Millennials are getting a lot of attention in the real estate world these days as the up-and-coming generation of home buyers. Clever Real Estate offers this interesting breakdown of a survey from their blog. They interviewed 1,000 people who intend to buy a home in 2020, and calculated their answers by generation—baby boomers, Generation X, and millennials.
Here are some interesting statistics the survey revealed:
Saving Money is the Biggest Hurdle
For nearly half of the millennials surveyed, saving for a down payment was their biggest obstacle to buying a home, and most (70 percent) don’t plan on a 20 percent down payment.
Millennials Aren’t So Concerned About Location
Millennials don’t care as much about “location, location, location”— they’re willing to overlook a nearby highway or waste management facility.
Millennials Want a Home Before Having a Family
More than a third listed their top reason for wanting to buy a home as wanting or having a family, and 40 percent said they would put these plans on hold in order to buy a home first. Birth rates among millennials definitely reflect that they’re not having kids yet:
Millennials Find Smaller Homes More Attainable
Of special interest to us here at Attainable Home was the finding that millennials are willing to settle for less expensive, smaller homes in order to achieve home ownership.
Millennials Lack Financial Literacy
And while Clever Real Estate seemed surprised to report that millennials are willing to settle for a higher interest rate than other generations, they also pointed out that more than half of millennials surveyed didn’t know what interest was. In fact, millennials answered fewer than half of questions correctly in a financial literacy survey. So 4 percent interest, 6 percent interest—it doesn’t sound like a huge difference, does it? And neither one even sounds like a very big number.
But the difference amounts to nearly a hundred thousand dollars over the life of a 30-year mortgage, a difference that could really hurt the long-term financial success of the home buyers in question.
Here’s a $200,000, 30-year loan at 4 percent:
And here’s the same loan at 6 percent:
The nearly $250 difference in monthly payments jumps out first, but make sure to compare the lines that say “This loan will really cost you…”
You Should Really See the Whole Report
Go read the whole report for a ton of other interesting stats and conclusions—there’s too much to repeat in a quick summary like this one!
If you are one of the millennials wanting to buy a home, here’s the big takeaway: Get educated, and get saving. You don’t have to become a CPA to understand savings, loans and interest rates. A quiet Saturday morning with Google and a good pot of coffee could be one of the best investments you make in your future. Below are a few links to get you started. If you find something else that’s really helpful, please share a link in the comments below!