Many millennials may be stuck renting for years
Millennials represent the biggest and most important segment of today’s real estate market. But a recent survey found that more than a third of that generation don’t expect to buy their first home for at least another five years.
The biggest hurdle to their home-owning dream? The down payment – especially for millennials who live in or near cities.
The survey, by the rental website Apartment List, found that cobbling together enough for a 20 percent down payment could take up to 20 years for many millennials. Saving even 10 percent would require at least five years of savings for one in three survey respondents.
The findings are important for several reasons.
The rate of homeownership in the U.S. – symbolic of the American Dream and the primary creator of wealth for families – has failed to recover from the 2008 recession. Younger Americans simply aren’t buying homes at rates comparable to their parents’ generation and, in fact, a significant percentage seem resigned to live in rental housing.
The survey also reflects the tightest market for affordable homes in years. Inventory is down, prices are up, and with many millennials already struggling with high student loan obligations and stagnant wages, it could be years before the once-healthy market for buyers under 34 recovers.
Indeed, according to Apartment List, which surveyed 24,000 renters born between 1982 and 2004, “a large share of millennials may be stuck renting for years.”
Here’s a closer look at some of the details of the survey findings:
68 percent have saved less than $1,000 for a down payment, while 44 percent have saved nothing;
more millennials say they’ll wait at least five years to buy a home, up 4 percent in 2016 to 27 percent;
about two in three think it will take at least three years to buy their first home, while only 16 percent think it will become a reality within two years;
nationally, 15 percent of millennials will save enough for a 10 percent down payment within the next year; nearly two-thirds of will need more than five years;
millennials in San Jose will take the longest to save up a 20 percent down payment – 24 years – compared to the 5 1/2 year it will take someone in Kansas City.
For more on survey, including graphics, visit Apartment List.