Why Millennials Don’t Buy Homes
Housing prices are rising faster than income, student loan arrears and more frequent job changes are some of the reasons.
Stringr / Wochit
Lauren Durphy and Sal Corso, a first-time home buyer, spent several weeks in a tiny hotel room with their two cats and one dog, waiting to move to their new townhouse in Eatontown when the project was shelved.
Derphy began to doubt. The couple spent several months looking for a home, ready to take root and get married. But their time at the hotel was running out and they had nowhere to turn.
“We love (the house) a lot,” Derphy said. “But so many times I ask, ‘Is it worth it at the moment? “But we also cannot retreat. Are we going to start over and repeat this whole process again? “
Derphy and Corso are among the first buyers to elbow their elbows through Shore’s frantic real estate market to try to find a home that could potentially affect the fate of the cities of Monmouth and Ocean County, which have spent the past decades in the shadow of Jersey City, Hoboken, and Manhattan. and Philadelphia.
But the journey was not smooth. First-time buyers are faced with small purchases; sellers who ask them to opt out of safeguards such as evaluations and checks; and competition from investors rushing to buy houses with cash.
This process can have emotional consequences. And some real estate watchers fear first-time homebuyers – young people trying to place bets and earn wealth – are being pushed out of the market.
“The danger is that you have taken the traditional real estate market and turned it into something else,” said Drew Anlas, division manager for NJ Lenders Corp., a mortgage banker in Shrewsbury. “This is what I’m trying to get my hands on.”
On the hunt
Derfi and Corso, both 28 years old, work in technology. They rented a one-bedroom condominium in Long Island City, New York, with their cats, Paddington and Haven, and their dog, Cappuccino Carrots.
When the pandemic hit in March 2020, they were quarantined in their 600-square-foot home, working side by side all day, and quickly decided they needed more space.
They targeted Monmouth County, which had a lot to offer: beaches, restaurants; prices are more affordable than, say, Connecticut or Long Island; and easy access to their offices, Derfy in Jersey City and Corso in Manhattan.
They donned masks and set out in search of homes, joining a wave of their cohorts in a generation of millennia that traveled from Manhattan and North Jersey to the Shore in search of protection from the pandemic.
They were helped by record low mortgage rates and technology that prevented them from commuting and working from home.
In 2021, migration accelerated.
In the first six months of 2021, 3,409 single-family homes were sold in Monmouth County, up 19.4% from the same period last year. Ocean County had 4,307 single-family home sales, up 16%, according to the trade group of the New Jersey Association of Realtors.
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Buyers quickly sold out the houses. For example, in Ocean County, stocks plummeted from a 6.2-month stock before the pandemic to a 1.7-month stock in June, a group of realtors said in a record low.
However, new buyers were at a disadvantage. They usually enter the market with less money than other buyers, who can use cash or profits from the sale of an existing home to support their offer, said Samara O’Neill, a broker for Porter Plus Realty in Jackson.
Across the country, the share of first-time home purchases fell from 33% in 2019 to 31% in 2020, the lowest since 1987, according to a report by the National Association of Realtors.
“You come to the market with cash offers, trade wars and missed checks,” said Samara O’Neill, a broker for Porter Plus Realty in Jackson. “This is the new norm.”
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Finding Derfy and Corso seemed easy at first. In November, they made an offer for a home at the Cottage Gate complex in the Atlantic Highlands, which was accepted. They were scheduled to close in January.
They notified their landlord in Long Island City. Derphy paid them to keep their belongings and move to Airbnb in Middletown’s Navesink neighborhood until mid-May.
But then things went awry. An online appraisal of the home due to the pandemic was below their offer, which means they couldn’t get a mortgage to cover the entire price.
The second appraisal approached their offer by reopening the deal. But the sellers did their best to find a new home. Derfi and Corso decided that it was too risky to wait and continued their search.
They looked at the old houses in Shrewsbury, Little Silver and Fair Haven, but worried that the houses would require too much maintenance. In March, Derphy stumbled upon new townhouses under construction in Eatontown that looked sleek and for less than $ 500,000 were within their range.
Derfi and Corso bet on a unit and got it. They planned to close on May 15th, just as their Airbnb was ending. Derfi and Corso were thrilled.
“We were ready to go,” Derphy said.
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Building materials are running out
Every two weeks they drove past their new home to watch. But at the end of April, we noticed that work began to slow down. And they began to exchange what they described as increasingly intense messages with the project’s real estate agent; the closing date was postponed all the time.
Construction, built by Lakeview Development Townhomes LLC in Freehold, has been delayed, according to Michelle Neidl, real estate agent for the Long and Foster project.
“COVID,” Neidl told the Asbury Park Press. “The supplies came in very slowly. And there weren’t enough people in the city. People got sick, so it slowed down our work. “
May 15th came and went. Derphy, Corso, and their pets moved from Airbnb to a 250-square-foot room at the Blue Bay Inn in the Atlantic Highlands that cost $ 3,650 a month, which cost more than their Long Island City condo.
Their offices were still closed due to the pandemic, so the couple worked closely, talking to each other during meetings, not knowing how long the standby time would last. They needed to buy furniture. They needed to plan a wedding. And the closing date kept moving. Until June 1, June 15, June 30.
“It was very, very stressful.” said Corso.
Derfi and Corso have seen contractors make progress. But they had to leave the Blue Bay Inn before July 15th.
They were looking for additional temporary accommodation, but Jersey Shore was booked for the summer before they had time to rest. Durphy’s friend was about to leave town and offered the couple her apartment for 10 days.
Eatontown wants young people
Derfi and Corso had no options, and they reached out to Eatontown Mayor Anthony Talerico to try to expedite the vetting process.
Talerico chimed in, saying the prospect of young families moving to Eatontown is a welcome sight for the area. Since the closure of Fort Monmouth in 2011, the state has seen more than 10% drop in student numbers in Eatontown.
“There are a lot of young people appearing in the city,” Talerico said. “Remember, we lost a lot of families during the (closure of) Fort Monmouth. We could definitely use more children in our school system. “
However, real estate agents and lenders say many new buyers still get stuck, sometimes living at home with their parents, sometimes renting out while they wait for the housing market to slow down.
Katie Bernadino Dobin, a real estate agent with Burke and Mann, said she recently sold an entry-level home in Long Branch for $ 245,000 in cash to an investor who bought 12 homes that she planned to rent out.
“Prices for single family homes have gone up a lot,” said NJ Lenders’ Anlas. “Homes that used to cost $ 300,000 to newcomers are now selling for $ 425,000 and $ 450,000.”
“How do you re-attract a new buyer if you’ve basically pulled them out of the market price?”
Derfi and Corso moved into their new mansion on July 24, 10 months after the search began.
They have a full-time job that allows them to work from home. They have an employer who helped pay for their travel expenses. And they’ve gone through the stress that their marriage portends.
They also met a new neighbor.
“She said she stayed at the hotel for 109 days,” Derfy said. “So we’re not the only ones.”
Michael L. Diamond is a business reporter who has written about New Jersey’s economics and health care for over 20 years. You can reach him at email@example.com.…