An Australian real estate mogul has deduced the real reason the millennial generation are finding themselves increasingly unable to buy homes: avocado consumption.
There is a lot of discussion in the Real Estate industry regarding the “Millennial Buyer”. This generation represents more than one quarter of the nation’s population and achieves about 35% of all consumer spending. According to this Time.com article they are spending their money on avocado toast and not homes. In 2016 only 32% of home owners were first-time buyers, the lowest point since 1987. Studies have revealed that this age group place value over convenience such as the ease of eating out and spend their money on "experiences" over ownership of goods. While this may be true we think there is more to the story than avocado toast.
The modern housing market is a dangerous, uncertain place for millennials, who are mostly first-time buyers. They are fiercely competing for scarce real estate in the major metropolitan areas against repeat buyers and foreign Investors who have more buying leverage and experience. A shortage of available homes has driven up prices -- particularly among starter homes that tend to fall within first-time buyers' budgets. This dovetailed with things like the staggering costs of higher education, delays in marriage that make young two-income households increasingly scarce; a fluid job market that makes it risky for members of an increasingly mobile workforce to make such a significant long-term investment; city governments reluctant to permit the construction of badly-needed starter homes; and skyrocketing rents that make it difficult for young people to accumulate the savings necessary to make a down payment.
But yeah. Avocados, though.
What does this mean to you? The struggle is real for the first time home buyers. If this is you one of the best things you can do is keep on saving. (in other words make avocado toast at home). If you are in a multi offer situation and have 20% down vs someone with just 10% that could be the golden ticket.
Need a good agent who knows the art of bidding wars and can help you compete against all cash offers? Call us we’ve got your back!