For millennials looking to buy their first home, the hunt feels like a race against the clock.
In the seven years since the housing crash ended, home values in more than three-quarters of U.S. metro areas have climbed faster than incomes, according to an Associated Press analysis of real estate industry data provided by CoreLogic.
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For millennials looking to buy their first home, the hunt feels like a race against the clock.
The high cost of home ownership is also putting extreme pressure on 20- and 30-somethings as they try to balance mortgage payments, student loans, child care and their careers.
Jake and Heather Rice, both 35, moved to Utah last year from Mountain View, California, where the biggest employers are tech giants such as Google, Symantec and Intuit and the median home price is a dizzying $1.4 million or so.
Nationally, home prices since 2000 have climbed at an annual average rate of 4%, according to the data firm CoreLogic, while average incomes have grown at an annual rate of 2.6%. And in the metro areas with the strongest income growth — for example, parts of Silicon Valley — home prices have risen even faster.
Scott Robbins, president of the Salt Lake Board of Realtors, sees the price growth as having changed the habits of first-time buyers. They are putting less money down and carrying more debt. And some first-time buyers are looking at condos and duplexes instead of houses.
Andy and Stacie Proctor made a bid on a house in the Salt Lake City suburbs, only to rescind it upon learning there were 13 rival offers. At one point, they almost decided not to buy a house just yet, figuring the bubble was going to burst eventually, said Andy, a 35-year-old who hosts the podcast "More Happy Life."
Roughly 1 in 6 homes sold in the Salt Lake Valley since 2004 have been in a 4,100-acre development called Daybreak, being built on land once owned by mining giant Rio Tinto. About 5,500 homes have been constructed, with an additional 14,500 units planned — enough in total to house roughly 65,000 people.
Parry Harrison, a 26-year-old divorced father of two small children, bought a townhouse in Daybreak for $309,000 in March. His down payment came in large part from selling his previous home, which appreciated a robust 25% in the two years he owned it. He hopes to upgrade again in five years, when his children might need more space.
ADVANCE FOR RELEASE SATURDAY MAY 25, 2019, AND THEREAFTER - This April 13, 2019, photo, shows homes being built in suburban Salt Lake City. For millennials looking to buy their first home, the hunt has felt like an anxious race against the clock. (AP PhotoRick Bowmer)
ADVANCE FOR RELEASE SATURDAY MAY 25, 2019, AND THEREAFTER - In this April 13, 2019, photo, real estate agent Scott Robbins stands in front of a home, in suburban Salt Lake City. Home prices in the greater Salt Lake City area have surged 8% in the past year Robbins, president of the Salt Lake Board of Realtors, sees the price growth as having changed the habits of first-time buyers. (AP PhotoRick Bowmer)
That gap is driving some first-timers out of the most expensive cities as well as pressuring them to buy something before they are completely priced out of the market.
ADVANCE FOR RELEASE SATURDAY MAY 25, 2019, AND THEREAFTER - In this April 13, 2019, photo, Parry Harrison, 26, speaks during an interview outside his townhouse in the Daybreak development, in South Jordan, Utah. Harrison bought a townhouse in Daybreak for $309,000 in March, using proceeds from the sale of a house that appreciated a robust 25% in the two years he owned it. (AP PhotoRick Bowmer)
The high cost of home ownership is also putting extreme pressure on 20- and 30-somethings as they try to balance mortgage payments, student loans, child care and their careers.
"They do want all the same things that previous generations want," said Daryl Fairweather, chief economist for the brokerage Redfin. "They just have more roadblocks, and they're going to have to come up with more creative solutions to get the homes that they want."
A Redfin analysis found these buyers are leaving too-hot-to-touch big-city markets — among them, San Francisco and Seattle, where the tech boom has sent housing prices into the stratosphere. Many millennials are instead buying in more reasonably priced neighborhoods around places like Salt Lake City, Oklahoma City and Raleigh, North Carolina. That, in turn, is driving up housing prices in those communities.
ADVANCE FOR RELEASE SATURDAY MAY 25, 2019, AND THEREAFTER - This April 13, 2019, photo, shows homes in suburban Salt Lake City. The Salt Lake City area is among the hottest spots for first-time buyers in part because of a staggering burst of home construction and a surge of high-tech jobs. (AP PhotoRick Bowmer)
Jake and Heather Rice, both 35, moved to Utah last year from Mountain View, California, where the biggest employers are tech giants such as Google, Symantec and Intuit and the median home price is a dizzying $1.4 million or so.
The couple and their three children settled into a 4,500-square-foot house in fast-growing Farmington, just far enough away from Salt Lake City to feel rural but minutes from a major shopping center and Heather's sister. Their monthly mortgage cost of $3,000 is roughly the same as the rent for their former two-bedroom apartment in Mountain View.
"We didn't expect to stay in California because of how ludicrous the prices had become," said Jake, a mechanical engineer who works in the medical device sector.
ADVANCE FOR RELEASE SATURDAY MAY 25, 2019, AND THEREAFTER - In this April 27, 2019, photo, Andy Proctor peers through the window at his new home in Vineyard, Utah. For some millennials looking to buy their first home, the hunt feels like a race against the clock. Andy and his wife, Stacie made a successful offer on a three-bedroom house for $438,000. (AP PhotoRick Bowmer)
Nationally, home prices since 2000 have climbed at an annual average rate of 4%, according to the data firm CoreLogic, while average incomes have grown at an annual rate of 2.6%. And in the metro areas with the strongest income growth — for example, parts of Silicon Valley — home prices have risen even faster.
