Apartment List just released their annual report looking at millennial homeownership trends across the U.S. The study was produced after surveying 6,400 millennial renters about their plans for homeownership. Although homeownership is in the majority of the millennial renter's plans, few are financially prepared to do so in the near term.
9 in 10 millennial renters want to purchase a home, but only 4.4% plan to do so within the next year. Homeownership is still the main goal for the majority of millennial renters. 89.4% of survey respondents say they plan to own a home in the future. The below graph looks at when this group of renters is planning on purchasing a home. Although it's in the plans, most are not looking to purchase for at least another 3 years.
What’s the reason?
For millennial renters, saving for a down payment is the biggest obstacle between them and homeownership. Among those planning on purchasing a home, 61.7% say the down payment is the largest challenge.
Down payment issues
A whopping 48% of millennials have saved nothing for a down payment. If millennials have savings for a down payment, they have likely only saved no more than $5,000.
Not only are millennials struggling to save for the future, but the study shows that they are underestimating the cost of a down payment.
In San Francisco, the average survey respondent expects to need $99,300 for a down payment. Unfortunately, a 20% down payment on a median-priced condo in San Francisco requires the much larger sum of $175,180. This trend continues even in more affordable markets. In Phoenix, for example, a 20% down payment on the median-priced condo requires $33,400, but survey respondents in the area expect to only need $17,610.
For the full study, check out the article here.
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