The FINANCIAL -- On May 10 Trulia, a home and neighborhood site that helps homebuyers and renters discover a place they'll love to live, released the findings from its Consumer Home Buying Survey which suggests that market conditions and financial obstacles could be forcing millennial homebuyers to consider home and neighborhood trade-offs in order to purchase a home.
The survey, conducted online by The Harris Poll of more than 2,000 Americans aged 18 and older, found that 84% of millennials (ages 20-36) say they'd be willing to give up one or more home features to live in their ideal neighborhood, if they were looking for a new home. Meanwhile 89% would be willing to give up one or more neighborhood features to live in their ideal home.
Millennial Buyers Under Pressure Thanks to Rising Prices and Down Payment Savings
Of the 86% of millennials planning to purchase a home, 35% plan to purchase in the next year. However, rising home prices and shrinking inventory has created an environment where compromises are needed to be made. As the largest prospective home buying generation, almost all (98%) of millennials planning to buy in the next year have encountered obstacles that are keeping them from buying at this time. Unsurprisingly, financial concerns rank at the top of the list, with rising home prices as the most common culprit, affecting 40% of this population and saving enough for a down payment coming in second at 31%.
Generational Gap: Money Problems More Likely to Deter Millennial Buyers
Among those who ever planned to buy a home, millennials are the generation most likely to have had to put their home buying plans on hold at 90%, compared to 77% of Gen Xers (ages 37-53) and only 61% of baby boomers (ages 54-73). A look at generational differences in home buying obstacles sheds some light on difficulties that are uniquely skewed toward millennials including job instability (17%) and inability to pay off student debt (15%). Significantly less baby boomers have struggled with some of the biggest obstacles faced by millennials and Gen Xers – in fact, 39% have never had to put their home buying plans on hold.
Home Search Tradeoffs: Garages and Block Parties Top the List of Features to Forgo for Millennials
Perhaps due to tight budgets and fewer inventory, millennials are more willing than any other generation to consider trade-offs in their home and neighborhood. With 84% of millennials willing to give up a home feature to live in their ideal neighborhood and 89% willing to give up a neighborhood feature for their ideal home, older generations are less likely to be willing to compromise. About a third, 35%, of boomers and 22% of Gen Xers say they wouldn't compromise on any home features for their ideal neighborhood while looking for a home, and 19% of boomers wouldn't give up any neighborhood features for their ideal home. Garages are the number one feature to go when it comes to a new home feature for millennials, with 34% willing to give it up – compared to 22% of Gen Xers and 15% of baby boomers.
Similar to home trade-offs, 89% of millennials are willing to consider neighborhood concessions when searching for their ideal home, with 24% willing to accept higher crime rates, while only 15% of Baby Boomers said the same. However, all three generations agreed that neighborhood activities, such as clubs and block parties, would be the first feature that would get the axe during their home search (35%, 36%, and 42%, respectively).
Quotes from Trulia's Senior Economist, Cheryl Young:
"For millennials, the dream of homeownership is alive and well, but with prices going up and inventory continuing to shrink, this new generation of buyers are facing more obstacles than any other demographic. With tight budgets and fewer choices on the market, most millennials are forced to make trade-offs and are more willing than other generations to give up home and neighborhood features in order to find their ideal home."
"In markets where the economy and job growth are thriving, we may see some of these financial challenges start to dissipate as millennials mature into their careers. If anything, millennials can hold out hope that the encouraging housing starts we saw in 2017 can lead to some relief in the starter home segment."