You’ve heard it said before. Millennials aren’t buying homes. They’re the largest generation since the Boomers and they aren’t moving anywhere. They’re living at home longer than previous generations. Or they’re putting their money towards rent rather than a down-payment. But does this mean they don’t ever want to buy? And for the few that are, where are they going? What kind of down-payment could they possibly be making when their income is taken up with high student-loans and rent rates?
Are Millennials Really Disinterested In Buying Homes?
The short answer: No. In fact a number of surveys have shown that a majority of millennials would love to own a place of their own. But that’s easier said than done.
Current adults between 22 and 34 (millennials) are actually more passionate about owning a home than previous generations were. They’re just not ready yet.
Part of the reason Millennials aren’t purchasing homes yet is partially because they’re marrying later in life than their parents and grandparents. That combined with the financial crisis of 2008 and only about half of adults having a full time job one year out of college makes pulling together enough for a down-payment difficult.
Millennials Are Unaware of Down-Payment Options
20% is one of the most commonly cited price points for a down-payment in the mortgage industry. And when that’s the number you hear circulated over and over you can get nervous. Especially in the greater Seattle area when 20% can easily mean $80,000.
However there are other options for first-time home buyers. A majority of people purchasing their first homes in 2015 made down-payments between 0% and 6%.
With a down-payment in that range you’ll need PMI (Private Mortgage Insurance) but it will be paid off in the first few years of owning your home.
Where Are Millennials Moving To?
Honestly, the suburbs. With city prices skyrocketing and the housing numbers being pretty limited, it’s not an area that an average buyer can afford. So they’re accepting longer commute times for more affordable housing opportunities and are heading out towards the quiet suburbs.
The generations are all circling. While most Gen Xers are currently upgrading to make room for families, older boomers are trying to downsize. So Gen Xers are buying from Boomers, Millennials from Xers, and a lot of Boomers are getting into the condo market for the ease of maintenance.
A lot of the rumors circulating about Millennials not wanting to purchase homes are a myth. Society has actually jumped on them much too soon. They’re not buying any later in life than their parents did. In the 1970s the median home buying age was 30.6. In 2015 it was 31. Virtually unchanged in the past 40 years.
Two thirds of millennials haven’t even reached the home buying age of 31. In the next few years we’ll be sure to see a rise in first home purchases made by Millennials as more of them begin to reach their early 30s. For now, most of the generation is still enjoying their 20s.