Real Estate News

3 recurring barriers to millennial homeownership

Published: 17 Jul 2017

There likely isn't a single answer to why more people in the 18 to 34-year-old age range don't own homes. As this blog has mentioned several times, this demographic clearly is buying homes to some extent, but there are factors which seem to keep coming up as possible obstacles for those who want to make the financial jump to ownership, a challenging move for anyone, no matter the generation.

These three concerns are part of what may keep potential owners away from owning a home in 2017.

Lack of independence
It's a stereotype, but there may be some truth to it: millennials living with their parents. The State Of The Nation's Housing report for 2017, from the Joint Center for Housing Studies of Harvard University, said that 35.6 of millennials lived with their parents or grandparents in 2015. This reportedly represented an "all-time high," and seems to have possibly influenced the rate of "household growth," considering the slowdown in those actually moving out to form their own families and purchase homes.

This could change over the next few years, but may remain a challenge for those trying to leverage a purchase.

Poor housing knowledge
Another problem facing the incoming generation of home buyers could be a lack of accurate knowledge about the home purchase process and what they need to begin it. The Mortgage Reports cited a Bank of America survey in a recent infographic on the amount of money thought to be needed for a down payment on a home.

The source said that most buyers only need 0 to 3.5 percent, but just 5 percent of the surveyed buyers guessed this correctly. The vast majority of the respondents thought the required amount was much higher: 31 percent thought it was a 10 percent down payment, 29 percent thought the correct amount was twice this, and 16 percent assumed it was even higher. Even if the amount of down payment needed gets lower on average, interested buyers might not enter the market out of a misconception, the data implies.

High standards suggested that, among other things, it's the particular way millennials are looking for homes that is restraining their search. In other words, this buying audience wants to purchase soon but is waiting, looking specifically for a home that meets their requirements and may not require extra work to get to the level they want.