Zillow reports that 55% of homebuyers make a financial sacrifice to achieve homeownership, and 71% of millennials and Generation Z homeowners make at least one financial tradeoff to buy a home. [1]
This number falls to 57% for Generation X homebuyers and 33% for Baby Boomers and the Silent Generation.
Younger homebuyers are more likely to make more serious tradeoffs to achieve homeownership, as 13% of millennial and Gen Z homebuyers skipped healthcare services. This number falls to 8% for Generation X and 3% of older buyers. Zillow also states that younger buyers are more likely to reduce or cancel insurance coverage to save money for a home purchase.
"The fact that homebuyers have to make tradeoffs to save for the down payment is not surprising," said Kathryn Coursolle, economist at Zillow. "That's pretty much the study of economics: how people make decisions when they can't have everything. But todays tradeoffs are non-trivial and often cut into more than just the 'nice-to-haves.' Indeed, some of those who manage to buy young are foregoing going to the doctor or paying for insurance. To buy young means sacrificing more, ostensibly for the ability to sacrifice less, later."
Additionally, 29% of younger buyers go over budget on home purchases, compared to 23% of Gen X buyers and 22% of Baby Boomers. Of those who go over budget, 33% say it is because they “fell in love” with a home above their price point.
Millennials and Gen Z homebuyers are also more likely to receive help from others. Forty-seven percent of young buyers with mortgages received a gift or loan from family or friends for part of their down payment. This falls to 33% for Gen X buyers and 13% for older buyers.
The biggest sacrifice for most homeowners, young and old, was entertainment. Millennials cut back the most on entertainment, as 29% reduced spending. This was followed by 27% of Generation X homeowners.
Millennials were found to most likely pick up additional employment at 24%. Of the older homeowners who responded, 67% said they did not make financial sacrifices to afford their home.