Inflation Impacting Millennial Homebuying Plans Nationwide

Debt and inflation are unrelenting barriers to the dream of homeownership for millennials, according to a new survey from Real Estate Witch. Clever polled 1,000 millennials looking to buy a home in the next year and found that more than 9 in 10 (92%) say inflation has impacted their homebuying plans, with more than 1 in 4 (28%) delaying their home search due to it.

The real estate market has clearly changed in the past year. Just 29% of millennials now say buyer competition is an obstacle, compared to 59% in 2022. Now, nearly half (47%) ranked high interest rates as their primary concern.

Highlights:

• A majority of millennials (51%) have been reduced to tears during the home-search process.
• An estimated 3 in 4 millennials (76%) think market conditions will worsen before they buy a home.
• Nearly half of millennials (47%) say high interest rates are a significant barrier to homeownership.
• Buyer competition is no longer seen as a barrier to homeownership, indicating a changing market. Just 28% of millennials say it’s an obstacle, compared to 59% in 2022.
• Some 82% of millennials who own a home have regrets about their purchase.
• The most common regret among millennial homeowners is that their interest rate is too high (22%).
• Almost two-thirds of millennials (62%) plan to put down less than 20% on a home. Only 34% of millennials did the same in 2022, when they faced stiff competition with other buyers.
• More than half of millennials (54%) have less than $10,000 in savings — a percentage that has tripled since 2022, when only 18% of millennials had that little.
• About 1 in 5 millennials (20%) have $0 in savings.
• The percentage of millennials who would buy a home sight unseen dropped slightly from 90% in 2022 to 86% in 2023.
• About 65% of millennials would buy a fixer-upper — a sharp decrease from the 82% who said the same in 2022.
• About 1 in 6 millennial homeowners (16%) who bought a fixer-upper regret it.
• Nearly 1 in 4 millennials (23%) plan to buy a home that costs more than the national median of $455,000, but to afford such expensive homes, 1 in 3 (38%) anticipate having to max out their budget.
• For their dream home, 1 in 7 millennials (14%) would offer $100,000 or more over asking price, a slight decrease from the 1 in 6 respondents (17%) who said the same in 2022.
• Debt remains a looming barrier to homeownership among millennials, with nearly half (46%) owing $10,000 or more.

An estimated 62% of millennial homebuyers say they plan to put down less than 20% on a home. Only 34% of millennials did the same in 2022, further showing a significant shift in the market.

It's no surprise millennials can no longer afford heftier down payments — more than half (54%) have less than $10,000 in savings, a percentage that has tripled since 2022, when only 18% of millennials had that little. 20% have no savings at all.

More than half of millennials (53%) say they can't currently afford a home, with most (41%) citing not having money for the down payment as the primary reason. 1 in 3 (37%) worry that they may not even qualify for a mortgage. Some 3 in 4 millennials (71%) say home buying has caused them stress, and 44% say it has negatively impacted their personal relationships. A majority of millennials (51%) have even been reduced to tears during the home-search process.

Of millennials who already own a home, 82% have regrets about their purchase. The most common regret among millennial homeowners is that their interest rate is too high (22%). Millennials still in the market for a home are not overly optimistic — 3 in 4 (76%) think market conditions will worsen before they buy a home.

Despite 77% of millennials believing buying a home is still part of the American Dream, more than 1 in 3 (37%) don't think it's attainable for the average American.

To read the full report, including more data, charts and methodology, click here.