Joe Moshé Says Younger Generation of Homebuyers Will Propel Real Estate Market
May 1, 2014
But Student Debt, High Cost of Living on Long Island May Push Millennials to Purchase Homes Elsewhere
PLAINVIEW, NY — Joe Moshé, Owner/Broker, Charles Rutenberg Realty, Inc., says the youngest generation is the reason for the ongoing success of the residential Real Estate market as they make their big-ticket purchase now and another one a few years later. But on Long Island, Mr. Moshe says, the next generation of homeowners — facing student debt, high taxes and living expenses, lack of affordable housing and choices in lifestyle — will seek their next home somewhere else.
The 2014 National Association of Realtors® Home Buyer and Seller Generational Trends study reported that 87% of homebuyers age 33 and younger — this age group is called the Millennial generation — considered their purchase a good financial investment. Further, 31% of recent home purchases were made by Generation Y (those born between 1980 and 1995) and 30% of homes were recently bought by Generation X (those born from 1965 to 1979). Gen Y also made up the largest share of first-time homebuyers at 76%, and 97% of this group financed their own purchases.
“Those who have bought a home were either able to save up until the time was right to buy or received money from family members, either as a gift or to assist in the purchase,” Mr. Moshe said. “These Millennials have picked up on the fact that a home purchase is a wise long-term investment and homeownership is an important part of their lives.”
But what is preventing many younger homeowners from buying a home, says Mr. Moshe, is debt. The study found that 12% of all recent buyers delayed buying a home due to outstanding debt. With four-year college educations costing between $90,000 and $179,000, according to data from The College Board, more than half of Millennial buyers who took longer to save up for a down payment cited student loan debt as the reason for the delayed purchase.
For those who are looking to buy a home on Long Island, it becomes even more difficult. Although the median home price in Long Island fell in March to $345,000 (compared to $350,000 the previous month), that price is higher than the national median price of $198,500 and New York’s median price of $217,500. Further, the National Association of Home Builders’ Housing Opportunity Index ranked the Long Island area 203rd in affordability out of the nation’s 224 housing markets.
“The Long Island housing market has become a victim of the ‘brain drain,’” Mr. Moshé says. “Once these future homebuyers graduate high school, they will attend college outside the region. They know that, once they graduate, they cannot return home because the cost of living is too high and there are no good-paying jobs that will allow them to purchase a house. So they relocate to a more affordable place to live.”