Millennials Over-Extended and Frustrated with Home-Buying Process

Posted on October 04, 2017 by Laura Lam

Millennials poured some $514 billion into the U.S. housing market over the last year as the largest generation of home buyers, Zillow reported.  But new survey data shows their home-ownership aspirations are stymied by affordability issues, frustration with the buying and selling process, and a cutthroat housing market.

More than half of young buyers (53%) make multiple offers to buy their first home, and only 2 in 5 millennials (39%) are able to make the recommended 20% or more down payment.  The results of the Zillow Group Report on Consumer Housing Trends 2017 show how the nation’s highly competitive housing market is changing the way a new generation approaches buying a home.

More than half of millennials (62%) shop for a rental while they’re looking to buy a home, indicating they accept the fact that buying a home is not a sure thing. They are more likely to say they struggled to find a home in their price range and on their time frame, and over one-third (37%) of millennial buyers say they went over their budget, compared to 29% of all buyers.

Coming up with a down payment is one of the biggest hurdles young buyers face.  Zillow reports that less than half (39%) of millennials put down the recommended 20% or more on their home purchase, while 1 in 4 (21%) put down the bare minimum –5% or less — in order to secure a home loan.  One in 3 (29%) millennial buyers now gets financial help from friends or family to make a down payment, and 1 in 3 (31%) millennial buyers cobbles together a down payment from multiple sources.

The study reports that home ownership is out of reach for many Americans, including many families. In today’s hot housing market, more Americans are renting than at any time in recent history – 40% of families with children are renters.

Renters typically face higher monthly payments than homeowners, and 79% of renters who moved in the last year said the rent increase is the reason they moved.  In order to find their new affordable rental, 25% of renters had to look beyond the area they initially considered moving.  More than a third (37%) of renters who have not moved in the past year say they can’t afford to move elsewhere. Nearly half (48%) of renters who make less than $25,000 a year say they can’t afford to move.

Source:  Zillow Group/Builder