Rather than attempting to save money while living in an apartment, or renting more millennials are choosing to live at home to save the money to purchase their first home. According to the National Association of Realtors, this strategy is gaining momentum with 27% of first-time buyers in 2022 moving directly from a friend or family members home. In 2023 that number trended lower to 23% but remains elevated.
The trade off does come with a relinquishing measure of independence, and to achieve a milestone of becoming a homeowner which is becoming more out of reach for young adults. Jessica Lautz, Deputy Chief Economist & VP of Research at NAR says this generation faces a host of obstacles when it comes to owning a home. Student loan debt, car payments, child-care costs, and historically high rent costs make living at home a more attractive and affordable solution for millennials. The national median for one-bedroom apartment is roughly $1,500 a month, with large urban areas that are a beacon for young professionals sitting much higher. The average rent in Tampa, according to RentCafe is $1,923 – not including utilities cost and additional costs that may come with renting. In St. Petersburg, that cost jumps up to over $2,000.
Young adults are also facing a competitive real estate market with elevated listing prices and high interest rates, causing many to feel hopeless and frustrated. The median age for first time homebuyers jumped to 36 last year, compared to the age of 29 for their parents' generation. Home prices also remain at record highs with the U.S. median sitting at $420,000 and prices in the west at much higher prices sitting at $600,000 and slightly higher prices at $430,000 in the northeast. In November 2023 according to Realtor.com the median home listing price in Tampa was $455k, with a 3.4% upward trend year-over-year. In St. Petersburg the median home price was up 12% compared to last year with a median selling price of $431k as of November 2023 according to Redfin data.
Interest rates on 30-year fixed mortgages only recently dipped below 7%, and borrowing costs are more than double than what they were early last year. Inventories are also low for starter homes and remain at record lows. Younger buyers continue to be outbid by baby boomers swooping in with all-cash offers. According to NAR data, there were fewer existing home sales in October 2023 than any month since 2013. 2023 is on track for the fewest existing home sales of any year since 2011.
2023 census data shows 20% of men between 25 and 34 live with their parents – a number that has steadily increased since the 80’s. 12% of women in that age range live at home a number that has also seen an increase.
Millennials who opt to move into family homes in hot housing markets are often still priced out of their neighborhood. Additionally, those living in multigenerational households are less likely to live in poverty.
Source: The Washington Post
Thank you for your interest. For more information on the Tampa Bay Market or to discuss your property valuation needs feel free to contact:
Mike Cliggitt, CCIM, MAI, MRICS
Commercial Realtor
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