In the not-too-distant past, young adult lives going according to plan went something like this: By the age of 25 or so, young people had settled into a life and career path and were looking to put down roots.
In other words, they were ready to buy a house.
In recent years, it may have taken some creative financing to make that big move happen – a gift from parents, perhaps, or a rent-to-own property, a low- or no-down-payment loan or a fixer-upper.
But lately, a new paradigm has emerged among members of the millennial generation – generally, those 35 and younger. In larger numbers, they’re postponing purchasing a house – if they’re planning to buy one at all.
Realtor Kyle Ness, president of the Upstate Alliance of Realtors in Fort Wayne, says he’s already seen young people put off home-buying.
Think of it this way – 35 is the new 25, he says.
I think some of it is a commitment issue. My perspective is they’re less committed about a lot of things in life. They’re getting married later. They’re having kids later. They’re not expecting to stay in one job. A lot of decisions, they’re getting pushed down the pike.
Rick Fletcher, a real estate agent with North Eastern Group in Fort Wayne, says the area’s affordability factor – with median home prices staying relatively steady and well below the national average – has made the situation less acute here than in larger, higher-priced cities.
He thinks area millennials will eventually buy. But young people are busy with other things at the age at which they used to become homeowners.
I don’t think I’ve ever come across someone who says, I’ll never own a house.’ I think most people still want a house, he says.
If they’ve delayed (buying), it’s because they’re finishing school, or they’re getting married or have just finished getting married, or they’ve just taken a job but they might not stay in it long. There’s a lot of unknowns at that age.
Fort Wayne native Jonathan Souder, 27, has seen the home-purchase decision from both sides.
He’s already lived in Portland, Ore., and Nyack, N.Y., renting in those places because he was going to school.
In Portland, he says, he was part of a younger population that made for a very apartment-driven climate. Nicer houses closer to the city were $300,000 to $400,000, he says. I couldn’t afford that then – or now.
When he returned to Fort Wayne about two years ago and started earning a good income working as a carpenter at a construction company, he still rented, thinking it was really temporary for me.
But he decided to stay, in part because nowhere else seems to have the strong chance I’d be able to afford a house anywhere worth living.
When Souder started house-hunting a few months ago, he was able to find homes in the $100,000 to $130,000 range, just above the median price, or halfway point, of all area homes recently sold. The house he finally made an offer on was built in the 1920s on East Drive on the near north side.
It’s one of those hidden gems, he says.
A lot of my co-workers own homes, and they’ve found a lot of great starter homes they can afford, he adds.
The idea of owning a house seems so very grown-up, but I guess in the end, people who have said to me, Why rent when you can buy?’ convinced me.
I had thought if I rent, and my pay changes, my housing can change more readily. But at this point, I feel I’m stable enough in my job. I’ll have my own space, and the ability to work on a house drove me past the sheer weight of the decision to buy a house.
Justin and Dayna Shutt, both on the cusp of 25, recently moved back to Fort Wayne after going away for college; Justin also did a stint in the military. They’ve been looking for a house since November.
They say they didn’t like renting when they were students, but they’ve had to delay a home purchase because of finances. They’re now living with relatives.
We actually found out we couldn’t get preapproved for a loan, Justin said this month at a Sunday afternoon open house on Fort Wayne’s far north side. We probably would have bought back in January if that hadn’t happened.
The two, both Carroll High School graduates, say they were told one of them had to have had a job in Fort Wayne for at least a month before they could be pre-qualified for a mortgage.
Dayna is now working as a nurse, and Justin is finishing school soon. The two are still wondering about their debt level because of Dayna’s student loans – she says she thinks they amount to about $50,000.
They didn’t tell us anything about that, she says of the couple’s pre-qualification appointment.
Adam Smith, an agent with Coldwell Banker Roth Wehrly Graber of Fort Wayne, says student debt can be problematic for millennials. Nationally, the average student debt rose 58 percent from 2005 to 2012 – from $17,233 to $27,253, according to a report last year from FICO, a national credit scoring company.
With lenders nowadays, they’re not lending money the way they used to, he says.
On the other hand, many millennials apparently aren’t in the market for home loans.
An analysis of U.S. Census Bureau data by USA Today found that renting among 25- to 34-year-olds went up by more than a million households nationwide from 2006 to 2011. Meanwhile, homeowners in that age group fell by nearly 1.4 million – the largest decline in any age group.
A 2011 study by the Pew Research Center found that nearly 30 percent of 25- to 34-year-olds were living with their parents.
Still another, recently released by the youth advocacy organization Generation Opportunity, pegged unemployment among 18- to 29-year-olds at more than 15 percent when adjusted for those who have stopped looking for work – more than double the reported percentage of unemployment in all age ranges.
But postponing buying a house for even a few years could be a good thing for millennials, Smith says, especially if that means their debt-to-income ratio is in better shape. They’ll probably be able to afford more house, he says.
What’s surprising to me is I’ve seen some of them buy $300,000, $400,000, houses, where they’re not buying the starter houses, he says. They’re looking at buying something they’re going to be in long term, instead of moving in a couple of years.
Smith says he isn’t seeing as many younger millennial buyers as he did a few years ago. He jokes that maybe it’s because he’s no longer in that age range.
But he hopes those who can jump into the market, will – while interest rates are down and prices remain lower than in many areas.
There are opportunities there, he says.