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Millennials Are Finally Heading Back to the Housing Market — Here’s Where They’re Moving

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Adults under the age of 35 are beginning to buy homes at an increasing clip, according to a recent study by LendingTree, the parent company of MagnifyMoney.

Millennial homebuyers made up nearly one-third of new mortgage requests during the period reviewed.  The average loan amount requested from this age group was $166,863.

In the study, LendingTree analyzed mortgage requests and offers for borrowers ages 35 years and under between Feb. 1, 2017 and Feb. 1, 2018, along with requests from the total population of mortgage seekers based on the location of the property to be mortgaged. In the end, the top cities were ranked by the percentage of mortgage requests coming from millennials.

Here’s where Millennials are putting down roots.

 

Heading out West Midwest

Six of the top 10 most popular cities for millennials buying homes are in the Midwestern U.S., while the others are in Pennsylvania and New York.

  1. Des Moines, Iowa
  2. Pittsburgh
  3. Buffalo, N.Y.
  4. Lansing, Mich.
  5. Fort Wayne, Ind.
  6. Grand Rapids, Mich.
  7. Scranton, Pa.
  8. Syracuse, N.Y.
  9. Youngstown, Ohio
  10.  Minneapolis

Meanwhile, Florida is struggling to attract younger homeowners. Cities in the Sunshine State made up half of the least popular cities for millennial homebuyers.

  1. Sarasota, Fla.
  2. Fort Myers, Fla.
  3. Honolulu
  4. Palm Bay, Fla.
  5. Las Vegas
  6. Lakeland, Fla.
  7. Tucson, Ariz.
  8. Reno, Nev.
  9. Tampa, Fla.
  10. Albuquerque, N.M.

The pros and cons of homeownership

Pro: You can build equity. Unlike renting, in a mortgage situation where the payment goes completely to the landlord, a percentage of the homeowner’s payment goes toward interest to the lender and another percentage goes toward the principal loan balance. As you pay down the principal, you gain more equity.

“Purchasing a home provides economic stability,” said Jessica Lautz, the managing director of survey research and communication for the National Association of Realtors. “You know the cost moving forward for the foreseeable future, and you are able to build equity.”

Pro: Tax benefits. There are also several tax benefits for homeowners, according to the North Carolina Housing Finance Agency. Homeowners can generally deduct interest paid on their mortgage loans as well as property taxes. Work with an accountant to figure out if the value of those deductions makes it practical to itemize your taxes vs. taking the standard deduction.

Pro: You don’t have a landlord to answer to. Another benefit to homeownership is the ability for a homeowner to customize their house, says Lautz. For example, most rentals do not allow renters to change fixtures in the apartments.

Con: Extra maintenance. In the same vein, the one caution the finance agency gives to millennials interested in home-buying is that they will become responsible for extra costs associated with maintenance or upkeep that typically are covered by landlords in rentals.

Con: Homeownership a long-term commitment. The big question millennials should ask themselves when deciding whether to rent a home or buy one is how long they see themselves in the area. The general rule is if an interested homebuyer plans to be in the area for five or more years, it’s a good idea to buy.

Con: The upfront costs of homeownership can be expensive. If you thought coming up with a security deposit was a pain, just wait till you estimate your mortgage closing costs. Closing costs can be between 2% to 4% of your mortgage, and that doesn’t even include your down payment.

Overcoming the obstacles

The largest barrier to entry for millennials looking at homeownership is typically making a down payment. Millennials may be able to afford a mortgage, but if they’re saddled with student debt, they may not be able to gather the money for a down payment.

But Lautz says it’s a common misconception that you have to pay 20% for a down payment. First-time homebuyers rarely pay that much for a down payment, she says, noting that the typical down payment for a first-time homebuyer is 5%, according to NAR data.

“There are a lot of myths out there about homebuying. Until you go through that process, you are not entirely sure, so make sure you talk to someone who is your local expert who might be able to tell you about programs that are available,” she said, adding that those options include low down payment programs and first-time home buyer programs.

State and city housing finance agencies, for example, have down payment assistance programs that can help subsidize those costs.

Before you enter the process, Lautz says first-time homebuyers should pull their credit score and make sure there are no surprises on their report. You also can seek advice and assistance on topics from homebuying to credit issues from housing counseling agencies.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Lindsey Conway
Lindsey Conway |

Lindsey Conway is a writer at MagnifyMoney. You can email Lindsey here

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Here’s Why Single Women Are Buying More Homes Than Single Men

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Right after she turned 30, public relations pro Wendy Hsiao put in an offer on a cute brick townhouse in Atlanta. “For a lot of my friends, being an adult started either when you got married or had a baby,” she said. “I chose to buy a house.”

Why did she buy? She felt ready for a major life change, considered buying to be a smart financial decision and wanted a yard for her Pomeranian named Georgia. “I felt like it was time to make a place my home,” Hsiao said.

Her story is one example of a growing trend: the rise of single female homeownership. Single women are far more likely to become homeowners than single men, according to a study on singles owning homes by LendingTree, which owns MagnifyMoney. In fact, single women own 22% of homes on average, while single men own less than 13%.

