We hear a lot about how the Millennial generation is moving back in with the parents rather than buying homes of their own. The data tells a different story, though—Millennials may be delaying buying a home, but they most definitely still believe in the American dream of homeownership.
Facts on Millennials and Homebuying
Yes, Millennials are buying houses! The Generation Y segment of the Millennial generation, born between 1980 and 1995, represents 31 percent of homebuyers and 12 percent of home sellers, according to a National Association of Realtors report. Of these buyers, 24 percent were repeat buyers, and they’re typically upsizing.
But it’s also true that Millennials are less likely to be homebuyers than young adults in previous generations. They entered adulthood during the Great Recession, which has made it harder for them to find their financial footing. They’re staying in college longer, often pursuing graduate degrees (and accumulating student debt), and getting married later than previous generations. Poor credit could be to blame for low homeownership rates, as well, with 67 percent of those under the age of 30 holding credit scores below 680.
Millennials Want to Buy Homes
Contrary to popular belief, Millennials do want to buy homes. In fact, a majority of Millennials want to become homeowners, and 75% believe owning a home is an important long-term goal.
An Allstate/National Journal Heartland Monitor poll assessing the motivation and desire to buy a home showed that older and younger Americans equally believe homeownership is a smart goal. But those in the younger generation find it harder to believe they’ll ever be in a position to buy—almost a fifth of younger respondents feel buying a home is not a financially viable option.
Young Renters would Prefer Owning a Home
While it’s true that many young people are currently renting or living with parents, research shows they would prefer to own a home for several reasons. For those young people who move back into the family home in adulthood, they’re able to experience firsthand the many reasons why investment in property makes more sense than short-term rentals. Often they are wanting to recreate what they remember from their childhood, and they value the privacy and security that comes with living in a nice home.
When considering a place to call home, a top factor for Millennials is finding a way to use their home as a means of self-expression. Young people want to bring personality into their homes, and that’s not often possible in rentals where the landlord frowns on painting walls or hanging art.
Millennials are Postponing Homebuying
While many Millennials do indeed plan to one day buy homes, they’re taking a different track to homeownership than generations past. They want to make sure they do it the right way, ensuring they can afford the house and actually be able to sustain it. Young people today are choosing to live with parents and family in multigenerational homes rather than renting in the hopes of building up income and saving up money to purchase an ideal first home.
That’s a smart strategy, since finances have definitely been holding Millennials back from becoming homeowners. When they do buy, research shows Millennials are interested in larger houses that could one day accommodate additional family members (and not necessarily the micro-apartments and tiny houses we hear about in the media).
Many times Millennials aren’t aware of home buying options available to them. While young renters believe a down payment and closing costs would price them out of buying a home, many don’t realize there are lower down-payment options available. The Federal Housing Administration (FHA) insures loans for first-time homebuyers that allow for a 3.5 percent down payment, for example, while Fannie Mae and Freddie Mac reinstated the 3 percent down payment program in early 2015. Our team can assist, research and educate on the options.