The Salt Lake City area is among the hottest spots for first-time buyers in part because of a staggering burst of home construction and a surge of high-tech jobs. The suburb of Lehi, which served as a film location for the 1984 Kevin Bacon movie "Footloose," about a rural town that banned dancing, is in what is now known as "Silicon Slopes" because Adobe, eBay and Microsoft have opened offices there.
Of course, the influx of people from unaffordable cities is contributing to the very problem they were trying to escape: Home prices in the greater Salt Lake City area surged 10.8% in the past year, while average incomes rose only 3.9%, according to figures from CoreLogic and the U.S. Bureau of Labor Statistics.
ADVANCE FOR RELEASE SATURDAY MAY 25, 2019, AND THEREAFTER - In this April 13, 2019, photo, Parry Harrison, 26, speaks during an interview in his townhouse in the Daybreak development, in South Jordan, Utah. Harrison bought a townhouse in Daybreak for $309,000 in March, using proceeds from the sale of a house that appreciated a robust 25% in the two years he owned it. (AP PhotoRick Bowmer)
Scott Robbins, president of the Salt Lake Board of Realtors, sees the price growth as having changed the habits of first-time buyers. They are putting less money down and carrying more debt. And some first-time buyers are looking at condos and duplexes instead of houses.
There is also more pressure on families to earn two incomes, rather than letting one choose to be the stay-at-home parent. This could be a particular challenge in the Salt Lake City area, where families are generally larger, mostly because of the influence of the Church of Jesus Christ of Latter-day Saints, and about 28% of the population is under 18, compared with nearly 24% nationwide.
"The one thing that really would make it even more sustainable is if wages would increase," Robbins said. "Whereas before you could have a young couple buy a place and only one of them would work. Now, you need both of them to work."
ADVANCE FOR RELEASE SATURDAY MAY 25, 2019, AND THEREAFTER - This April 13, 2019, photo, shows rows of homes, in suburban Salt Lake City. The Salt Lake City area is among the hottest spots for first-time buyers in part because of a staggering burst of home construction and a surge of high-tech jobs. (AP PhotoRick Bowmer)
Andy and Stacie Proctor made a bid on a house in the Salt Lake City suburbs, only to rescind it upon learning there were 13 rival offers. At one point, they almost decided not to buy a house just yet, figuring the bubble was going to burst eventually, said Andy, a 35-year-old who hosts the podcast "More Happy Life."
But there was also the opposite risk: "There is the question about whether it's going to keep going up," his 31-year-old wife said.
The couple ultimately made a successful offer on a three-bedroom house for $438,000 in Vineyard, Utah. It includes an apartment that could be rented out to defray their mortgage payments. That will make it easier for them to afford starting a family.
ADVANCE FOR RELEASE SATURDAY MAY 25, 2019, AND THEREAFTER - This April 13, 2019, photo, shows homes in suburban Salt Lake City. For millennials looking to buy their first home, the hunt has felt like an anxious race against the clock. (AP PhotoRick Bowmer)
Roughly 1 in 6 homes sold in the Salt Lake Valley since 2004 have been in a 4,100-acre development called Daybreak, being built on land once owned by mining giant Rio Tinto. About 5,500 homes have been constructed, with an additional 14,500 units planned — enough in total to house roughly 65,000 people.
The homes range from $180,000 to $1 million. One of the guiding principles is that homeowners can upgrade or downsize without having to move out of the neighborhood.
But that cycle of upgrading might not continue as it did for past generations. Home values need to rise for people to build equity that they can use to buy a new house. Yet if they rise too fast, it will become too expensive for many people to move up.
ADVANCE FOR RELEASE SATURDAY MAY 25, 2019, AND THEREAFTER - In this April 27, 2019, photo, Andy and Stacie Proctor stand in their new home in Vineyard, Utah. For some millennials looking to buy their first home, the hunt feels like a race against the clock. The Proctors ultimately made a successful offer on a three-bedroom house for $438,000. (AP PhotoRick Bowmer)
Parry Harrison, a 26-year-old divorced father of two small children, bought a townhouse in Daybreak for $309,000 in March. His down payment came in large part from selling his previous home, which appreciated a robust 25% in the two years he owned it. He hopes to upgrade again in five years, when his children might need more space.
"It's definitely not a forever home," he said. "It's a lot more convenient if I have move-up opportunities that are right next door."
Follow Josh Boak on Twitter at https://twitter.com/joshboak
ADVANCE FOR RELEASE SATURDAY MAY 25, 2019, AND THEREAFTER - This April 13, 2019, photo, shows homes in suburban Salt Lake City. The Salt Lake City area is among the hottest spots for first-time buyers in part because of a staggering burst of home construction and a surge of high-tech jobs. (AP PhotoRick Bowmer)
ADVANCE FOR RELEASE SATURDAY MAY 25, 2019, AND THEREAFTER - This April 13, 2019, photo, shows homes being built in suburban Salt Lake City. For millennials looking to buy their first home, the hunt has felt like an anxious race against the clock. (AP PhotoRick Bowmer)
ADVANCE FOR RELEASE SATURDAY MAY 25, 2019, AND THEREAFTER - In this April 13, 2019, photo, real estate agent Scott Robbins stands in front of a home, in suburban Salt Lake City. Home prices in the greater Salt Lake City area have surged 8% in the past year Robbins, president of the Salt Lake Board of Realtors, sees the price growth as having changed the habits of first-time buyers. (AP PhotoRick Bowmer)
