Homebuying Amid Inflation Survey: Nearly All Millennials’ Plans Upended as They Struggle To Save in New Ways
Often called “the unluckiest generation,” nothing could have prepared millennials for the economic battering that followed since the pandemic. The largest generation in American history has weathered recessions before, but the current financial climate may set their homeownership goals back years.
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According to Real Estate Witch’s 2023 Millennial Home Buyer Report, nearly all American millennials — a staggering 92% — have had their homebuying plans upended by recent inflation levels, and more than three-quarters of those surveyed (76%) feel the housing market will get worse before they are eventually able to buy.
Soaring prices for available houses and high mortgage rates have had a major impact on buying a first home. As CNBC reported, the average age of a first-time homebuyer is now 36, up from age 33 in 2021. Also in 2022, first-time buyers accounted for 22% of house purchases, down from 34% in 2021, according to the National Association of Realtors (NAR).
Although house prices have decreased from the lofty numbers seen in June 2022, the median price for an existing house was $366,900 in December, up just 2.3% from Dec. 2021 and down slightly from $370,700 in Nov. 2022, per NAR.
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However, steady declines in house prices and inflation in recent months haven’t crushed millennials’ hopes — they’ve simply reshaped them. Of those polled by Real Estate Witch, 28% said they are delaying buying a house, while 59% are saving more money to afford one (more than twice the amount than boomers). 36% are expecting to pay more than they expect, and 26% and 25% will be looking to buy a fixer upper or a smaller home, respectively.
How Millennials Are Saving for a Home
The ways in which millennials are choosing to save money is varied, but exactly half of respondents said they are saving a portion of each paycheck to build up their bank balance. Per the study, here are some of the (positive and negative) ways millennials are choosing to cut back on costs:
- Cutting back on non-essential spending (45%)
- Finding additional sources of income (38%)
- Seeking higher-paying employment (32%)
- Moving in with family(24%)Investing (21%)
- Going into debt or neglecting bills (13%)
Saving money for a down payment is also extremely difficult now. Real Estate Witch found that since it published its report last year, the number of millennials with less than $10,000 in savings jumped by 36% — from 18% to 54% — and 62% of millennials expect to put down less than a 20% down payment on a home, compared to 34% who responded in 2022. Alarmingly, 20% of those who participated in the Real Estate Witch study had $0 in savings and 10% had less than $1,000.
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Current millennial homeowners have had their objectives dashed, as well. Among those surveyed, 82% claim to regret their purchase due to steep interest rates, which was the most common concern among respondents (22%), followed by not being educated about homebuying (21%) and choosing an area that has changed too much or in a bad location (21% and 19%).
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