Millennials are looking forward to buying a home, but feel overwhelmed by the process
Millennials are buying homes. This much is known. But, despite the much-discussed generation making their entrance into the housing market, many still are still very uneasy about the process.
To try to get into the minds of millennials, TD Bank surveyed more than 850 millennials (which it categorizes as age 23-38) who are planning to buy their first home in 2020.
According to TD Bank’s First-Time Homebuyer Pulse, 68% said they think now is the right time to buy a home and 52% are actively searching home listings online.
But, 75% of first-time Millennial homebuyers admit they’re overwhelmed by the process of buying a home.
As for what’s weighing on millennials’ minds, the answers vary.
Just over half of those surveyed said they are worried about their job stability when it comes to looking for somewhere to live.
Meanwhile, 35% said they are thinking about their relationship with their significant other, 57% said they are worried about the state of the economy, and 47% said they are keeping in mind potential policy changes in the 2020 election – all of which play a role in their homebuying anxiety.
Unsurprisingly, student loan debt is playing a role too. Just over 40% of Americans who graduated in the last 20 years said they have delayed purchasing a home because of their student loan debt, the report said.
Even though a big chunk of Millennials say they are planning to purchase a home in the next 12 months, only 52% said they have started saving for a down payment, and 53% have reviewed their credit reports.
Meanwhile, only 42% said they have established a budget for their home purchase and only 30% have spoken with a mortgage lender.
“It continues to amaze me how many buyers begin their home search without first speaking with a mortgage lender,” said Rick Bechtel, head of U.S. residential lending at TD Bank. “A knowledgeable loan officer will work hand-in-hand with a buyer to help them understand mortgage and homeownership costs and establish a realistic budget. To put the cart before the horse is to pursue a significant life decision with possibly incomplete or inaccurate information.”
A decent amount said they feel prepared to buy, but it’s that same amount that said steep home prices are keeping them from purchasing a home in the neighborhood they desire, 22% both cases.
Of those respondents, 36% said they thought homes were overpriced. On the other end, 17% of buyers said they have yet to buy a home because they enjoy renting in their current neighborhood, but can’t afford to buy there.
“The millennial cohort of homebuyers is unlike any other in history,” said Bechtel. “They grew up during the explosion of personal technology, the fall of the housing market and the renaissance of the rental market. And as our survey found, their expectations of homeownership are shaped by all of it.”
Although Millennials were considerably young during the housing crisis in 2008, 67% said they are familiar with the housing crisis, while 55% said their family or a family they knew lost their home.
Those who were influenced by the housing crisis said it made them nervous to buy a home (47%), and a whopping 70% said they view the housing market as fragile.
And in an offshoot of that, 85% of buyers who said their families lost their home during the 2008 housing crisis said they will receive financial help from their parents when they go to buy their first home.
The most common way parents are contributing to the child’s home purchase is in the form of their child’s down payment (33%), followed by closing costs (20%), monthly mortgage payments (17%) or by co-signing the loan (9%).
All in all, mom and dad are still the role models for many of these Millennials. Case in point, 37% say they regularly ask their parents for advice about homebuying.