This “gender gap” stems partly from the fact that single women prioritize homeownership when setting life goals. In fact, 73% of single women list owning a home as a top priority compared with 65% of single men, according to the 2018 Homebuyer Insights Report from Bank of America.

Single women are “skipping the spouse and buying the house,” according to the Bank of America report, which found that single women rank homeownership as a goal above getting married (41%) and having children (31%).

From homemaker to homeowner

While there’s still work to be done, women have taken huge steps toward professional and financial independence. Homeownership in particular contributes to economic stability, so it’s great that more single women are buying homes. There’s no doubt the increase in the number of women in the U.S. workforce, a figure that has more than doubled since 1975, has contributed to the trend. Here are some other driving forces behind the rise of single female homeownership:

Homeownership empowers women. Homeownership offers a place to live, stability and a way to build wealth, so it’s no surprise women view owning a home as empowering. In fact, 31% of single women (vs. 23% of single men) feel empowered when thinking about buying their first home. A licensed real estate agent in Chicago, Martina Smith bought a condo in her dream neighborhood of Streeterville after she broke off an engagement a few years ago. Her budget only allowed her to buy a “fixer-upper,” but she got a great deal and renovated her place. “It’s been very rewarding and empowering,” she said. And she thinks it reflects a bigger national trend. “We’re seeing more women taking charge,” Smith said.

Women are becoming more educated. Over the past few decades, women have become more educated than men. In 2017, 38% of women and 33% of men ages 25 to 64 had a bachelor’s degree. In that age group, 14% of women and 12% of men had an advanced degree. And women are putting off marriage to pursue that education, according to the 2018 Women in the Housing & Real Estate Ecosystem report. Educational attainment has a positive impact on homeownership rates.

Women are done waiting to marry. There’s been a cultural shift where women no longer feel they need to wait until they pair up to embark on certain aspects of “adulting,” said Kelley Long, a CPA and certified financial planner with Financial Finesse. “I will never forget a friend’s dad chastising me for doing ‘nesting’ things like buying nice furniture before I was married because of his perception that you just don’t do things like that until you’re married,” Long said, adding that women are “rejecting that idea because it’s not true.” If you want to marry in the future, the right partner will likely be impressed that you were financially secure enough to buy a home on your own, she said.

Single moms want a home base to raise kids. “Oftentimes, when people buy homes it’s for lifestyles reasons,” said Tendayi Kapfidze, chief economist for LendingTree. Getting married is one big reason, but having children is the other, he said. About 21% of U.S. kids live with single moms, a number that has almost doubled since 1968. In contrast, just 4% of kids live with single dads. “Children prompt people to buy homes,” he said. “So that might be one of the factors at play.” And it’s not just kids. As many as eight in 10 caregivers for elderly parents are women. The median age of a single female buyer is mid-50s, points out Jessica Lautz, vice president of demographics and behavioral insights for the National Association of REALTORS. A single female homebuyer “may be coming from a past relationship and purchasing a new home for herself, her children and her parents,” Lautz said, adding that single females are “willing to make sacrifices” to purchase a home.

So what does the future hold for single women owning homes? If marriage rates among all U.S. adults continue to drop, it’s likely the number of single women purchasing homes will rise even more, Lautz said.

Turn your homeownership dreams into reality

Strict lending standards can make it more difficult to qualify for a mortgage on a single income. Considering women also only make 80% of what their male colleagues earn, getting to a financially secure enough position to afford homeownership may feel daunting. Here are three tips for single women looking to buy a home of their own:

  1. Prep your finances for homebuying. It’s important to check your credit and your debt-to-income ratio before you start the homebuying process. If you spot problems, work on increasing your credit score and paying down your debt before you try to get preapproved for a mortgage. Getting the best possible rate can save you money over the life of the loan, which is especially important when your household depends on a single income. The upside is that single women have complete control and don’t need to worry about anyone else’s shaky credit or loads of debt. “If you’re in a couple, somebody is going to be dragging the other person down,” Kapfidze said.
  2. Build your nest egg before you buy. Forty-eight percent of women say they haven’t purchased a home yet because they haven’t saved enough for a down payment. But that’s not the only savings barrier to breach before taking the leap into homeownership. “Make sure you have a robust emergency fund,” Kapfidze said. Because single homeowners are on their own, they should set aside at least three months of mortgage payments as part of their emergency fund, Kapfidze suggested. “If you’re single, you’re the only one with income coming in to pay the mortgage,” he said.
  3. Pick a home that comes in under budget. Single women have lower household incomes than single men, so they may need to consider buying a smaller home, taking on a house that needs some work or settling in a lower priced neighborhood. The good news is that single women may be doing exactly that. In fact, the average home purchased by a single woman cost $173,000 compared with over $190,000 for a single man. Single women “may need to make price concessions when purchasing to find a home for themselves and their families,” Lautz said. And buying less house than you can afford can help you make your mortgage payment more easily if you hit financial hard times in the future.

Finally, it’s normal to feel stressed when you think of buying a home. In fact, more women (40%) than men (30%) feel overwhelmed by the idea of homeownership. But even though the homebuying process was scary, Hsiao said she has zero regret about buying a home of her own: “If you love the house, it’s 100% worth it.”

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Allie Johnson
Allie Johnson |

Allie Johnson is a writer at MagnifyMoney. You can email Allie here

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