AMERICAN DREAMERS

By Mick Lochridge

Millennials — young adults in their 20s and 30s — are defying expectations, at least when it comes to buying their first homes. They aren't all that interested in living in urban centers where they can walk or bike to local markets and pubs. They want their own space — and plenty of it.

"What we're seeing goes against the idea that millennials want to live downtown," says Rose Quint, assistant vice president for survey research for the National Association of Home Builders. "They're like the rest of us. They behave like the Generation X. When it's time to settle down, they want detached, single-family homes in the suburbs."

Defined as anyone born between 1981 and 1996, millennials number about 75.5 million, outpacing baby boomers — their parents — by a half-million, according to the U.S. Census Bureau. 

That's not their only No. 1 ranking. Millennials are the largest generation in the American workforce, and they make up the largest share of homebuyers at 36 percent. 

And 65 percent of those were first-time buyers, according to the latest Home Buyer and Seller Generational Trends Report from the National Association of Realtors.

With its affordable homes and strong economy, Central Florida has the makings of a millennial magnet. Orlando, where the median age is in the mid-30s, was ranked the No. 3 millennial homebuying hot spot by Realtor.com. Forbes magazine also has tagged Orlando as a rising homebuying destination for that group.

Those numbers all add up to one thing: Millennials are ready to buy their first homes — a fact not lost upon Central Florida’s housing industry.

"Millennials are the next wave of homebuyers, and they're a large group," says Kelley Finley, vice president of marketing for the Florida division of AV Homes. "They're waiting until a little bit later to make their first purchase, because their expectations are higher than those of previous generations."

Millennials now have children, Finley adds, so they're looking at neighborhoods that offer good schools and are walkable so they can push strollers and trot alongside dogs. "They're willing to move to more suburban areas that offer these options," she says. "One reason is because the suburbs are usually more affordable than urban areas."

Those local trends are true nationwide, according to Lou Nimkoff, president of the Orlando Regional Realtor Association and owner-broker with Brio Real Estate Services: "Millennials are most concerned about the quality — safety, schools, maintenance and so forth — of their new neighborhoods."

Overall quality, Nimkoff notes, was the driving factor in home selection for 65 percent of millennial homebuyers. Close behind was commuting time (62 percent) followed by affordability (49 percent.)

The affordability factor — how much home, if any at all, you can buy — is an issue for buyers of any age. But for millennials, there are additional complications. 

Many are uneasy because of the economic collapse — and the related plunge in home values — of a few years ago. 

"Millennials grew up watching the last housing cycle play itself out — and many saw their parents go into foreclosure and lose homes," says Sean Snaith, an economics professor for 12 years at the University of Central Florida.

"The old belief that buying a home and building equity is good for retirement, it turned out, wasn't a sure thing," he adds. "That takes the shine off the idea of buying a home. The market has come back — but millennials know it can be volatile."

Snaith, who's also director of UCF's Institute for Economic Competitiveness, notes another issue facing millennials and other first-time buyers: The challenge of qualifying for a mortgage — and having money for a down payment — while trying to pay off student-loan debt.

That financial hurdle is borne out by data from the Orlando Regional Realtor Association. 

The association's first-time homebuyer affordability index showed that the median price for a home in Central Florida was $201,450 as of April. Those who earn the area's median income of $39,755 are still about 10 percent shy of earning enough to qualify for a median-priced home.

Nationwide, the median price of homes bought by millennials in 2017 was $220,000. Sixteen percent paid $200,000 to $249,999, 12 percent paid $250,000 to $299,000, and 11 percent paid $150,000 to $174,999.

A 2016 report by the National Association of Home Builders found that millennials expect to pay a median price of $219,967 for their next home.

First-time buyers shopping for less-expensive homes might consider a townhome instead of a detached single-family home. The NAHB's Quint noted a trend in the growth of townhomes because “they use less land and produce a lower price point.”

Still, in 2017 only about 7 percent of millennials nationwide who bought a home selected a townhome. That same year, 85 percent bought a single-family home and 1 percent bought a condominium, according to the realtors' buying trend report.

To help first-time homebuyers, the federal government offers programs through such agencies as FHA, VA, Fannie Mae and Freddie Mac. Many builders also offer incentives, such as helping with closing costs.

