Why Hiring a Millennial Can Help Your Real Estate Investments

Okay, so that might not be a solution, exactly. But, a recent report by the National Association of Realtors (NAR) did point to a notable hindrance for the housing market: 33% of recent home buyers are first-time buyers—which is significantly lower than the historical norm of 40%.

Investor’s Business Daily points out that this is:

“ . . . the lowest first-timer participation rate since 1987 and it coincides with NAR’s forecast that 4.9 million home sales in 2014 will fall 200,000 short of last year’s total.”

“Why?” you might ask.

At this point in time, the market would expect millennials to fill the niche of the first-time homebuyer. Yet, there are many factors that prevent them from purchasing homes:

• Greater student debt burdens
• Rising rents
• Underemployment
• Slower wage growth
• Avoidance of marriage and baby rearing

Not only do these factors contribute to a drop in first-time home buying, they also account, in part, for the 13% of homebuyers who purchased a multi-generational home this year so that they could welcome their children over the age of 18 back into the house—among other reasons.

Is this really a problem for real estate investors?

A healthy, growing market increases your chances of being able to sell your rehab project or other property investment at a higher price—even if it might be a little more challenging to find the next bargain for a subsequent project. But, the market appears to have halted in growth. In fact, Daren Blomquist says,

“We’ve had a nice period of growth in home prices, but I think we’re going into a period of stagnant price appreciation, and the only thing that could change that is if incomes went up.”

Blomquist also references another cause of this deceleration: single-family home investors pulling back in Phoenix, Southern California and Atlanta, among others.

As you are probably aware, the housing market is influenced by numerous factors, many of which we don’t have much control over. That doesn’t mean you shouldn’t continue to invest in real estate.

The truth is, there is never an ideal market for real estate investment, but real estate investment works in every market. Your success largely depends on your ability to make wise, deliberate decisions, leverage your resources at hand and spot a good deal when you see it.

But, it doesn’t hurt to get a handle on current factors that influence the market and do what you can to address the inhibiting factors and encourage the positive trends. This shouldn’t translate to taking unreasonable risks, but chances are, we all have more influence over the market than we think we do.