Overcoming Homebuying Hurdles

A new study by Real Estate Witch, an online publication owned by Clever Real Estate, has found that 93% of millennials say the real estate market has impacted their homebuying plans, and 76% are concerned it will get worse for buyers before they buy a home.

The study found that half of millennials (50%) who plan to buy a home before the end of 2024 say high interest rates remain a barrier to homeownership, and 67% regret not purchasing a home when rates were lower.

More than three in four millennial home buyers polled (78%) would consider accepting an interest rate that's higher than the national rate of about 7%—65% would accept an interest rate of 10% or more, while 23% would accept a rate of 15% or more.

The millennials polled stated they would be willing to accept a high interest rate because 68% plan to refinance if rates decrease.

In an effort to limit upfront costs, 47% of millennials plan to put down less than 20% on a home. Financial concerns run rampant, with one in four millennials (25%) worrying they won't qualify for a mortgage. Alarmingly, the percentage of millennials who have $10,000 in debt (57%) is more than double the percentage who have $10,000 in savings (25%).

Saving for a down payment was cited as a struggle for many cash-strapped millennials, with 42% stating it was a barrier to homeownership. Acquiring the funds necessary for a down payment requires sacrifice, and in order to afford a large down payment, millennials are:

• Cutting back on non-essential spending (36%)
• Finding an additional source of income (36%)
• Moving in with family (23%)
• Taking money from retirement/emergency funds (17%)
• Asking family or friends for money (14%)
• Not saving for retirement (11%)
• Not paying other bills or going into debt (8%)

The study revealed a sense of desperation among prospective millennial homebuyers, with most open to purchasing homes with significant issues such as asbestos (67%), mold (62%), and foundation issues (58%).

Even more, 79% of millennials would pay above the asking price to beat the competition for their dream home—down from 85% who said the same in 2023.

Unsurprisingly, 90% of millennial homeowners have regrets about their first home purchase, up from 82% in 2023. Common regrets include a less-than-ideal location (27%), problematic neighbors (26%), and high interest rates (25%).

Nearly 85% of tech-savvy millennials buyers stated they would purchase a home without ever touring it in person, as an overwhelming share of those polled felt comfortable buying just about anything online—including homes—but the same cannot be said for baby boomers, as just 60% of boomers pooled would buy a home sight unseen.

Millennials polled said they could be convinced to buy a home sight unseen if:

• The home is listed at a great price point (38%)
• The home is newly constructed (34%)
• Someone they know looks at the home on their behalf (34%)
• There is competition from other buyers (27%)
• The seller offers concessions (24%)

Notably, one in five millennials (21%) would also buy a home sight unseen if they thought interest rates were about to rise and they needed to move quickly on a home purchase.

Real Estate Witch is a web property of Clever Real Estate, an online platform that connects home buyers and sellers with top-rated agents at a discounted rate.

Click here to view Real Estate Witch's full Millennial Home Buyer Report: 2024 Edition.