Millennials—the generation of adults born between 1980 and 1998—are now an active force in the housing market. In fact, nearly one-quarter of recent homebuyers on Oahu identified as Millennials, and that number is expected to grow as Millennials age and start families.
Although would-be homebuyers 37 years old and younger face more hurdles than Gen-Xers or Boomers, like more student-loan debt and higher housing costs, thanks to near historically low interest rates and a smart strategy, homeownership in Hawaii is possible.
- Find a Realtor you can trust. An experienced Realtor can walk you through the home-buying process step by step—helping you avoid common pitfalls and suggesting locations or properties you may not have considered. They can also help recommend a loan officer to help with financing. Read: How an agent helps with homeownership.
- See a loan officer and get pre-qualified. You won’t know how much house you can afford until you talk to home loan officer. Read: What to ask a Hawaii Lender
- Set your budget. Many first-time homebuyers are surprised to learn that a 20 percent down payment isn’t necessary—in fact, waiting until you’re able to save up 20 percent could cost you in the end by delaying your entry into the market. In some cases, you can put down 10, five or even zero percent, if you qualify. When you get pre-qualified, it will help with budgeting. Read: Determine your ability to own a home.
- Get your finances in order. If your credit score is less than ideal or you have outstanding debt, now’s the time to tighten your belt and put off any big purchases, like a new car.
- Prioritize your needs and wants. Consider your lifestyle and priorities: Are you handy, or would you prefer to let someone else handle repairs and yardwork? Do you like to go out to new restaurants and bars, or are you a homebody? “Many Millennial buyers enjoy the convenience of metro Honolulu,” said Scott Higashi, CEO of Locations. “While a condominium in the urban core can cost you more initially, you may be able to go without a car and you’ll save time not being stuck in traffic. Younger buyers in particular take advantage of being able to walk or bike to work.” Your Realtor will help you with this process.
- Think beyond just the purchase price. If you’re looking at a condo or townhome, be sure to check out the maintenance fees. Depending on the property’s age, location and amenities, fees can vary quite a bit. Many newer buildings offer state-of-the-art fitness centers, pools and outdoor gathering spaces, which add value to your investment. If you’re considering a single-family home, especially an older home, be sure that you’re financially prepared should your home need a major repair or new appliance.
- Get a home inspection. While you may be tempted to skip this step—particularly if the home appears to be in good condition—you should always have a professional evaluate the property before you buy to avoid costly repairs later.
- It doesn’t have to be your “forever” home. Many younger first-time buyers are searching for a home like the one where they grew up—but with a median price of $750,000 in May for a single-family home, Millennials may need to adjust their expectations. “Your first home doesn’t have to be your forever home,” explained Higashi. “It should be your stepping stone to building wealth and equity so when you’re ready for that bigger home in ten years, you’ll be able to shop for your dream home.”
- Don’t forget about resale value. Since your first home doesn’t have to be your forever home, be sure to consider its resale value. Your Realtor can advise you on which properties will offer you the best Return On Investment, or ROI.
- Attend a Future Homeowners Seminar. Get free expert home-buying advice from a Locations real estate professional—you’ll have a leg up on your competition when you’re armed with a sound strategy. Read: Homeowner Seminar Information