Did COVID-19 push millennials into homebuying? In a word, yes. According to Clever Real Estate's annual millennial homebuyer survey, 30% of millennials say they're house hunting earlier than planned because of the pandemic. The reason: They want enough space to be comfortable while working from home and to raise a family.
A tough market for buyers
With the largest group of homebuyers since the boomers young adults, all eager to buy -- and at a time of low inventory and record-low interest rates -- something's got to give.
In this case, there are two "somethings" millennials are dealing with: affordability and condition of the home.
- Regarding affordability, home prices are rising: 8.4% last year, with an expected 10.5% increase for this year, according to Clever. The U.S. existing home median sales price, as of January 2021, was $303,900. The U.S. average sales price for new houses sold was $408,800 and $341,200 for existing homes.
- Regarding condition: A whopping 71% of millennials say they'd buy a fixer-upper. Unfortunately, many don't realize that to get the fixer-upper fixed might cost a lot of money, possibly turning what looks like a good deal into a bad one.
We reported earlier that millennials love to browse Zillow (NASDAQ: Z) (NASDAQ: ZG) listings; there was even a Saturday Night Live skit about this new millennial pastime. And we also reported that because of this current buying frenzy, some people are hastily buying houses, often sight unseen, and then might even regret the purchase. It's a good thing that people are buying homes, but the trend of rushing the purchase is usually not a good plan.
Millennials have savings
Millennials have more money in savings now than what we've seen in the past. The Clever survey shows 57% of this cohort has saved more than $10,000. This means they sometimes (but not always, because homes are so expensive now) have enough for a down payment, which tends to be one the greatest barriers to homeownership.
How did they save so much? The old-fashioned way: Mostly by putting aside a portion of their income and not spending so much. But other factors came into play, such as coronavirus stimulus money, supplemental gig work, and getting a deferment on student loans.
Millennials do have some preferences
Assuming a millennial can have the house of their dreams, which is tough in this market, just what would that house include? The Clever survey found the most requested feature, at 61%, is a garage. A close second is a large kitchen, followed by outdoor living space, lots of natural light, and a basement.
The Millionacres bottom line
Millennials, like the generations before them, still consider homeownership a part of the American dream. And because of the recent urgency to buy a home, millennials are reportedly "excited" about the prospect of being a homeowner.
But because of the high prices of homes, these first-time buyers are anxious about whether they're making a wise decision. They worry about hidden costs of owning a home and whether these high-priced homes will decline in value.