Study: Younger adults have the same hopes and dreams as older adults. While homeownership is a smart financial investment, it’s not always the top reason people buy a home. Millennials want to be part of a community and neighborhood, and have a place their family can call home.
SANTA CLARA, Calif. – Homeownership is still part of the American Dream, even for millennials, long considered “the rent generation,” according to a new HarrisX survey from realtor.com.
However, the American Dream is getting more expensive and harder to find these days.
The survey included more than 800 prospective homebuyers who plan to purchase their first home in 2021.
“Americans – even millennials who many thought would never buy – have a strong preference for homeownership for the same reasons many generations before them have: To invest in a place of their own and in their communities, and to build a solid financial foundation for themselves and their families,” says realtor.com Senior Economist George Ratiu. “However, today’s first-time homebuyers face unprecedented challenges … They are resilient though, with many in the market searching for their home for more than a year.”
The survey found:
- 43% have been searching for a home for more than a year.
- 33% have been in the market between six and 12 months
- 14% have been searching for three to six months
- 10% just entered the market in the last three months
I want to be a homeowner and build equity
Homeownership has long been considered an important part of the American Dream, and it’s the No. 1 reason this year’s first-time homebuyers are in the market. Three of the top four responses centered on the personal benefits of owning a home.
When asked, “Why are you planning to buy a home?” The top responses were:
- 59% – “I want to be a homeowner”
- 33% – “I want to live in a space that I can invest in improving”
- 31% – “I need more space”
- 22% – “I want to build equity”
Homeownership ranked as the top choice across all generations surveyed – Gen X and older (40+) at 68%, millennials (aged 24-39) at 62% and Gen Z (18-23) at 45%. Millennials ranked the need for more space second among their reasons for buying a home, while Gen X and Gen Z both cited being able to invest in a property at 34%.
A needle in a haystack
When asked why they have yet to purchase a home, 44% said they don’t have enough for a down payment, and 34% haven’t been able to find a home within their budget.
Millennials – many saddled with student loans – struggle the most to save, with 47% saying the biggest obstacle has been coming up with money for a down payment. This also was true for 44% of Gen X and 38% of Gen Z respondents.
Millennials also have the hardest time finding a home within their budget at 37%, followed by 33% for Gen X and 30% for Gen Z.
Location, location, location
The old adage remains true. At 38%, location ranked as the top feature potential homebuyers want, followed by a quiet location (33%), a large backyard (32%) and a garage (29%).
Despite the popularity of reality home improvement shows, only 11% of this year’s first-time homebuyers are willing to take on a fixer-upper, with 43% saying they want a move-in ready home. The remaining 46% would be willing to take on some repairs.
Searching, saving important first steps
When asked what they did first when they decided to purchase a home this year, 29% started searching online, with nearly a third checking listings at least once a day. Nearly a quarter (24%) of first-time buyers began saving money and changed their spending habits, while 20% figured out their budget.
The most common way to save is setting aside a certain amount from each paycheck (50%), while 45% said they also cut out discretionary expenses, such as gym memberships and eating out for lunch; 29% put away lump sums from annual bonuses, tax returns and gifts.
With a majority of respondents having been in the market since last spring, they are fully aware of the competition they face: 53% expect a lot or some competition, with one in five first-time homebuyers expecting a lot of competition.
© 2021 Florida Realtors®