As millennials have come of home-buying age, they've seen some of the strangest years in the housing market to date.
Older millennials were graduating college right as the 2008 financial crisis hit and faced a tough job market and housing crisis. 12 years later, when most millennials were of home-buying age, they were hit with the COVID-19 pandemic.
Now, in 2023, interest rates are the highest they've been in years. But millennials remain hopeful. 29% of millennials plan on purchasing a home as of 2021 (up from 19% in 2020), showing increased optimism from this younger generation.
In 2023, 47.9 percent of millennials own homes. And despite soaring home prices in recent years, many still plan to purchase.
The number of millennials who plan to purchase homes increased by 10% from 2020 to 2021, showing that the generation remains optimistic despite a difficult housing market.
However optimistic they are though, millennial homebuyers slowed in 2021, with first-time homebuyers making up just 14% of home sales in the U.S. Similarly, the average age of a first-time homebuyer raised to 40 from 36 in previous years. Still, millennials have the intent and we can expect them to show up in the markets in the coming years.
The age-old question: can millennials actually afford to buy homes? The answer is complicated.
Per the U.S. Census Bureau, 71% of millennials can afford less than half of the homes on the market.
According to data from the National Association of Realtors (NAR), the median existing-home price in January 2023 was $357,000, up 16.2% from January 2022. However, millennials may be in luck: NAR's data shows that the median home price was down 0.2% year over year in February.
Millennials have also faced financial challenges that make it difficult to save for a down payment, such as student loan debt. Beyond that, millennials have also seen wage stagnation and inflation, making it difficult to save for a down payment.
There is hope for millennials looking to buy homes in 2023. Some cities and states are offering first-time homebuyer programs that can help millennials with down payment assistance and closing costs. And some employers are also offering homebuyer assistance programs to help employees become homeowners.
As they enter the housing market, what do millennials care about? While affordability and location matter, a few other trends have emerged, showing what millennial home buyers value.
Here's what millennials care about:
Many millennials are first-time homebuyers, and it can be intimidating to start the process. If you're a first-time homebuyer, here are a few things to consider before jumping in.
Another critical step is to get pre-approved for a mortgage. This involves meeting with a lender and providing information about your income, debt, and credit history. This can help you determine how much you can afford to borrow and give you a better idea of what your monthly mortgage payments will be.