Millennials Drive Homeownership Rate to New High
For the first time in 13 years, the U.S. homeownership rate rose last year, driven in part by millennial home buyers.
And while many news stories in the past have portrayed millennials as perennial renters, the most recent data shows otherwise.
A recent Wall Street Journal article focused on data released this week by the U.S. Census Bureau, showing an increase in the overall homeownership rate in 2017, with the largest share of the increase among households headed by someone under age 35.
"This is happening because young households are buying homes. Full stop," Ralph McLaughlin, chief economist at Trulia, told the Wall Street Journal.
While it's true that this generation faces challenges from student loan debt, Bank of America recently released a study on milliennials' money habits that shows they're just as good, or better, than other generations at managing their finances.
Specifically, 57 percent of millennials have a savings goal compared to 42 percent of Generation-X members and Baby Boomers. All three of these generations are essentially neck-and-neck with the percentage of people who are budgeting.
Concern about having correct information, rather than an inability to purchase, may be what's still holding some millenials back, according to Alissa Alvarez, a lender with Skyline Home Loans.
"They're nervous about all the information out there and what's right," Alvarez said.
Many first-time homebuyers are unaware they can come-in with a down payment that's far less than 20 percent of their home price. Current conventional loan programs are available with down payments of 10 percent, 5 percent or even as low as 3 percent. There are also more than 10 programs that help with down payment assistance.
Millennials also express concerns about credit scores, student loans, and credit card debt, Alvarez said. All of these are surmountable problems.
"We have multiple misconceptions that we're always battling," Alvarez said. "If someone is credit-challenged, we have partners we work with to not only improve someone's credit but help them get in their home."
Some people may also be surprised by just how much millennials have saved in recent years. In 2015, only 33 percent of millennials had $15,000 or more saved. That number has since jumped to 47 percent. Likewise, only eight percent of millennials had at least $100,000 saved in 2015 but that percentage has since doubled.
The increase in savings indicates that there are plenty of renters out there with more than enough money for a down payment.
With home prices and interest rates expected to rise in the next year, now could be a good time to explore buying a home. February and March are typically the time of year when inventory begins to increase, which can create more options for buyers.
If you're interested in exploring a home purchase, having an experienced real estate agent can help you choose the area and home that will best fit your lifestyle, priorities, and budget.