For example, Hanover Family Builders (hanoverbuilds.com) pays up to $10,000 in closing costs, says Matt Orosz, company president.

Among its other developments, Hanover offers communities in Lake and Polk counties with first-time buyers in mind. The company’s townhomes in Davenport start in the $180s, while detached single-family homes in Groveland start at $208,000.

In addition to price and location, Hanover includes amenities designed to appeal to millennials and first-time buyers. 

"We've paid special attention to features that can get people really excited about moving out of a rental and buying a new home," Orosz adds. Those features include digital shower systems and smart-home packages with thermostat and light-switch controls. 

"One of the biggest trends we're seeing is single individuals purchasing homes and then renting rooms to their friends," he says. "It’s a smart way to build equity over time — and in many situations, the buyer ends up living for free."

At least a couple of builders in Central Florida created brands of homes specifically for first-time buyers. Starlight Homes (starlighthomes.com) by Ashton Woods has communities in Lake and Polk counties, while D.R. Horton's Express Homes (drhorton.com/orlando) are found in more than 20 communities in Polk, Lake, Osceola and Volusia counties.

"Express Homes offers open-concept floorplans perfect for entertaining, and include all appliances in the base price," says Amber Sambuca, marketing manager. "Our neighborhoods are geared toward first-time buyers looking for a sense of community and the ability to make a home their own."

Express Homes offers both townhomes and single-family detached homes. With an average size of 2,000 square feet, homes range in price from $178,000 to $294,000. As with other builders, D.R. Horton offers help with financing and closing costs.

Sambuca says entry-level homes attract working professionals seeking an alternative to renting as well as young families with children looking for community amenities such as pools, clubhouses, parks, pavilions, trails, playgrounds, fitness centers, gathering rooms and dog parks.

David Weekley Homes (davidweekleyhomes.com) offers communities in Seminole and Lake counties aimed at first-time buyers, with both townhomes and detached single-family homes priced from the $260s to $350s.

"Savvy first-time buyers are willing to spend more money on a quality-built home with an industry-leading, multilevel warranty program," says Brent Bartholomew, division president. "Many of today's first-time buyers are more discerning — and are looking for a combination of great value with high-quality craftsmanship."

Community amenities also can be key to a homebuying decision for first-timers. 

"All our communities targeting first-time buyers offer community pools with cabanas as well as proximity to dining, shopping, entertainment and major roadways," Bartholomew adds. "Some also feature playgrounds, dog parks, walking trails and more."

As with other builders, David Weekley also will help with closing costs, paying $5,000.

"We build in family-friendly locations that offer convenience to urban amenities while keeping the quiet charm of suburban life," Bartholomew notes. "Additionally, first-time buyers are attracted by pricing, amenities, customization options and customer service."

The demographic of a David Weekley buyer is wide-ranging, he adds: "We may have a family with teenagers buying their first home after years of saving, a young couple recently married and looking to put down roots, or even a single young professional ready to make an investment in his or her future rather than continue paying rent."

AV Homes (avhomesinc.com) promotes its Eagle Point development in Groveland as a good choice for first-time buyers, with homes priced from the $260s.

Eagle Pointe residents have easy access to water recreation and golf courses in addition to major thoroughfares leading to Orlando. The community offers views of Cherry and Cook lakes. 

"Our homes offer open floorplans with large kitchen islands — perfect for entertaining," says Kelley Finley, marketing vice president. Homes also boast ample pantries and oversized lanais as well as walk-in showers in the master suite — plus plenty of customization options.  

She notes that for AV Homes, the typical first-time buyer is 33 years old, married with young children.

Nimkoff, with the Orlando Regional Realtors Association, says that about a quarter — 26 percent — of millennials who bought a home in 2017 expect to live there for 16 or more years.

"This surprisingly high percentage indicates that many millennials are moving away from the traditional mindset of purchasing a starter home," he says. "They want to remain long enough to build equity, then sell and have enough for a bigger 'forever' family home."

“As much as things change, they stay the same,” adds UCF’s Snaith. “When millennials start getting married and having children, they’re like the rest of us.”