How Millennials Are Changing The Gilbert Housing Market

So it seems like millennial might be buying homes after all.  The younger generation dubbed as millennials have been a punching bag for older generations on many topics over the years, and home ownership is no exception. Millennials are known to stay home longer, rent instead of own and move around frequently.  However recent survey data is showing that our young troublemakers may be starting to grow up.

A study from the Urban institute shows that 7.1 million people aged 25 to 34 now own their own homes.  This is 37% of the millennial population.  Not only that but nearly 60% of millenialls now aspire to own a home.  This is a very big change from recent surveys.  So what do these new statistics mean for the Gilbert housing market as a whole?

Favorable Outlook

Home ownership was once frowned upon by millennials.  While older generations looked down on them for it, it made sense for a couple of different reasons.  The biggest reason is that they couldn’t afford it.  While the federal reserve states that inflation is at 2% annually they must not be including housing when they release that figure.  Housing has become increasingly expensive over the last few decades and to young adults entering the workforce saving up 20% for a down payment can seem like an impossible goal.  In fact, According to a 2019 home affordability report it will take new entrants into the workforce an average of 14 years to save up 20% for a down payment.  That is a staggering number and it is easy to see how millennials could get deterred and just assume home ownership is not for them.  Secondly, owning a home means putting down roots.  When you buy a home you typically need to stay in the home for 2 to five years to make the investment worth it over just renting.  For a young single person or even a young couple that isn’t sure where they want to end up, a 1 year lease may seem like a more favorable option than a long term housing commitment.  millennials also came of age through the great recession of 2008 that was caused by massive losses in the housing market, this could also have a negative effect on their willingness to take a risk on a huge asset such as a house.

Still Some Skepticism

While we have seen a drastic rise in home ownership in millennials it may not all be roses quite yet.  The same study also showed that of the 37% of homeowners from the age of 25 to 34, that 63% of those homeowners regretted purchasing the home and had wished they had rented instead.  Some of the reasons that the respondents cited were unaccounted for expenses.  When you rent a home you know what your monthly budget is going to be for housing.  When you own a home you can have unexpected expenses that many first time buyers were not adequately prepared for.  At The Reeves Team, we make sure to prep first time home buyers on some of the expenses they can expect.  It is important to know what shape a homes roof is in when purchasing as well as having the rest of the house inspected for common concerns such as Air Conditioner or pool maintenance that may be in the future.  Another reasons home buyers regretted the purchase was due to the fact they had to sell sooner than they had anticipated.   Many jobs require frequent relocation, and we live in a world that is becoming more and more transient with multiple reasons we may need to leave the place we planned on being for the foreseeable future.  Because there are large overhead costs with purchasing and selling a home this can be a real negative when homeowners decide to sell sooner than they anticipated.

So what do you think?  Is it a good thing that millennials are starting to get excited about home ownership?  Or are you still skeptical based on how many of them resent their home purchase?  Let us know in the comment section below!

Should I Rent My Home Or Put It On Airbnb

Back in the good old days it was simpler.  If you were buying a new home you had limited options.  You could sell your existing home or keep it as a rental property.  If you kept it as a rental property you would either need to find a property management company and pay a third party a significant amount of your rent, or you would need to set aside a large amount of your time and dedicate it to being a landlord for your property.  Then everything changed.  In 2008 in the face of the financial crisis,  Airbnb was launched and the real estate world would never be the same.  Now second home owners and investors have another viable option.  Airbnb allows owners to open up their units to short term tenants, in much the same way a hotel would work.  Many home owners come to The Reeves Team with questions regarding the benefits of renting vs listing on Airbnb so we are going to break down the options to help you decide which is best for you.

Where is your home located?

Like most things in real estate location is a huge consideration when determining what to do with your home.  If you have a home in a highly trafficked area you will likely see higher returns on your investment.  Another important thing to consider is will your home be in demand more at certain times of the year than others.  For instance, if you have a home very close to the cubs spring training facility you can expect great returns when travelers come into town to view the games, but the rest of the year your returns will be more on pace with the average in the valley.  Now for instance if you have a home near downtown Gilbert or downtown Scottsdale you can expect higher than average returns on your Airbnb listing throughout the year due to there not being a real off season.  You can also expect higher returns during the winter months than in the summer as more people flock to the valley during the winter than they do in the summer.

Do you need a stable return from your investment?

As we mentioned above you can expect some variation in income if you decide to list your home on Airbnb.  This is even more true if you have a home that will have high demand but only seasonally.  You will need to budget accordingly and plan ahead for the months that do not have as high of demand and make sure to stay current with your pricing so you do not under charge during the peak months and lose out on potential revenue.  You must also make sure you adjust your prices down during the off season to make sure your property continues to get utilized and is priced competitively with other homes on the market.  With renting you know what you are getting.  Renting is more of a set it and forget it situation. You know the price you will be receiving every month and can budget accordingly.  If you are someone who is ok with fluctuations and wants to maximize the potential of your home Airbnb may be the way to go.  However, if you like consistency renting may be a better option for you.

Do you want access to use your property during some periods throughout the year?

One of the biggest benefits to using Airbnb is that you can have access to your property when you need it.  You can block out dates and stay in your home as you wish.  This is great for home owners that do not live in the valley but that visit frequently.  If you already live in the valley and don’t need access to the property then this is not a consideration to take into account.  If you have a home up north in the white mountains you use as a vacation home, this would be a perfect opportunity to rent on Airbnb the weekends it is not in use.

How big is your home?

The size of your house will matter when determining the amount you can charge for your property on Airbnb. If you have a one bedroom condo in a business area you will be in good shape, but if its in a family travel destination it may not be as marketable.  Also if you have 5+ bedrooms in your home you can anticipate multiple families staying in the house and will be able to charge significantly more than a 3 bedroom house.

Let us know what you thought of this breakdown between renting and listing your second home on Airbnb.  Have you tried both? If so which do you prefer?  Let us know in the comments below.