UPDATED: AUGUST 08, 2023 | 3 MIN READ
Millennials, more than anyone, are ending their leases and becoming homeowners, and they are doing it in large numbers. Regarding buyers, they are taking over the market, mainly those in their late 20s to early 30s. They hold the record for household income rates more than any other age group by two to four times higher.
Millennials are impacting the market more than ever, not just buyers but sellers. Half of the buyers are under 36, and half of the sellers are under 41. This movement in the market is likely because the millennials have grown in their careers and have paid off their student debts.
Millennials Have Changed the Home Buying Process
Most generations purchased homes right away, whether right after university or when they got married, but millennials have chosen to wait longer to purchase their first home.
This is because not only did they deal with rising student debt in their lifetime, but also the Great Recession. In addition, buying a home for them was a slower process as many of them chose to stay at home with their parents longer.
Due to economic factors and the recent Covid-19 pandemic, 52% of adults between 18-34 chose to move back home with their parents. Those statistics have not been seen since the Great Depression.
Facts About Millennials and Home Buying
- 35% of millennials have $2,000 or more in emergency savings
- U.S. millennials total 66 million individuals and 24 million independent households
- 82% of millennials saved for a down payment
- Two-thirds of millennials haven’t reached the homebuying age of 31, and 25% are under the age of 25 years old
- 34% of millennials said they bought a home to have kids or improve their children’s lives
- Millennials will typically rent for six years before buying compared to the average of 5 years for renters in the 80s
- 35% of millennials bought homes to make a financial investment
- 19% of millennials said that dealing with the stress was the most difficult part of buying a home
- Millennials are expected to have 20 million new households by 2025
- The average income for a millennial older than 25 is $38,220
Technology and Millennials
Millennials are using technology more than anyone to buy a home. They are more likely to apply for a mortgage through an app or browse for a home online. They will use technology to go through the process of being approved for a loan and contacting a real estate agent.
In 2017, 99% of millennials bought a home using technology. Virtual showings have also grown in popularity, making it even easier for millennials to use technology to purchase a home. In addition, the home-selling process has found a house online, making e-closings available for people to complete the whole process online.
Tips For Millennials Purchasing a Home
If you’re a millennial looking to purchase a home, there are some things to consider:
- When it comes to finding a mortgage lender, shop around. You won’t know if you are getting the best deal until you talk to multiple lenders. Interest rates aren’t the only things to consider, but the all-in costs that will accrue.
- Find a real estate agent you can trust. The market is competitive, so you want to find someone that can help you with bidding and buying.
- Make a budget, and don’t sway from it. It can be tempting to get a little more, but you don’t want a house you can’t afford long-term.
- Budget for more than homebuying. You may have unexpected maintenance costs that crop up and furnish your new home.
Online Mortgages Are the New Normal
Back in the day, people used to walk into a realtor’s office or a bank or simply talk to their parents about the possibility of owning their own home. But that’s not necessarily the norm any longer. These days millennials will go to the internet first to shop around for a mortgage. So it’s common for the younger generation to go online and look for a home.
When millennials start shopping for a home, they want flexibility and ease. They want quick digital communication, a simple user experience, and on-demand services. They don’t want to have to wait for anything. Considering this, it’s unsurprising that in 2017, six out of the top ten lenders were non-banks.
Options Are Best for Millennials
Over the years, the internet has exploded so much that it has armed shoppers with the data they need to make smarter buying decisions. It’s not just buying a house; it extends to mortgages too. In 2016, 86% of homebuyers aged 18-34 shopped online for mortgages compared to 55% of the over 55 crowds.
Millennials always want options; they aren’t interested in getting one quote and then buying a house. On average, millennials wish to have at least six mortgage quotes before making their final decision. Millennials have no problem waiting to buy a house due to having difficulty saving or lacking supply in the market.
Millennials Prefer the Suburbs Over the City
Millennials are no longer interested in living in the city; they are making their way to the suburbs. 47% of new millennial homeowners prefer to live in the suburbs instead of moving into the city. They are looking for more modern updated homes. The bigger, the better.
Millennials have all the patience to wait for the house they want. A third of millennials still live in the city and are now making their way to the suburbs, which could drastically change the rising costs of urban living.
Why are millennials buying homes?
The emergence of remote work seems to have lit the fire beneath the millennial home-buying trend. Young families used to living in apartments have opted to leave the expensive cities behind and find cheaper living. The ones that already owned homes typically traded up for larger ones.
What do millennials want in a home?
There are typically a few things that millennials will look for in a new home:
- convenient laundry room
- Smart home technology
- Great location
- Updated kitchen
- Home office availability
- Outdoor space
- Turn-key ready
Are millennials buying smaller homes?
For those millennials that aren’t settling down to start a family, there are the ones that want to open up more space for traveling. They are choosing to buy smaller homes to travel more and spend time with family and friends. In addition, they are downsizing their possessions to free up more money to travel.
Can millennials buy a home with no money down?
In some cases, yes. With many moving to more rural areas, a USDA loan is one possible option to buy a home with no down payment.
Wrapping It Up!
Millennials now more than ever are interested in becoming homeowners and seem to be taking over the market by storm. They no longer want to be renters and want to move to the suburbs to give their families a better life.
It’s always best to do your homework and shop around when it comes to getting a mortgage, home insurance quotes, and a realtor you can trust. By shopping around, you guarantee that you are getting the best value for yourself and your family.