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More Than 70 Percent of Kansas Millennials Plan to Buy a Home in Next 5 Years: BMO Harris Bank Study

Survey of Kansas residents shows 71 percent of those aged 18-34 will purchase a home in the next five years Sixteen percent of Kansans purchasing in next 5 years will be first-time buyers BMO Economics: student debt causing some pause with young homeow

LEAWOOD, KS -- (Marketwired) -- 06/18/14 -- According to the BMO Harris Bank Housing Confidence Report issued today 71 percent of Kansas millennials (those ages 18-34) and 48 percent of Kansans across all age groups plan to purchase a home in the next five years. The percentage planning to purchase in Kansas City mirrors the rest of the state (49 percent). Sixteen percent of Kansas respondents with a five-year purchasing timeline will be first-time homebuyers.

The study showed likelihood to buy is highest among millennials in Kansas, and increases with a longer purchasing timeline:

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 Timeline for Purchase    Ages 18-34  Ages 35-54   Ages 55+    Total Likely
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 Next 12 months               21%         15%         9%           15%
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 Next 2 Years                 32%         22%         21%          25%
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 Next 5 Years                 71%         40%         32%          48%
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"I'm heartened to see this level of confidence in our local housing market, especially among the younger generation," said Amy McDonald, Kansas City Mortgage Market Manager, BMO Harris Bank. "Buying a home is such an important decision, and there are a lot of factors to consider, not least of which is financing. Buying a home is typically the largest purchase anyone makes; working with a mortgage banker can really help make the process less stressful."

According to the study, 74 percent of Sunflower State residents currently own and 26 percent rent. The top three reasons homeowners cited for owning rather than renting were they considered it a good long-term investment (70 percent), somewhere to call their own (63 percent), and the stability and certainty homeownership brings (58 percent). The top three reasons people in Kansas cited for renting rather than owning were financial instability (41 percent), not yet ready to settle down (36 percent) and having to deal with less upkeep and maintenance (31 percent).

"While the housing market is on the upswing, the record level of student debt carried by young Americans does pose a challenge to many in their 20s and 30s hoping to purchase their first home," said Michael Gregory, Head of U.S. Economics, BMO Capital Markets. "Student debt levels have more than doubled in the last seven years to $1.1 trillion. The financial burden means renters are delaying entering the purchasing market, which has a trickle-down effect on the overall housing recovery."

According to BMO Economics, U.S. home prices are still rising. The S&P/Case-Shiller metric is up 12.4 percent year-over-year during the past 12 months (ending March) and 12.8 percent in the first quarter of 2014. Although the annual pace is slightly slower than the post-recession 13.7 percent year-over-year peak hit last autumn (and a cooling is welcome at this point given affordability considerations), prices are still up a cumulative 25 percent from their January 2012 lows.

The study also showed ownership by property type:

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                    National           Kansas             Missouri
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 House              95%                96%                98%
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 Condo/Apartment    5%                 4%                 2%
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At the national level, the poll found:

  • Three-quarters (74 percent) of American millennials will buy in the next 5 years
  • Nearly half (45 percent) of millennials said they will buy in the next two years, and a third (32 percent) will buy in the next 12 months
  • Just more than a tenth (12 percent) of renters say they prefer to rent and never plan to buy

Survey results cited in this report are from a Pollara survey commissioned by BMO Harris Bank using interviews with an online sample of 2,500 Americans, including 250 from the state of Kansas, conducted between April 1st and 7th, 2014. The margin of error for a probability sample of 2,500 is +/- 1.96%, and 250 is +/- 6.2% 19 times out of 20.

For more trends, tips and tools for your financial future, visit bmoharris.com/YourFinancialLife.

About BMO Harris Bank

BMO Harris Bank provides a broad range of personal banking products and solutions through more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris® and BMO Harris Bank® are trade names used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $582 billion in assets (as of April 30, 2014).

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