Millennials find a brutal market for buying homes, and it’s not going to get any easier
I bought a house.
Those are four words I never expected to say because I never expected to be a homeowner. As a Millennial smack dab in the middle of my generation, buying a home always seemed like a pipe dream — out of the realm of possibility.
(As a new homeowner, I am actually having more pipe dreams now, but these ones involve actual pipes.)
In the last three months of 2021, about 19% of homes purchased in the Sacramento region were bought by an investor, according to Redfin. That’s an approximate 46% jump over last year. For me, that experience looked like putting in a bid and immediately getting outbid by investors who were able to drop $50,000 or more above asking at a moment’s notice.
I’m a born-and-raised Sacramentan who wants to be a member of this community, yet I was told to look outside of Sacramento if I wanted anything in my price range. I’m sure that communities outside of the Sacramento area have already begun to see a boom in real estate, as our region’s high prices push out buyers looking for something affordable.
Even with my home’s down payment covered by an unexpected inheritance, I struggled for months to find something in Sacramento’s housing market. My budget was $350,000 — which I thought was astronomical — but the median price of a home in our area is around $550,000, so I wound up looking at many homes that needed an incredible amount of work.
One in Antelope had no floors to speak of and big black widows dropping from the ceiling. One in Del Paso Heights had a big backyard — but its floor plan was the size of a postage stamp. Another in Oak Park had at least a dozen, suspiciously patched holes in the wall, right around chest height. All of them needed work, sweat, and more money than I had to spend.
I was tired of spending every spare moment running to see homes across the county, only to lose out on them within hours of placing a bid. I wanted out of the race, so when I saw a home with history, I decided to look past a lot of the flaws and invest some time and money into a home instead of settling for something I wasn’t totally in love with.
I wound up buying a 115-year-old home near Oak Park for $335,000, closing escrow six weeks after I made an offer that was $15,000 below asking. That’s certainly not the norm: In Jan. 2022, 54% of homes in the Sacramento region sold above the listing price. Approximately 14% of sales were done entirely in cash, and for the past 19 straight months, there has been less than one month’s housing supply, according to Ryan Lundquist, a Sacramento real estate analyst, and appraiser.
It’s a beautiful old home and I’m slowly making it mine, but there are thousands of dollars of work that needs to be done on the rotting roof, the sagging foundation, the cracked plumbing leaking into the crawlspace — and don’t even get me started on how much it cost to tent and fumigate for the termite problem.
But that’s indicative of what was available to me, even with a $350,000 budget. My dad was fond of pointing out that he’d paid the equivalent of my down payment for his entire home in the early 1980s. I had good luck, privilege, and generational wealth on my side, but that still wasn’t enough to compete in Sacramento’s market in 2022.
The market is flush with high prices for new homes and low availability of affordable homes, while interest rates climb steadily higher. In order to take advantage of the rate I was offered by my lender, 4.25%, I rushed to sign and buy a home while I still could.
Moreover, real estate isn’t exactly something they teach you in school. I found the process confusing most of the time, with a new vocabulary to learn and understand. Buying a home is an investment unlike any I’ve ever made, and I’m still not entirely convinced homeownership will inherently hold the same security to my generation as it did to previous ones.
Especially if a great number of us will never be able to invest. Millennials were raised at war, graduated into a recession, and have now spent some of their prime buying years holed up in a pandemic. Rising costs, pre-existing debt, and tighter lending standards are often too large a barrier to overcome.
Millennials are the most likely generation to buy a home that needs work, and the most likely to end up regretting it. I feel too lucky to let regret my choice. Every day I hear horror stories of young people getting fleeced by landlords and rentals, and I’m grateful that I will never have to answer to another property management company again.
The path to homeownership for my generation shouldn’t depend on generational wealth or white privilege or even just luck. My generation is too often held to the same expectations as prior generations without being given the same opportunities to achieve them.
