Most millennials are prepared to take drastic measures to buy a home, with 65% saying they would pay up to 10% mortgage interest and 23% saying they would pay up to 15%, according to new research from Clever Real Estate. % or more.
A combination of high interest rates, inflation and stagnant wages are putting millennials under financial strain, but their enthusiasm for homeownership remains undiminished.
A Clever survey of millennial homebuyers found that today's real estate market is tough, and it's even tougher if you're young. Approximately 93% of Millennials say the market is influencing their home buying plans, and 76% are concerned that the market will worsen before they buy a home.
interest rates become an obstacleRaising interest rates is a strategic measure to control inflation, and so far it has been effective. The housing market is slowing, but Millennials are starting to feel the effects as they begin buying their first homes.
Approximately 96% of Millennials say high interest rates are affecting their home buying plans. As a result, they may consider smaller, less expensive homes or refrain from purchasing altogether. Half of Millennials say high interest rates are a barrier to homeownership.
Two-thirds of Millennials regret not buying a home when interest rates were lower. While this is not unique to their generation, it is especially painful for buyers looking for a starter home.
purchase intentionDespite the obstacles to homeownership, many Millennials are eager to buy, and their enthusiasm knows no bounds.
More than three-quarters of millennial homebuyers would consider a higher interest rate than the national average of about 7%.
Some young buyers take additional bankruptcy steps to get the keys to their homes. When it comes to their dream home, 79% of Millennials say they would pay more than the asking price, and 11% of them said they would offer more than $100,000 more than the asking price.
Expectations are high but balances are lowWhile Millennials' desire for homeownership remains strong, their finances have taken a hit. A quarter of Millennials have less than $10,000 in savings, and 12% have less than $1,000 in savings. Additionally, 5% have no savings at all.
Most Millennials also have a lot of debt. About 57% of Millennials have $10,000 in debt, more than double the 25% with $10,000 in savings.
Their precarious financial situation shapes their approach to home buying. Almost half of Millennials plan to spend less than 20% on their home purchase, and 57% plan to buy a home for less than the U.S. median price of $431,000.
last resort Millennials have had to adapt to market conditions, and not always for the better.
35% of Millennials are afraid of major home repairs, but are open to renovation work. Two-thirds of Millennial buyers think they'll buy a fixer-upper, but 18% of Millennial homeowners who buy one regret it.
The idea of a millennial fixer-upper goes far beyond a house in need of a new coat of paint. Two-thirds of millennials said they would buy a fixer-upper with asbestos, 62% would buy a home with mold, and 58% would buy a fixer-upper with poor foundations.
Millennials are also willing to buy homes sight unseen. Approximately 85% of people would consider buying a home without actually touring the home, but 13% of millennial homeowners who bought sightseeing regretted that decision. Masu.
The necessary compromises in home quality, financing, and the buying process have left many Millennials with regrets. An astonishing 90% regret their first home purchase, up from 82% in 2023. The most common regret is poor location, followed by bad neighbors and high interest rates.
agent can helpIn a tough market, even a small advantage can mean the difference between a happy home purchase and a disastrous home purchase. One of the easiest ways for millennial buyers to gain a meaningful advantage is to choose an experienced agent who can help them navigate the local market.
“My advice to millennials considering entering the housing market is to create a roadmap and plan ahead,” says Adrian Alvarado, a California-based agent. “Millennials should discuss their options with their lender to find out what assistance programs are available in their area to cover down payments and low down payments.”
Alvarado also said a knowledgeable agent can help negotiate a sales contract in which the seller agrees to relieve some of the financial burden on the buyer.
“A local real estate agent may also be able to receive assistance with closing costs from the seller,” Alvarado explains. “Having local knowledge can make a big difference. The longer a home has been on the market, the more willing the seller may be to negotiate.”
For millennial buyers struggling with regret, Alvarado recommends taking a long-term view and remembering that where you live now isn't necessarily where you'll live forever.
“Think of your first home as a springboard to your future dream home,” he added.
