As a generation, millennials have never had it easy. In addition to living through world-altering events, wars, and economic crashes, older generations have blamed them for everything. Including their inability to buy their own homes, despite it being more difficult to do so than ever.
In the meantime, millennials have embraced long-term rentals. Renting has its downsides, what with the fact that you never own the place you live in. However, it comes with a lot less stress and associated costs. While renters insurance in California is more expensive than in most other states, it is still only a fraction of the price of homeowners insurance. Furthermore, maintenance costs for California homeowners are high, whereas renters need not worry about that.
But millennials are evolving and many are coming into their own wealth. The real estate boom leading up to COVID-19 was largely attributed to a major uptick in millennials buying homes. The pandemic disrupted that, but property soon became extremely coveted.
For Myrtle Beach residents looking for real estate, the impact on property caused by the millennial generation’s evolution is huge. Here is why.
Economic Recovery and Financial Literacy
Property prices began to rise at a higher rate than expected before the pandemic because many millennials became ready to buy housing around the same time. Economic recovery after the recession hit a peak. While many people still struggled to make ends meet working two or three jobs, there were suddenly far more successful young people than before.
This was accompanied by an increasing financial literacy. It has become a trope to hear millennials complaining about how school failed them with absolutely no training in real world financial matters. But with more online content than ever, they built up their own financial literacy.
As such, we had millions of people with growing reserves of savings and a better understanding of why homeownership may be their best next step.
This occurred throughout the country, but in late 2019 and early 2020, the demand for housing was cooling. Homes were spending more time on the market and prices were going down. Then the pandemic occurred.
Pandemic Opportunities
The pandemic wreaked havoc on the economy, but for those who managed to weather the storm, it provided opportunities. Millennials in stable careers, who now had greater financial literacy than ever, saw an opportunity to finally buy property. The Fed had lowered interest rates and they could get mortgages that were far cheaper than ever in their adulthood.
Throughout the country, property prices rose at unprecedented rates. South Carolina was no exception, and the increased demand for property led to record low inventory in Myrtle Beach. Prices as of May 2022 were tens of thousands of dollars higher than even a year earlier and inventory was low.
But things are beginning to change. We’re seeing what is being called ‘the great deceleration’ happening throughout the country. The Fed has raised interest rates and getting a mortgage would be expensive even if house prices were at pre-pandemic levels. We may be about to see costs plummeting. Alternatively, they may just cool down.
A lot of this depends on millennials.
Risk, Reward, and Fortitude
Traditionally, a cooling down in any market can lead to panic, causing investors to sell and prices to plummet. That could well be what is about to happen. However, millennials are different to generations who came before them, for a number of reasons. For one thing, they have more data on which to base decisions, potentially decreasing the tendency to panic sell.
Another reason they’re different is that risk has been sold to them as a good thing. We’ve seen this with cryptocurrencies and NFTs. There is significant risk in investing in crypto and NFTs, and that has led to both huge surges and massive crashes, all over the course of a couple of years.
It remains to be seen what the case will be with housing, which is a far more difficult investment to offload. In Myrtle Beach, that may be what determines the future of the housing market. The safest decision at the moment is to hold off on buying property, but no one can really say with any accuracy what is to come.