in Los Feliz) are higher we don’t see as many first-time buyers.”
“There are a lot of Millennials,” said Richard Stanley, Los Angeles residential broker and estate director. “Household formation as of late has been low, and Millennials are getting off to a very late start.”
Stanley has observed that most Millennials are seeking homes going for less than one million dollars for their first buy but are facing stiff competition amongst their peers in that price bracket in part to rising costs.
“Our market (Los Angeles) is very brutal” Stanley said. “A lot of buyers are suffering buyers fatigue — getting discouraged in multiple offers.” Stanley continued, “It’s not unusual to have more than 20 offers for one property.”
According to Stanley, much of that lack of affordability has to do with a large influx of foreign money over the past decade into large luxury condominium and apartments.
“A lot of people are moving money out of China and out of Russia and putting it into the real estate market,” Stanley said.
Another issue is lack of availability, or inventory, due to investors buying fixer-upper homes and flipping them to buyers at much higher cost.
“Fixing it up yourself use to be part of the process,” Stanley explained. “Because flippers are intercepting them it reduces the inventory (of more affordable home).”