We know millennials account for over a third of homebuyers. We know the areas they’re picking up real estate in, and we even know what motivates them the most to purchase a home. (Spoiler: It’s their dogs.) But what about the millennials not buying homes?
Zillow just released a new report delving into the big reason that’s holding millennials back from buying homes. Despite more than half of the buyers in the 18 to 34 age bracket—53 percent, to be exact—making multiple offers to buy their first home, only 39 percent can make the recommended down payment of 20 percent or more.
So, maybe it should come as no surprise that the number one reason millennials don’t buy homes is affordability. According to Zillow, which surveyed 13,000 US residents between the ages of 18 and 75, 37 percent of renters who haven’t moved in the past year don’t think they can afford to move anywhere, and 48 percent of renters making under $25,000 a year can’t afford to move.
And it also looks like a growing number are turning to friends and family for help: Twenty nine percent of millennial buyers get financial help to make a down payment.
“Young buyers often start their careers in fast-growing cities in which the market is particularly tough—and they’re trying to save for a down payment while making record high rent payments,” said Dr. Svenja Gudell, Zillow’s chief economist in the report.
Another potential reason millennials aren’t buying homes? They are no longer the youngest age group showing an interest in real estate. Gen Z (here defined as those born between 1995 and 2010) might be young, but they’re beginning to enter the housing market as renters.
And according to Zillow, Gen Z is already showing an interest in buying a home: Members of the youngest generation believe that owning a home is a key component of the American Dream, with 57 percent saying they’ve already considered buying a home while looking for their last rental.
“It’s encouraging to see that Generation Z is inheriting the same notion of what a home means as their parents and millennial siblings. As they mature and look toward homeownership, it will be interesting to see how their aspirations and preferences will shape the housing market,” said Jeremy Wacksman, Zillow Group’s chief marketing officer.