A new report from Bungalo reveals that not are millennials buying larger starter homes, they see these homes as a long-term investment.
According to the report, 74% of millennials (ages 25-34) want to purchase pre-owned single-family homes. Just 16.5% want a condo and 16% would prefer a townhouse.
While the report finds that millennials are buying homes later in life—at the average age of 32—those who do buy homes prioritize space. Fifty-seven percent of first-time buyers surveyed said they want more space, and it is the main reason they want to move. Only 13% of millennials say they moved to downsize.
“The trends are telling us that millennials want more room to grow into over time, and more bang for their buck than dense urban areas will allow,” the report says.
Additionally, millennials’ way of thinking about moving and starter homes has evolved, as most “don’t have the time or budget” to renovate, and most millennials desire move-in ready homes.
Of those surveyed, 76% of millennials want a home that is completely move-in ready, with just 1% disagreeing with that sentiment.
Although millennials are active in the housing market, the barrier to enter homeownership seems too high for many millennials looking to purchase their first home. For current millennial homeowners, 69% say that homeownership has cost them more than they expected, according to a survey from 1 800 Contacts.
Despite the high number of potential homeowners in this demographic, the majority, 84%, believe there will be significant financial trade offs to owning a home. However, among millennials who are homeowners, just 63% state that they saw any significant financial trade off as homeowners.
According to a study from the National Association of Homebuilders (NAHB), millennials are the largest homebuying demographic, as 77% of millennials will be buying their first home, which is more than Gen X and baby boomers combined. However, the barriers to homeonwership are still there, as recent figures from the NAHB represent a 14% year-over-year decline in prospective homebuyers, which is the third-consecutive annual drop for the metric. The 12% of prospective homebuyers is half of the 24% of potential homeowners in Q4 2017.