- Nearly 90 percent of millennial renters expect to buy a home in the future, but just 4 percent plan to do so within the next year.
- Amassing a down payment is millennials’ biggest barrier to homeownership, and almost half of them have not saved any money for that purpose.
- About 80 percent of millennials in the San Francisco metropolitan area will need more than 20 years to accrue a down payment at the current rate of savings.
Yet another poll has confirmed that millennials are very keen on homeownership, but only a small percentage of them plan to enter the real estate market in the coming year.
A survey conducted by Apartment List found that 89 percent of millennials plan to purchase a home in the future. Only 4 percent of respondents expect to do so in 2019, with the majority (30 percent) saying that they will hold off on a real estate purchase for five or more years.
The report cites several factors preventing more millennials from buying homes, including student debt, less-than-stellar credit scores, and a severe shortage of entry-level properties. Nearly three-quarters of those surveyed pointed to a lack of affordable homes as the reason that they are delaying buying real estate.
But the biggest barrier to homeownership for millennials is amassing a down payment. Sixty-two percent told Apartment List that saving a down payment is the biggest obstacle to purchasing a home. Nearly half of millennials have not saved a dime toward a down payment, while just 11 percent have $10,000 or more.
At the current rate of savings, 67 percent of millennials will need more than two decades to sock away a 20 percent down payment. And in expensive California housing markets, that number goes up; about 80 percent of millennials in the San Francisco and San Diego metropolitan areas will need more than 20 years to amass a down payment.
Another problem: Millennials may underestimate how much they need for a down payment. For instance, those who live in San Francisco expect that they should save $99,300 for a down payment, when a 20 percent down payment in the region actually comes out to $175,180. And needing 20 percent is a fact of life in the Bay Area, as recent research from ATTOM Data Solutions found that homebuyers in the San Jose and San Francisco metro areas placed respective down payments of 24.7 percent and 23.3 percent in the third quarter.
About one-fifth of those surveyed expect to tap the bank of mom and dad to secure a down payment, which could drastically cut their savings time. For millennials earning more than $50,000 per year, nearly one-third would be able to amass a down payment in just five years with assistance from their families.
Shared with permission from the Pacific Union Blog