By Andrew Martins
Nearly a decade after a housing market bubble caused millions to forego buying homes, prospective sellers and realtors are coming back to the table to close deals with members of the newest, and largest, demographic to ever enter the market.
“Millennials are getting tired of paying rent payments and getting no significant breaks. They’re getting to be 30, they’ve given their parents one grandchild and they’re getting married at 30,” J.J. Elek Realty owner James Elek said. “The millennials are coming onto the market as we speak.”
According to the U.S. Census Bureau, millennials are people born between 1982 and 2000. More than a quarter of the nation’s population falls into this category, with more than 83 million individuals.
As it stands, not only are millennials a major demographic in America, they also now outnumber the previously dominant group of people known as “baby boomers,” who were born between 1946 and 1964 and now account for 75.3 million Americans.
Though the White House Council of Economic Advisers contented that millennials “are less likely to be homeowners than young adults in previous generations,” local realtors believe the number of millennials becoming first-time homeowners has begun shaping the current real estate market.
According to New Jersey Realtors President Tg Glazer, millennial first-time buyers are coming out of the woodwork to buy homes because their previous fears of the market are subsiding thanks to a recovering job market in New Jersey and the need to provide for their young families.
“The joblessness rate is down, so people are feeling a little more secure in their employment,” Glazer said. “During the harder times we were having, people had no idea if they had a job tomorrow, so if you don’t think you can be able to pay for a house, you tend to not buy one.”
According to the state Department of Labor, the unemployment rate has seen a steady decrease in recent years, with as many as almost 34,000 new jobs created in the workforce from 2015 to 2016.
This infusion of almost an entire generation into the housing market is fueling the market, since first-time buyers are purchasing homes, albeit at a later age than later previous generations, that in turn allow sellers to buy and move into new homes themselves.
“We’re taking listings, and if they’re priced right, they will be sold very quickly,” Iris Lurie, owner and broker of Century 21 Mack-Morris Iris Lurie Inc., said. “We’re also seeing multiple offers on the same home, which is something we haven’t seen in a long time.”
In Monmouth, Middlesex and Ocean counties, the housing market has been on a steady upswing since late 2012, according to the New Jersey Realtors, after increased foreclosures in 2006 and 2007 and the widespread use of subprime mortgages sparked the largest economic recession since the Great Depression.
The most recent local market figures for the three aforementioned counties conducted by the New Jersey Realtors show up to 14 percent increases in new listings, up to approximately 25 percent increases in closed sales and an overall shortened length of time on the market for single family units compared to 2015 so far.
Along with the rising job market, the advent of low-interest rates for mortgages has caused favorable conditions for buyers and sellers, whether they are first-timers or moving to their third home.
“There are plenty of options for buyers in a market that has prices that are slowly and steadily accelerating…and for the seller, prices are continuing to rise and because there are buyers out there who are ready, willing and able to buy after sitting on the sidelines for a while,” Glazer said. “This market is pretty balanced.”
Municipalities such as Marlboro, Manalapan, Metuchen, East Brunswick and Freehold have seen increased real estate activity thanks to people moving from the northern reaches of the state, as well as New York and the surrounding area, thanks to their more centralized location, the availability to mass transit, lower prices and exceptionally performing public schools.
“If you’re a commuter, you could move up to Bergen County, but as you get further up north, the prices are even higher. There’s more value around here,” Andrew Zastko, owner and broker for Gloria Zastko Realtors, said. “Though prices have gone up in certain communities, there’s still a lot more value than up in the northern parts of the state.”
With the inclusion of the tech-savvy millennial market in the real estate market, Elek said buyers are arming themselves with a better grasp on what makes a good deal and what they are specifically looking for.
“These buyers, in my 50-year career, are the absolute best buyers I’ve ever seen because of the internet,” Elek said. “Once upon a time, when you called, we would never give an address. Now, the address is in the paper and now everyone has access to information that only the realtors ever had.”
Websites like Zillow and Trulia are used on a regular basis to not only check a home’s listed price, but public information on land valuation and nearby zones mean millennials are able to find out more before even setting foot in an open house.
“These buyers are talented and they know what’s available,” Elek said. “If it’s a good buy, they jump on it and if it’s not, they watch it for months and jump on it when it’s right. This market is a very educated market and it’s a wonderful market.”
Though that accessibility of information can be seen as a largely positive effect of millennials entering the market, Glazer said information without context can be hard to deal with in the housing market.
“It’s kind of a double-edged sword, because there is certainly a lot of information out there and available to every consumer. However, sometimes the interpretation of that information is not something that every consumer has the ability to do,” Glazer said. “Certainly take a look and do research, but then you want to call a realtor because they have the local knowledge.”
In addition, Glazer said millennials also face a special burden when trying to purchase a home, thanks largely to the high cost of higher education.
“Something that we’re still being burdened with is student loan debt,” Glazer said. “Younger people trying to get into the market are having a little more of a difficult time because they have that debt which is keeping them from saving and being able to purchase a new home.”
Though the millennial housing market is more knowledgeable, one aspect that many realtors feel is being overlooked is the favorably low-interest rates attached to loans and mortgages.
Currently, interest rates are hovering around the 3 and 4 percent, when historically they have been almost double that for decades prior.
“It’s a different world today and we should really value the incredible rates we have available today for people to own a great piece of real estate that is priced fairly right now,” Elek said.
With the rates being what they are now, Elek said most buyers are being urged by realtors to purchase now, since prices will only continue to go up.
“If the interest rate goes up one percent, that changes payments incredibly – two points will change it to the point where a buyer may not even afford the same home any longer,” Elek said. “Prospective buyers will be sorry if they don’t strike while the iron is hot.”
Though the housing market is generally considered one of the more steady sources of investment, trends tend to shift from favorable to less favorable as the years go on.
“You’re seeing, year after year now, a consistency and I think a lot of it is based upon affordability,” Zastko said. “Overall, the current market is perfect for both buyer and seller.”
That being said, Glazer believes the current upward trend in the housing market will continue to be strong for years.
“In the grand scheme of things, like anything else, the real estate market does fluctuate,” Glazer said. “Historically, real estate has outperformed any other investment a person can make by far. I think that with the healthy market that we have…it will be healthy for quite a while to come.”