Millennial homeowners are growing fast, and buying cheaper, according to a recent report. According to the latest Down Payment Report from Down Payment Resource, younger homeowners, aged 44 and younger, were the fastest growing demographic of homeowners in the past quarter, and these younger homeowners are choosing more affordable areas with lower down payments.
Data from Realtor.com suggests that millennial homebuyers are choosing areas not typically regarded as "desirable", such as Buffalo, New York.
“The stereotype that millennials primarily choose to buy homes and live in large metro areas isn't the reality,”said Javier Vivas, Director of Economic Research at Realtor.com . “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.”
Corelogic data backs this trend up: the highest number of millennial homebuyers are buying in traditionally more affordable regions such as Midwest, Mountain West and Northeast markets. More expensive areas such as coastal California and Florida have seen the lowest rate of millennial homebuyers.
Millennials, as first time buyers without the added equity of previous homes, are seeking places with lower down payments, according to Realtor.com.
“Given that the majority of millennial homebuyers 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,” wrote Realtor.com. “This is likely a driver of their activity in more affordable markets, where their money goes further.”
Millennials have consistently made lower down payments than any other generation, according to Realtor.com. The average down payment for millennials was 8.8 percent of the purchase price in December 2018, compared to 11.9 percent for Generation X and 17.7 percent for baby boomers. Millennials are also buying cheaper in general.
“Within the last year, millennials have moved to affordable areas with strong job markets where they have more buying power,” Realtor.com said. “At the end of 2018, the median price of a mortgaged home purchased by millennials was $238,000, $26,000 less than the median price of a home mortgaged by baby boomers and $51,000 than Generation X.”
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