Mike Sullivan, 31, bought his first house a few years ago after saving up for years, but it's not a typical one or two-bedroom starter house. He paid $360,000 for the four-bedroom, 2,700-square-foot ranch on Long Island. He calls it his "forever home."
Millennials put off buying their first home as they struggled with the aftereffects of the Great Recession. Now that they're snapping up houses in greater numbers, many older millennials are making up for lost time: They're bypassing the traditional gateway to home ownership — the starter, or entry-level, home — and buying larger, more expensive houses where they're likely to raise families and maybe even grow old.
"They rented for longer," says Diane Swonk, chief economist at Grant Thornton. "Now they're going to where they want to stay," possibly for decades.
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By renting or living with their parents for years, many Millennials in their mid-30s can now afford pricier houses because they've socked away more money and moved up to better jobs, Swonk says. And they need the extra space because they're finally getting married and having kids after deferring those transforming events. Also nudging them into more lavish houses is a severe shortage of lower-priced starter homes.