There's been a lot of speculation from media types that Millennials can't or won't buy homes, and it seems to be turning out that way around here.
According to the monthly real estate report from Arizona State University's Center for Real Estate Theory and Practice, Millennials in the Phoenix area "are less engaged in home-buying than might be expected."
If you've read one of the dozens and dozens of reports on Millennials and home ownership, then you're aware that the bar wasn't all that high to begin with.
"This represents pent-up demand, but at the moment, the realized demand is much lower than expected," the ASU report states. "A larger percentage of the population than normal is choosing to rent, either because it fits their lifestyle or from financial necessity, having neither the credit history nor down payment needed for a home purchase. Indeed, competition for rentals is much stronger than competition for homes to buy. If it persists, this could lead to rent increases over the next two years."
They might be on to something with that part about "financial necessity." Check out some of the numbers we cherry-picked from this report about the people who are buying homes:
- At the top end of the market sales of single family homes over $500,000 grew 21 percent over December 2012. Sales of single family homes below $150,000 fell 47 percent.
- Luxury homes grew their market share from 21 percent to 25 percent of the dollars spent while the lowest-priced homes fell from 20 percent to 11 percent.
- New home sales are showing the largest percentage price increase in all three measures over the last year. December's new home sales included a high percentage of active adult homes which tend to sport higher prices because of all the community facilities.
- Newly constructed homes in Maricopa County during December were on average 31 percent larger in square feet of living space compared with the average for normal resales.
- The percentage of residences in Maricopa County sold to owners from outside Arizona was 17.3 percent in December, rebounding from 16.1 percent in November but much lower than the 20.3 percent we saw in December 2012.
- For some considerable time, cash purchases have been running at an unusually high level. In Maricopa County the percentage of properties recording an Affidavit of Value and purchased without financing was 25.7 percent in December 2013, significantly down from 35.5 percent in December 2012. We consider 7 percent to 12 percent the normal range for cash buyers.
- In December 2013, 12.7 percet of all homes purchased with an Affidavit of Value in Greater Phoenix were to be owner-occupied but used as second or vacation homes.
Those lines might shed some light on why Millenials around here aren't the ones buying homes.
While it's not exactly a new revelation that Millenials aren't snatching up homes, the overall lower demand gets at one of the main points of the report: Home prices in Maricopa and Pinal counties probably aren't going up that much in 2014.
From the report:
It is already clear that 2014 will give us a much slower rate of appreciation than the furious pace we have witnessed during 2012 and 2013. We have been through enormous turbulence since 2002 and it will be a relief for many to be operating in a more balanced market. However if the current cooling trend that started in July continues for much longer, 2014 could easily see average and median home prices move a little lower than they were at the end of 2013.
Click here to read the entire monthly report.
Got a tip? Send it to: Matthew Hendley.
Keep Phoenix New Times Free... Since we started Phoenix New Times, it has been defined as the free, independent voice of Phoenix, and we would like to keep it that way. Offering our readers free access to incisive coverage of local news, food and culture. Producing stories on everything from political scandals to the hottest new bands, with gutsy reporting, stylish writing, and staffers who've won everything from the Society of Professional Journalists' Sigma Delta Chi feature-writing award to the Casey Medal for Meritorious Journalism. But with local journalism's existence under siege and advertising revenue setbacks having a larger impact, it is important now more than ever for us to rally support behind funding our local journalism. You can help by participating in our "I Support" membership program, allowing us to keep covering Phoenix with no paywalls.