Homeownership Among Denver Millennials

By Stephen Stribling

As a parent of two adult children I am no stranger to Millennials, the largest age group in the U.S. with an estimated 83.1 million individuals. Representing more than one quarter of the nation’s population, Millennials are already having a dramatic impact on social, political and economic trends.  

In Denver, we are seeing a trend of Millennials increasingly delaying the purchase of a home. The city is currently experiencing one of the highest year-over-year gains in home values at 10.2 percent. However, the current Millennial professional does not earn enough to purchase a home in the metro Denver area. The city was also ranked No. 12 in Bloomberg's “The 13 Cities Where Millennials Can't Afford a Home.” There are four reasons why this is true in today’s market: the Great Recession of 2008-2009, stiff competition for jobs, student loan debt and a changing set of priorities. 

In the U.S., buying a home was long considered a milestone that symbolized financial success and a transition into adulthood. But as Millennials watched the value of their parents’ home drop drastically during the 2008-2009 housing bubble, many have grown wary of homeownership. For years, they were brought up to believe that housing prices never decreased. But in the span of just one year, they experienced firsthand housing values falling through the floor. As a result, many are putting homeownership on hold – even questioning it altogether. 

In particular, Denver Millennials are experiencing a unique dilemma. Now may be a great time to purchase a home when compared to the high cost of renting. However, the city’s desirability is also causing an influx of Millennials to relocate here, creating more competition for high-paying jobs. 

Another contributing factor is the hefty burden of student loan debt, which often can impede the requisite debt-to-income ratios required by many mortgage lenders. National student loan debt now tops $1 trillion

For the few Millennial professionals who can afford to make a down payment and are not carrying student debt, buying a home could be the right fit. One way to alleviate costs is to have roommates that can help contribute to the mortgage – an option that some of our Millennial clients consider. However, if student loans are still a concern, I would suggest paying down some of that debt first. 

While it is evident that external factors such as the housing plunge and increased competition for higher-paying jobs has off put homeownership among Millennials, the lack of interest may also stem from internal sources such as their evolving set of priorities. It was evident from a discussion with my children and their friends that traveling, purchasing the latest tech gadgets and saving for retirement are placed as much higher priorities than purchasing a home.

With today’s market, it’s understandable why Millennials are hesitant toward purchasing a home. However, trends are constantly evolving and what it is now, may not be what it is tomorrow. It will be interesting to see how the factors contributing to Denver Millennials’ ability to afford a home will evolve – for better or for worse – and how it will ultimately affect their attitudes toward homeownership in the future.

Stephen Stribling is a Financial Advisor with the Pelican Bay Group, Global Wealth Management Division of Morgan Stanley in Denver. He can be reached at 303-572-4889 or stephen.l.stribling@ms.com. 

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