Think millennials don’t care about homeownership or just want to live in the city? Those are myths. The majority of millennials buy homes in the suburbs for instance.
CHICAGO – Millennials have been a closely watched group in real estate for years, and forecasters have long made predictions about their entrance into homeownership. The beliefs about this massive segment of potential buyers have been significant – they favor renting over buying, they just want to live in the city, and they must have their parents’ help to buy.
Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors®, recently blogged about the most common myths about millennials at the association’s blog. Here are some myths she busted:
Myth 1: Millennials aren’t interested in homeownership.
The homeownership rate for those under the age of 35 is lower than previous generations at the same age. However, millennials are still active in the housing market. They are facing plenty of challenges in obtaining homeownership: low housing inventories, competition, and rising home prices. But they are the largest generation of home buyers currently in the market at 37%, Lautz notes.
Myth 2: Millennials just want to live in the city.
Millennials love the suburbs after all. The majority of older and younger millennials have purchased a home in the suburbs; one-fifth of these young adults purchased in small towns, Lautz says. “The affordability of suburban areas is a driver,” Lautz notes. “Younger millennial buyers place a top priority on being close to friends and family while purchasing.”
Myth 3: Millennials need parents’ funds to buy.
The majority of millennials use their own savings to buy. Nearly a third of older millennials use proceeds from their previous home sale as a down payment on their next home. But millennials aren’t shy about accepting some help from their parents either: Twenty percent of millennials ages 31 to 40 and 28% between 22 to 30 report receiving a gift or loan from family and friends to purchase a home, Lautz notes.
Myth 4: If millennials would save more, they could buy.
Millennials have been hit with a lot of bills — housing in particular. The costs of rents have surged and that’s made it difficult to afford homeownership. “Younger millennials are spending more on housing, education, and slightly more on health care,” Lautz notes. “Younger boomers, in comparison, spent more on transportation, food away from home, apparel and services, and entertainment.”