Young adults are purchasing homes at the highest rate since the recession ended. According to a recent report from Housing Wire, around 35% of all home purchases were made by millennials in the last quarter. This generation has been responsible for more housing purchases than any other for five years in a row.
Market heat maps show that millennials are making more purchases in some areas than others. The Southwestern United States is one of the most popular homebuying destinations. However, there are a few things that millennial homebuyers need to know.
The strong job market in Arizona, New Mexico and other southwestern states is driving market growth
For the immediate future, the housing market in Arizona, New Mexico, Western Texas and Southern California is especially strong. There are a lot of reasons for this. However, the robust job market is the biggest.
Job openings have increased by 11% over the past year. This job growth rate is stronger in this region than almost every other part of the United States.
Since millennials are in their prime working years, they are benefiting the most. As a result, this is driving home purchases for the forseeable future.
Immigration crackdowns and tariffs will probably drive demand for existing homes
A record number of people in Arizona and neighboring states are taking out permits to build their own homes. This is a viable option while construction costs are fairly low. However, there are a couple of changes that are going to drive housing costs higher.
The recent immigration crackdown is one of the changes. As the Trump administration continues to report larger numbers of undocumented immigrants, contractors will have a more difficult time finding people to work on construction. Many experts estimate that approximately 14% to 25% of all construction workers are undocumented immigrants. However, that figure is probably a lot higher in states closer to the border, such as Arizona.
If more undocumented immigrants are deported, contractors will need to hire American citizens at higher wages. This is going to mean that they will have a harder time pricing their services at such discounted rates.
Tariffs are also going to have an impact. Many construction materials are imported from abroad. The cost on these materials will be marked up, which will lead to higher costs for contractors. Of course, the consumer is going to have to pay the price.
This means that consumers are going to find that it is cheaper to purchase existing properties, rather than building new ones. People selling existing homes will be able to do sell at a more attractive rate, which is increasing the turnover rate of homes for sale in Maricopa AZ. This should help buyers that are on a tighter budget. Of course, this is all contingent on the longevity of the Trump Administration‘s immigration and trade policies.
A possible tech boom may fuel housing market growth
A growing number of tech companies are getting tired of higher taxes and costly regulations in Silicon Valley. Many of them are looking to move to other states. A surprising number of companies are moving to Texas, but Arizona and New Mexico are also attractive locations. There are currently over 8.000 tech companies in Arizona.
This could have a very positive affect on the local economies in those areas. It probably will not happen to the degree it did in California, which drove consumer costs through the roof. However, it should have a positive influence and create a lot of new jobs. This will ultimately help the housing market too.