The following content is provided by the Ohio Housing Finance Agency.
For years, members of the housing industry have wondered when millennials, born between the years of 1981 and 1996, will begin to purchase homes. In recent months, millennials have surpassed every generation as the largest group of homebuyers. What is motivating this generation to enter the housing market, and what are the obstacles preventing Ohio’s millennials from purchasing homes? And most importantly, how can millennials overcome these challenges and achieve the dream of homeownership?
Too many millennials, not enough homes
A recent survey from the National Association of Realtors identified Ohio as having the most affordable housing in the United States. In fact, four Ohio metropolitan areas ranked among the top five most affordable metros in the United States: Youngstown, Dayton, Toledo and Akron.
Despite high affordability, millennials are still struggling to find an affordable home to purchase. According to the Ohio Association for Realtors, 74 percent of Ohio realtors responded in a survey that low housing inventory is affecting millennials’ ability to find a home. This means that more millennials will be renting longer, which hinders them from building equity on a home. By the time millennials turn 30, they will have spent an average of nearly $100,000 on rent.
As inventory remains low, working with a qualified realtor is key. Real estate professionals are often notified of new listings before they are made available to the general public. Millennials should remain patient and continue to work with their realtor to find the home that’s right for them.
Saving, saving, saving
Saving for a down payment remains the largest obstacle for millennial homebuyers. However, millennials may be miscalculating how much money is really necessary for a down payment. In Cleveland, Cincinnati and Columbus, the average down payment is less than 10 percent of the home’s purchase price. According to USA Today, Ohio homebuyers typically only need to spend two-and-a-half years saving for a home.
State and local organizations may offer down payment assistance to help millennials and other prospective homebuyers purchase a home. For example, the Ohio Housing Finance Agency will provide either 2.5 percent of 5 percent of the home’s purchase price to eligible homebuyers. Some organizations even help veterans, recent college graduates and more purchase homes through career-related and other types of assistance programs. These programs may help bridge the financial gap that sometimes prevents millennials from becoming homeowners.
The burden of student loans
More than 80 percent of people between the ages of 22 and 35 cite student loans as the reason they haven’t yet purchased a home, according to the National Association of Realtors, and almost a fifth or borrowers owe more than $100,000. Some argue that those who receive higher education have higher incomes, though student debt continues to be an obstacle due to high debt-to-income ratios and lower credit scores.
To improve their credit scores, millennials can meet with housing counseling agencies in Ohio to discuss the best ways to improve their financial situations.
As more millennials enter the job market, increase their incomes and start families, more millennials will want to purchase homes. Working to overcome these obstacles to homeownership will ensure that younger generations can find the homes of their dreams, build wealth and establish roots in the state of Ohio.
Call to action
For more information on homeownership programs in Ohio, visit the Ohio Housing Finance Agency’s website: www.ohiohome.org.
As the state’s leader in affordable housing, the Ohio Housing Finance Agency offers a variety of programs to help homebuyers, renters, senior citizens and others find quality housing that meets their needs. The Agency also works with developers and property managers of affordable housing throughout the state to improve Ohio’s housing.
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