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Young adults are now taking on more mortgages than any other generation and increasing their purchase power in the housing market. Millennials represent 42 percent of all new-home loans.
“Millennials are getting older, with better jobs and deeper pockets, allowing them to expand their collective purchase power and hence, their footprint in the market.” “The stereotype that millennials primarily choose to buy homes and live in large metro areas isn’t the reality. Results show millennials’ expansion is more heavily conditioned by affordability than in prior years, so their eyes are set on less traditional secondary markets where homes and jobs are now available and plentiful.”
Affordability is key for millennial home buyers when choosing where to live. The costliness of an area is having more influence on determining the places for millennials to live than it has for other generations, the study showed.
Millennials have a lower median purchase price ($238,000) compared to older generations. But millennials are increasing their purchase price at a faster rate than the other generations, which is “indicative of this generation starting to move beyond starter homes.”
Millennials consistently make lower down payments than other generations. The other age segments have increased their down payments in response to rising prices, but millennials have not. Millennials’ down payments averaged 8.8 percent in December 2018, compared to 11.9 percent for Generation X and 17.7 percent for baby boomers, the study showed.
“Given that the majority of millennial home buyers are searching for their first homes and do not bring equity from a previous home, it’s no surprise they are putting down smaller down payments,” the report notes. “This is likely a driver of their activity in more affordable markets, where their money goes further.”