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31 2014 Millennials Survey

CALIFORNIA ASSOCIATION OF REALTORS®_{| UNDERSTANDING CALIFORNIA’S HOUSING MARKET}

Contrary to popular belief, detached single-family homes and big lots of land are the preferences of these prospective buyers. The majority of echo boomers value homeownership, giving an average importance rating of 7.1 on a scale of 1-10, with 1 being not at all important and 10 being extremely important. Millennial renters find that the biggest advantages of homeownership are the freedom to do what they want with the property as well as having privacy. Their biggest concern about homeownership is affordability (45 percent). One in two millennial renters have student debt, but most do not feel it is preventing them from qualifying for a mortgage. The majority have other debt, such as credit cards and auto loans, which would make it difficult to buy a home. Most are uncertain or doubtful they could obtain a mortgage now. One in five millennials is a homeowner, and of these, nearly all are first-time buyers. Affordability is the main reason for buying a home. Most

millennial homeowners did not buy a home sooner because of a lack of urgency. They are optimistic about future home prices; 59 percent expect prices will be higher in a year and 63 percent think prices will go up in five years. Millennials were overwhelmingly satisfied with the home they purchased. Only 15 percent claimed they selected the best option given the limited supply available. The majority of millennial home buyers obtained financing. Of the 17 percent who paid cash, most of those funds came from personal savings. The average down payment for those who obtained financing was 26 percent. More than half found it easy to acquire financing, with an average difficulty rating of 4.4 on a 10 point scale (10 = extremely difficult).

WHO ARE THE MILLENNIALS?

Millennials, Generation Y, or echo boomers are those born between the early 1980s and early 2000s or late 1990s. More than 80 million strong, Gen Y is a force to be reckoned with as

the second largest generation behind the baby boomers, making up nearly 28 percent of the U.S. population. In California, they comprise more than 29 percent of the population—more than 11 million people (U.S. Census Bureau, 2012). Millennials have not known a world without computers. Many of this generation feel that texting is just as meaningful as a phone conversation (Abraham, 2011) and they send about 20 texts per day (Pew Research Center, 2010). Three out of four echo boomers have created a profile on a social networking site and one in five have posted a video of themselves online (Generation Waking Up). Technology is nearly as ubiquitous as oxygen in the lives of Gen Y; 80 percent sleep with

their phones next to their beds (US Chamber of Commerce Foundation, 2012) and 56 percent believe technology helps people use their time more efficiently (Pew Research Center, 2010). The 2014 C.A.R. Millennials Survey looked at those born between 1980 and 1996, or 18-to-34 year olds, who currently live in California. The survey focused on renters and homeowners and found that one in five is a homeowner, 41 percent are renters, and 36 percent live with their parents. When looking specifically at 18-26 year olds, the survey revealed that nearly half (49 percent) live with their parents, primarily for financial reasons.

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The  majority  of  millennial  home  buyers  obtained  financing.  Of  the  17%  who  paid  cash,  most  of  those   funds  came  from  personal  savings.  The  average  down  payment  for  those  who  obtained  financing  was   26%.  More  than  half  found  it  easy  to  acquire  financing,  with  an  average  difficulty  rating  of  4.4  on  a  10   point  scale  (10  =  extremely  difficult).  

Who  are  the  Millennials?  

Millennials,  Generation  Y  or  Echo  Boomers  are  those  born  between  the  early  1980’s  and  early  2000’s  or   late  1990’s.  Over  80  million  strong,  Gen  Y  is  a  force  to  be  reckoned  with  as  the  second  largest  generation   behind  the  Baby  Boomers,  making  up  nearly  28  percent  of  the  U.S.  population.  In  California,  they   comprise  over  29  percent  of  the  population—more  than  11  million  people.  (U.S.  Census  Bureau,  2012)   Millennials  have  not  known  a  world  without  computers.  Many  of  this  generation  feel  that  texting  is  just   as  meaningful  as  a  phone  conversation  (Abraham,  2011)  and  they  send  about  20  texts  per  day  (Pew   Research  Center,  2010).  Three  out  of  four  Echo  Boomers  have  created  a  profile  on  a  social  networking   site  and  one  in  five  has  posted  a  video  of  themselves  online.  (Generation  Waking  Up)  Technology  is   nearly  as  ubiquitous  as  oxygen  in  the  lives  of  Gen  Y;  80  percent  sleep  with  their  phones  next  to  their   beds  (US  Chamber  of  Commerce  Foundation,  2012)  and  56  percent  believe  technology  helps  people  use   their  time  more  efficiently  (Pew  Research  Center,  2010).  

