They’re buying homes after viewing them only online.
The amount of homes for sale is so low it’s making young buyers desperate, say two real estate studies.
The housing inventory is down 20 percent since last year, but demand is so high that almost half (45 percent) of millennials are making a purchase before seeing the home in person first, according to Redfin.
“Inventory has been deteriorating for more than two years, yet 2018 started off with buyer demand stronger than in any previous January we’ve measured,” says Redfin chief economist Nela Richardson. “Along with inventory declines, buyers contended with rising mortgage rates, an overhaul of the tax code and a jumpy stock market.”
Millennials are buying homes?
Yes, millennials are still anxious about buying homes, but many are still pushing to do it anyway. Over half (52 percent) of millennials are over renting and ready to look into homeownership, says a study from loanDepot, a nonbank consumer lender.
If they’re ready to look, what’s holding them back? Survey says…
- 63 percent worry they can’t afford a down payment
- 48 percent don’t know how to start the process
- 43 percent are concerned about having a poor credit history
- 38 percent think they have too much existing debt
“It’s clear from the survey results that millennials have a lot of anxiety built up about the home-buying process,” says David Norris, loanDepot’s head of retail lending. “There is good news, however, as there’s more flexibility than most millennials think regarding how to qualify for a loan and what’s needed for a down payment.”
Some may be putting too much stress on the amount they have to put down for a payment. A similar study on millennials and homeownership says almost half of first-time buyers believe you need to have 20 percent or more of a home’s price for a down payment, according to Bank of America.
That could be why 21 percent believe they can’t afford to buy a home.
“Some prospective first-time homebuyers tend to believe their personal circumstances should line up perfectly, or that they need a 20 percent down payment,” says D. Steve Boland, consumer lending executive for Bank of America. “Yet there are many ways homebuyers can achieve responsible and sustainable homeownership much sooner than they think.”
Millennials who haven’t made a purchase yet say they’re juggling paying bills and debt (61 percent), need to improve their credit scores (47 percent) and need to pay down their student loans (32 percent) first.
More millennials believe owning (54 percent) is cheaper than renting (45 percent), but the rates are close. A quarter say they’ll be purchasing a home within the next two years.
The perks of homeownership
Of the millennials who’ve already purchased a home, 80 percent say that homeownership has had positive effects on their long-term financial goals, and 86 percent believe it’s cheaper than renting.
“After years of seeing millennials sit on the sidelines, it’s clear some are recognizing it might not make sense to wait,” Boland says. “We talk to younger buyers every day about homeownership, and they understand the benefits it can have on their long-term finances.”
Most (60 percent) of current homeowners of all generation say they would tell their younger selves to start saving for a home sooner. Being a homeowner isn’t all about the financial improvements they’ve had. Millennials, more than any other generation, associate homeownership with adulthood (39 percent), according to Bank of America.
Almost all (95 percent) say they’re proud to be a homeowner, and 91 percent treasure the memories they’ve made in their home. Only 21 percent say that being a homeowner is a burden on their life.
Millennials who are aspiring homeowners should check out these cities, since they’re the most millennial-friendly in America.
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Article last modified on July 30, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Millennials Buy Homes Without Seeing Them in Person - AMP.