After being slow to enter homeownership for many years, millennials have finally picked up steam. The pandemic helped lower some hurdles, according to some new research, but there are still challenges for this group of potential homebuyers.
Seven out of 10 millennials say that the pandemic played a role in their homeownership decision, according to a survey by Angi. More than a quarter—27%—said it was the primary reason they bought a new home.
Angi, formerly Angie’s List, surveyed 1,000 millennials who bought a home during the pandemic.
Data from the National Association of Realtors show that millennials were the largest demographic of homebuyers in 2020, at 37%, down slightly from 38% in 2019. Of those, 31% were buying their first home. Angi found that home purchases tracked with the pandemic. Forty-two percent of millennial buyers purchased a home in the first half of 2020, over a third bought in the second half, and 24% have recent or pending home purchases as of the report’s publication in late May.
Millennials are giving more weight to the life side of the work-life balance. Angi found that 53% of millennials buyers changed jobs when they bought their home—some because they had been laid off (17%), but some changed explicitly because their old employer didn’t allow for remote work (16%).
“As we traded morning commutes for logging onto Zoom, the work-from-home lifestyle became the new norm. Now, many workers don’t want to go back to the office—and their home buying habits show it,” according to Claudia Guthrie, content editor at Angi and author of the report.
Home prices still a hurdle
There are still significant barriers to millennial homeownership, though, namely affordability. Apartment List’s “2021 Millennial Homeownership Report” found that over 18% of millennial renters expect that they will always be renters, with 74% citing affordability as the primary factor.
Millennials do value the flexibility and low maintenance burden of renting, but at much lower rates, as roughly a third cited one of these reasons as a factor in their future as renters. Notably, more than one in five believe that owning a home is too much of a financial risk.
“2020 saw a rise in both unemployment and home prices, so it comes as no surprise that affordability remains the biggest roadblock to prospective millennial homebuyers,” Rob Warnock, research associate at Apartment List, wrote in the report.
Although millennials represented the largest demographic of buyers in 2020, Census data show that they lag other generations in overall ownership: 48% of millennials own their home, compared to 69% of Gen X and nearly 79% of boomers.
“Over the past half-decade, the millennial homeownership rate has increased faster than that of other generations. But this is largely reflective of the stage of life that millennials are currently inhabiting; there are simply more new first-time homeowners in their 30s than their 60s,” Warnock pointed out. Even when you compare millennial homeownership to that of other generations when they were the same age, millennials lag their older peers.
Even among homebuyers, affordability is a challenge. The Angi survey found a third of millennial buyers paid more than asking price, and 35% said they had to go over their budget to get a home, even though 56% had to settle for a home that needed more renovations than they expected. Forty-two percent said they spent six months or longer looking for a new home, and 78% had to make multiple offers before theirs was accepted—including 51% who had to submit four or more offers.