If you read some of the current stereotypes in the media about millennials, you may think that they are a lazy and entitled generation. However, that’s just not true. Yes, millennials were burdened by more student loan debt than previous generations. They also entered the work force during the Great Recession. And many to most of them have less financial mobility and fewer options in their careers. You would think that all of these factors would mean that homeownership was out of reach for most of them. Well, what you are about to read will surprise you and may even shock you!
Millennials Are Starting To Lose Confidence in Homeownership
Housing prices and interest rates are at an all-time high currently. Perhaps that’s why a recent survey done by Real Estate Witch revealed that only 21% of millennials were confident that they would be able to buy a home this year. That’s down 31 points from just last year. Real Estate Witch is an online publication that Clever Real Estate owns.
Today, approximately 52% of millennials are homeowners. But it remains to be seen if that statistic will remain constant, much less increase.
Millennials Have to Jump Through Many Hurdles Just to Afford a Home!
The median house in America sells for approximately $420,000. However, most millennials (68%) of them can’t afford that much house. They stated in surveys that they may only to be able to afford housing costing less than $400,000. Just last year, 57% of millennials made the same statement.
But that’s not to say that the 32% of millennials who can afford to buy a home will have an easy time doing so. They face their challenges. About 96% of millennials surveyed are frightened about the entire home-buying process. Many of them worry that they won’t be able to find an affordable dream home, period! About 44% of them worry about that.
A little over a third of them (35%) are afraid of surprise or hidden costs. About 34% of them are afraid they won’t qualify for a mortgage. Millennials give many other reasons why they think homeownership is challenging:
- 52% feel that housing is unaffordable.
- 46% say that interest rates are too high.
- 44% are unable to save for a down payment.
- 34% say that property taxes are unaffordable.
- 33% say that there aren’t enough homes in their budget range.
- 28% say that they can’t qualify for a mortgage.
- 27% say that they don’t earn enough to afford a home.
- 25% say that they can’t find the ‘perfect house’.
- 23% are partially ignorant about the home-buying process.
- 21% say that they can’t afford homeowner’s insurance.
- 19% say that they can’t afford the homes in the places where they want to live.
About 45% of millennials that the Real Estate Witch surveyed stated that they felt that their generation faced the biggest hurdles to homeownership of any generation in American history. About a third blamed their (Baby Boomer) parents for their current homeownership maladies.
Many millennials regret not having become homeowners pre-pandemic when interest rates were lower and housing prices were less expensive. Approximately 67% are in that boat. About 32% of millennials expect to spend all of their savings and assets on their dream houses. The dreams of homeownership which have defined American life from the beginning are increasingly out of reach for millennials because of financial issues. That’s even more true for Gen Z, but that’s a topic for discussion in another blog post.
Millennials Are Compromising to Become Homeowners
Millennials realize that they have to make compromises That’s reflected in the Real Estate Witch survey which stated the following:
- 57% of millennials are willing to buy a house that needs fixing if they can finally own a home.
- 47% are willing to take up gigs or a second job for extra income to be able to afford a pricier home.
- 42% will purchase a less expensive and smaller house, even if it’s not as big as they want.
- 41% are willing to buy a home with asbestos or pest issues.
- 40% would buy a home even if it didn’t have all of their desired features.
- 35% would move to a different city to buy a less expensive home.
- 28% would live in the country.
- 25% would move to a different state to buy a less expensive home.
- 18% would rent out a room in their current room for extra income.
- 16% would move in with their parents to save mone for a house.
- 14% would not have kids right now to save money for a house.
- 11% would delay getting married or would just outright elope.
- 9% would create a GoFundMe fundraiser.
- 9% would live in a bad neighborhood.
- 34% would live next to or near a cemetery.
- 26% would live next to a railroad track.
- 60% would not live next to or near their in-laws.
What Percent of Millennials Are Homeowners?
Currently about 52% of millennials are homeowners. That means that the majority of them are finally homeowners. Millennials have taken much longer than previous generations to become homeowners as well. When the oldest millennials were 30, only 42% of the entire cohort were homeowners. By contrast, 48% of Gen Xers and 51% of Baby Boomers were homeowners when the oldest were 30. Approximately 38% of home buyers in 2023 were millennials. That made them the largest home-buying generation that year.
Almost Half of Millennials Own Homes Worth $300,000 or More!
The millennials who are in their early 40s are spending almost as much as what Gen Xers spent or are spending on housing. Interestingly enough, the oldest millennials are spending much more than their Baby Boomer parents did at their age. So, things may finally be looking up for millennials. The statistics tell the truth.
About 42% of home buyers between ages 32 and 41 bought a house worth at least $350,000 in 2021. The median sticker price for housing units was $315,000 in that year. So, let’s analyze the facts and statements presented in this and the previous paragraph. Clearly, millennials have made the sacrifices they said they were willing to make and those have generated great results.
Millennials have become a key force in the housing market going forward, inspite of the harder deck of cards they were dealt financially when they began their careers.
Younger Millennials Are More Cautious
The tail-end of the millennial group is much more cautious. 73% of them recently bought homes prices $350,000 or less. The median home price for that group was $250,000. That’s to be expected seeing as most of them are in their late-twenties to early-thirties.
Millennials Feel That The Time is Ripe
Many millennials, about 50% surveyed, feel that it’s the right time to buy a house. Some said it was because they wanted to capitalize on the affordability of houses while they still could. Five percent stated favorable mortgage terms and interest rates. About 9% of millennials and 7% of tail-end millennials bought because they felt that there were more affordable homes on the market and they didn’t know how long it would last.
Things Are Looking Up For Millennials
At least, for now. The housing market is finally looking up for older millennials and they’re finally making enough to be able to afford a decent house. Interest rates have come down, and mortgage terms are favoring home buyers, but perhaps not first-time ones.
