The dearth of first-time homebuyers in the housing rebound has realtors and economists wondering when today’s 20-somethings will finally make the leap to homeownership.
A new survey from the Consumer Reports National Research Center finds that Millennials overwhelmingly (71 percent) want to purchase homes, and gives some insight into what’s standing in their way.
The biggest roadblock is the ability to save for a down payment, cited by more than a third of Millennials as their top reason for not buying a home. While there are mortgage products available for buyers with as little as a 3.5 percent down payment, most financial advisors recommend having a bit more “skin in the game.” And any down payment amount lower than 20 percent triggers private mortgage insurance, which can make the loans more expensive.
Student loan debt, high rents and low wages all combine to make it tough for Millennials to amass that down payment. It’s also tougher for Millennials to save up that amount on their own, a necessity for the 30 percent of today’s buyers who are purchasing a home while single.
In addition to being more likely to be single, today’s first-time home buyers are older and have spent more time renting than first-time buyers historically have, according to a recent Zillow report.
They’re also more likely to skip the starter-home purchase, waiting instead to buy a more expensive property.