Although millennials have been labeled “the generation of renters,” research shows that this group is more interested in purchasing a home than other generations, but the problem is, they lack financial stability.
Realtor.com data shows that millennials are weighing their homebuying options by visiting sites and searching for homes for sale. Nearly 65 percent of millennials aged 21 to 34 spent time on real estate websites and apps in August, according to Chief Economist Johnathan Smoke's analysis of data from comScore and population estimates.
Older millennials, ages 25 to 34 are also 70 percent more likely to look for a home to buy on Realtor.com than the average adult.
“People who believe that millennials are disinterested in homeownership are grossly mistaken,” Smoke said. "This generation hit the job market during one of the largest recessions of all time, and they’ve had to work hard to establish credit and save for a down payment."
Smoke also pointed out, since millennials are in the beginning stages of their careers, financing is an important part of the homebuying process. Approximately 97 percent of millennials need a loan to purchase a home.
"With the older segment just beginning to enjoy living the life that drives homeownership—including marriage and children—now is the most appropriate time for them to consider homeownership," Smoke explained. "And that’s exactly what the latest numbers are showing.”
According to Realtor.com data, the average millennial who got a mortgage during the first six months of 2015 had a FICO score of 714, a down payment of 7.1 percent, a mortgage rate of 4.03 percent, and a debt-to-income ratio of 36 percent.
“People who believe that millennials are disinterested in homeownership are grossly mistaken."
Realtor.com identified the top ten areas where millennials make up a good portion of homebuyers. Millennials account for 44 percent to 59 percent of all purchased mortgages in these cities.
Most of the homes in these cities are much less than the median U.S. home price of $232,000 as of August.
“These markets underscore first-time home buyers’/millennial interest in growing, yet affordable, regions,” Smoke noted.
Top 10 Millennial Markets:
- Des Moines, Iowa
- Provo, Utah
- Baton Rouge, Louisiana
- Pittsburgh, Pennsylvania
- Lafayette, Louisiana
- Grand Rapids, Michigan
- Madison, Wisconsin
- Clarksville, Tennessee
- New Orleans, Louisiana
- Shreveport, Louisiana