The  2014  California  Association  of  REALTORS®  Millennials  Survey  looked  at  those  born  between  1980   and  1996,  or  18  to  34  year  olds,  who  currently  live  in  California.  The  Survey  focused  on  renters  and   home  owners  and  found  that  one  in  five  are  homeowners,  41  percent  are  renters  and  36  percent  live   with  their  parents.  When  looking  specifically  at  18-­‐26  year  olds,  the  Survey  revealed  that  nearly  half  (49   percent)  live  with  their  parents,  primarily  for  financial  reasons.  

Figure  18:    Millennial  Living  Situation  

Rent  41%  

Live  w/parents  36%   Own  20%  

Other  2%  

32 _{2014 Millennials Survey} CALIFORNIA ASSOCIATION OF REALTORS®_{| UNDERSTANDING CALIFORNIA’S HOUSING MARKET}

Despite being well educated—46 percent of 27-to- 34 year olds have a college degree, and 42 percent of 18-to-26 year olds are currently enrolled in a college—millennial earnings and employment have some catching up to do. Only about half of echo boomers are currently employed, and only one- third have a full-time job; 19 percent have a part- time job, 24 percent are students and 20 percent are unemployed. This bleak employment situation translates to a median annual income of $35,000. There is a silver lining for earnings; older millennials (those between 27 and 34 years old) have a median annual household income of $50,000, compared to $30,000 for their younger cohort (18-to-26 year olds). While they may not have a high income now, their earnings will increase as they advance in their careers.

This generation is known for delaying marriage and also for postponing having children; the majority are not married and nearly half do not have

children. While income limitations contribute to this delay in settling down and having a family, ethnic background also plays a role. Demographically, millennials are very diverse—62 percent are minorities. It is not uncommon in ethnic minority or immigrant households for children to live with their parents early into adulthood or after having children. The trend of more minority echo boomers living at home than whites is apparent in the survey results, as 42 percent of Asians, 39 percent of Hispanics, and 31 percent of blacks live with their parents, compared to only 21 percent of whites. MILLENNIAL RENTERS

Approximately two out of five millennials are renters, paying a median monthly rent of $1,075. Affordable rent is the most important reason for electing to live in their current residence and also why the majority rent instead of buy—67 percent said they rent because they cannot afford to buy. While they may not be able to afford to buy a home now, most Gen Y renters feel that

homeownership is important because it gives them the freedom to do what they want with the property, and they expect to buy a property within the next five years. Echo boomers in California prefer single-family homes, as two out of three indicated they plan to purchase a single-family home, compared to only 12 percent who plan to purchase a townhome or condominium. Contrary to popular belief, the ideal home for many would be on a big lot with lots of land (42 percent) in the suburbs (41 percent). Fewer than one in three EXHIBIT 2: IDEAL HOME FEATURES

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While  they  aspire  towards  home  ownership,  the  majority  are  uncertain  or  doubtful  they  could  obtain  a   mortgage  now,  indicating  a  need  for  relevant  information  on  the  process  and  qualification  criteria.   Millennials  are  realistic  about  the  responsibility  that  comes  with  the  territory.  Affordable  home  price,   problems  with  credit/mortgages/taxes  and  maintenance  are  some  of  their  biggest  concerns  about   owning  a  home.  Debt  is  also  a  concern.  About  half  of  Gen  Y  renters  have  student  debt,  which  is  below   $20,000  for  many,  so  they  do  not  feel  it  is  preventing  them  from  qualifying  for  a  mortgage.  However,   the  majority  have  other  debt,  such  as  credit  cards  and  auto  loans,  which  they  feel  would  make  it  difficult   for  them  to  buy  a  home.