From the suppression of student loan debt to stagnant wage growth to booming house prices, there are many barriers preventing millennials from owning their homes. However, the pandemic and the subsequent rise in interest rates caused this group to step off the sidelines and make a purchase before interest rates and prices rise again.
Clever Real Estate’s latest market survey of 1,000 millennials showed how committed they are to home ownership. 30 percent of respondents said, “COVID-19 has pushed them to start looking for a home earlier than originally planned.” In addition to extending the home-buying schedule, the majority of millennials were willing to be a fixer-upper (71 percent ) or could be persuaded to buy an invisible home (80 percent).
For those who are willing to hide an offer, they need someone to view the house on their behalf (59 percent), find a listing at a “cheap price” (51 percent) or find a new building with no previous owner ( 39 percent). Respondents also said sellers would have to forego inspection fees, offer repair credits, cover closing costs, or grant another concession to sweeten the deal (39 percent).
Another 29 percent said they would only need photos or a virtual tour. 44 percent said listing photos would be all they need for a quote.
While invisible stores are a way to beat the competition, Clever cautioned against the practice, especially for first-time buyers who don’t fully understand the risks.
“We surveyed the youngest home buyers in mid-2020 and found that people are more likely to regret their home purchase if they don’t see their home beforehand,” the report said. In fact, more than 75 percent of those who bought a home without first seeing it reported a buyer’s remorse – 27 percent more than those who saw their home in person before buying it.
According to Clever, historically low interest rates are the main driver behind millennials’ risky buying practices. From 2019 to 2020, four times as many millennials (11 percent versus 40 percent) felt that interest rates were “the biggest factor” in their decision-making process.
Even with lower borrowing costs and their willingness to buy cheaper fixer tops, millennials still struggle to buy a home. Although Millennials spent 2020 building nest eggs of at least $ 10,000 (57 percent), paying a 20 percent down payment within their preferred price range is still not enough (
Sixty-seven percent of millennials said they couldn’t make a 20 percent down payment and were more likely to offer five percent or less (80 percent). Regardless of income level, no more than 50 percent of millennials were confident that they could cover the full down payment for a “higher priced house” with its top amenities like a large kitchen (60 percent) and plenty of outdoor space (45 percent) or enough Room to grow (43 percent).
Clever said student loan debt is the main barrier for millennials at all income levels, as 77 percent said they are currently repaying loans. Half of the respondents said that student loans “will delay home ownership” with the average turn of the millennium pushing back their purchase targets by seven years.
Nearly 60 percent of respondents said that $ 10,000 on student loans would have “a noticeable impact” on their finances, and another 23 percent said it would “wipe out” their debt completely, making it easier makes to build up a larger down payment (52 percent). , set up an emergency fund (51 percent) or update the wish list for your home (36 percent).
The report said that stimulus checks and extended forbearance on student loans have moved millennials to a better place to buy a home in 2021, but financial fears will continue to prevent this generation from realizing their home buying potential.
“Millennials want more space to work remotely, enjoy the outdoors and live with their growing families,” the report said. “Compared to 2020, they have more savings to make home ownership a reality.”
“But these dreams of home ownership come with financial fears,” he concluded. “Millennials are still struggling to afford down payments – and to hold their own against other buyers.”
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