Millennials have long been painted as a generation doomed to be eternally broke and renting forever because they spend all their money on avocado toast. But one segment of the generation is defying those stereotypes.
Not only are millennials buying homes, but their their “starter homes” are multimillion-dollar homes rather than the traditional humble first property, Jacqueline Davalos recently reported for Bloomberg.
“In the past, people bought a modest property, lived in it until starting a family, and then traded up to a larger property,” Bradley Nelson, Sotheby’s International Realty’s chief marketing officer, told Bloomberg. “Millennials are finally coming out of the gate, and it’s not uncommon for the first purchase as a first time homebuyer to be a multimillion-dollar luxury home in the US or internationally.”
Rather than purchasing in expensive cities like New York City and San Francisco, millennials are buying their first homes in smaller, more affordable cities like Austin, Texas, and Aspen, Colorado, according to Bloomberg.
With these real-estate purchases, millennials are dispelling two of the greatest myths that have defined their generation.
Myth No. 1: The generation is doomed to rent forever
It’s long been forecasted that millennials — defined by the Pew Research Center as those born between 1981 and 1996 (ages 25 to 41 in 2021) — will be a generation of eternal renters.
It’s true that millennials typically rent longer than earlier generations. In 2018, millennial home ownership was at a record low.
But now, millennials make up the largest share of home buyers in the US, according to a 2020 survey from the National Association of Realtors. The delay in buying means millennials had more time to save, so now some can afford to skip a typical starter home and buy a multimillion-dollar luxury home as their first purchase, as Insider’s Hillary Hoffower has reported.
Young professionals have been snapping up homes at record rates and prices during the pandemic in places like Texas, Florida, and Colorado, partially thanks to the rise of remote work.
“Millennials are thinking about their overall lifestyle,” Nelson told Bloomberg. “It’s propelled these second-tier markets into the top of the interest list.”
Myth No. 2: Millennials are all broke
Many millennials are indeed broke.
Some may be dropping millions on their first homes, but a major generational wealth gap means that others are barely scraping by — particularly during the pandemic, as Hoffower recently reported.
“This pandemic is widening economic inequalities within millennials, with some millennials relatively unscathed economically and others just completely financially devastated by unemployment losses, increased childcare costs, lost economic opportunities, and lingering health problems that they or family members are going to experience,” Christine Percheski, a demographer and associate professor of sociology at Northwestern University, told Hoffower last month.
The majority of millennials have less wealth than their parents did at their age. They tend to have high amounts of student debt and spend a larger chunk of their income on housing and other nondiscretionary expenses.
Yet the residential real-estate market — now dominated by millennials — continues to thrive during the pandemic.
Home sales in the US hit a 14-year high in August 2020, according to a September 2020 report from the National Association of Realtors. And a record number of homes are selling within two weeks, per a Redfin report from last week.
The housing market is in such a frenzy that the US could actually run out of new homes.