According to a new survey by Realtor.com, millennial buyers are, more than older buyers, having to adjust what they're looking for in a home.
The report states that crushing student debt and smaller down payments are combining to leave millennials especially vulnerable to an already challenging market. About 80 percent of respondents to the survey told Realtor.com that rising interest rates and home prices are causing them to look for smaller or less expensive homes, or even to search in a different neighborhood to compensate. For millennials, the percentages rise past 92.
"Existing debt and lower down payments," said Danielle Hale, Chief Economist for Realtor.com, “won't prevent millennials from finding and buying homes, but most will have to adapt to these challenging market conditions by adjusting their home search."
According to the survey, rising rates have a greater effect on millennials than on buyers 55 years or older. Thirty-seven percent of millennials said that they have to look for a less expensive home, compared to 24 percent of buyers 55 and older. Thirty-five percent of millennials have to look in a different neighborhood, compared to 18 percent of those 55-plus, and 33 percent of millennials have to look for a smaller home, compared to 23 percent of boomers.
Millennial buyers are also more likely to report carrying each of the major categories of debt, according to the survey. Two-thirds to three-quarters of millennial responders said they had all the major kinds of debt to pay down—credit cards, car loans, personal loans, mortgage debt, home equity loans, and student loans. Above age 55, those numbers fall dramatically, to as low as 11 percent, depending on the type of debt.
Compounding all this, Realtor.com reported, is the fact that millennials put the least amount down on a home. A third said they would only put down 10 percent, while only 17 percent of millennials said they would put down the standard 20 percent.
On the other side of this equation, the survey found that one in four millennials are putting down more than 20 percent. That compares to one in three buyers over 55.
Scott Morgan is a multi-award-winning journalist and editor based out of Texas. During his 11 years as a newspaper journalist, he wrote more than 4,000 published pieces. He's been recognized for his work since 2001, and his creative writing continues to win acclaim from readers and fellow writers alike. He is also a creative writing teacher and the author of several books, from short fiction to written works about writing.