Think all millennials are content with renting or living at home with their parents? That’s not necessarily true, according to a survey from Nerdwallet.com. Learn more about the millennial buyer and the truth about their attitudes toward homeownership.
A common narrative in our age is that millennials are breaking with the habits of their parents and grandparents when it comes to homebuying. Millennials, the story goes, are renting longer, living with their parents, and are saddled with student loan debt. In short, it would seem they aren’t interested in homeownership.
But a new NerdWallet analysis that examined a number of surveys and data from government agencies and private organizations found many of these perceptions to be false. Our research showed that a majority of millennials would prefer owning to renting, but they appear to be postponing homeownership because of real and perceived difficulties in affording it. In fact, our analysis found that millennials, those born from 1981 to 1997, look upon owning a home just as favorably as previous generations.
FACTS ON MILLENNIALS AND HOMEBUYING
- U.S. millennials total 66 million individuals and 24 million independent households .
- The median age for first-time homebuyers has remained virtually unchanged for the past 40 years: In 2015 it was 31 years old, compared with 30.6 in 1970-74 .
- Two-thirds of millennials haven’t reached that homebuying age of 31, and 22% are under 25 years old .
- Millennials are renting for a median of six years before buying, compared with a median of five years for renters in 1980 .
- Millennials are expected to form 20 million new households by 2025 .
- The median income for a millennial older than 25 is $38,220 .
NEW HOMEOWNERSHIP IS DOWN AMONG ALL AGE GROUPS
As a percentage of all homebuyers, the number of first-time owners has fallen significantly since the Great Recession. The National Association of Realtors report Home Buyer and Seller Generational Trends, from March 2016, shows that first-time homeowners make up 32% of all buyers — compared with a historical average of 40%. That’s the lowest percentage since 1987 . Meanwhile, the number of millennials living with their parents has increased nearly 15% from 2006 to 2013 .
Homeownership in general has declined across all age groups, as well. The U.S. homeownership rate was down for the 11th consecutive year in 2015 — from a peak of 69% in 2004 to 63.7% in 2015, the lowest level since 1994 .
MILLENNIALS WANT TO BUY HOMES
A 2014 survey by housing finance giant Fannie Mae found that the majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home . Many young renters in the survey appear to be on the brink of homebuying, and 49% said their next move would likely be to own a home.
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