Nearly half of millennials in a new Bankrate survey said that the cost of living is one of the biggest barriers to buying a home compared to other generations.
Of the respondents, 45% of millennials (ages 23-38) cited cost of living as holding them back from buying a home. This number falls to 38% for Gen Xers and 31% for baby boomers. Student debt, which currently stands at $1.6 trillion, is impacting millennials disproportionately, as 23% cite student debt as a barrier. Just 15% of Gen Xers agree.
Millennials are the most likely to save their own down payment money at 53%, but they need a full three years to accomplish that. Gen Xers reported needing two years and nine months, while it took baby boomers two years and six months.
Fifty-one percent of all U.S. adults didn’t know the minimum down payment required to buy a home.
Millennials, though, were most likely to use an assistance program for the down payment at 33%, compared to 27% for Gen Xers.
However, in what Bankrate called “worrisome,” 13% of millennials said they would dip into their retirement to afford a house.
“With Americans not saving enough for retirement , tapping a 401(k) account to pay for a house can hurt millennials’ financial security in their later years,” Bankrate said.
Just 8% of Gen Xers and 7% of baby boomers said they would use retirement funds for housing costs.
Bruce McClary, VP of Communications with the National Federation for Credit Counseling, said perceived barriers to homeownership could be overcome with the right guidance and education.
“People of all income levels transition from renting to homeownership, even in housing markets that seem more challenging than others,” McClary said. “Credit issues are another area of misconception because people assume their credit doesn’t meet the right guidelines. It’s not a permanent impediment (to homeownership).”
Twenty-seven percent of millennial said they don’t think they’ll ever be able to save enough for a down payment. That number increases to 37% for Gen Xers and 60% for baby boomers.
First-time homebuyers rarely put down 10% or more, as the average down payment for first-time buyers is 7%, according to the National Association of Realtors’ 2018 Profile of home Buyers and Sellers.