ST. LOUIS–A new analysis of Millennials and their plans for buying homes reveals lots of stress around whether they’ll ever be able to buy a place of their own, and a willingness to take some financial risks to do so.
The 2021 Millennial Home Buyer Report from Clever found that despite their increased savings, 52% of Millennials are stressed and anxious about buying a home, mostly for financial reasons.
According to Clever, nearly one-third of Millennials (30%) say COVID-19 pushed them to begin house hunting earlier than they originally planned.
But with home prices leaping 8.4% in the past year — and projected to rise an additional 10.5% in 2021 — Millennials are facing the reality of skyrocketing demand and vanishing inventory, the company noted.
For its annual Millennial Home Buyer survey, Clever said it asked 1,000 people who are planning to purchase a home in the next year about their hopes, anxieties, and the compromises they’re willing to make to become homeowners.
The Biggest Fears
The biggest home-buying fears among Millennials are:
- Unexpected or hidden costs (47%)
- Lack of affordable homes (44%)
- The prospect of major repairs (38%)
- The possibility that home values will decline (31%)
- Not being able to qualify for a mortgage (29%)
Among the other findings:
- Just 11% of Millennials have less than $1,000 in savings, compared to 26% before the pandemic
- 57% of millennials have at least $10,000 in savings, a 36% increase from last year
Downpayment Issues
“Although Millennials have saved more, home prices have continued to surge, and two-thirds of Millennial home buyers say they will be unable to afford a 20% down payment on a house,” said Clever in releasing the findings. “As a result, Millennial home buyers are making riskier financial decisions in the current competitive market: 71% of Millennials would be willing to buy a fixer-upper, and nearly 80% could be persuaded to buy a home sight unseen.
Indeed, Clever reported Millennials are undaunted by homes that need major repairs: 71% say they’d be willing to purchase a fixer-upper. Similarly, 62% of Boomers are also open to rehabbing a house, a significant leap from the 46% who said the same in 2019.
“Although a fixer-upper might seem like a steal, they can be costly to repair and maintain — a major challenge for Millennials whose cash reserves are wiped out after purchasing a home,” Clever stated. “Additionally, those in seller’s markets may be unable to obtain repair credits from sellers at closing, potentially turning a deal into a money pit.”
Virtual Tours
According to Clever, “Even more concerning, 29% of Millennials say they’d buy a home after seeing only photos or virtual tours.”
Of those Millennials:
- 44% would buy a house just after viewing photos
- 31% would require a pre-recorded virtual tour
- 26% would require a live virtual tour
Clever said it found the remaining six in 10 Millennials don't necessarily have a hard rule against buying sight unseen — two-thirds of them said they could be convinced to buy a home without seeing it first under some circumstances, including:
- Someone they know can look at the home on their behalf (59%)
- Great price point (51%)
- Newly constructed home or no previous owners (39%)
- Seller concessions, e.g., waived inspection fees, covering closing costs, repair credit, etc. (39%)
- Low interest rates / fear of interest rates rising in the near future (28%)
- High competition from other buyers (21%)
- Inability or unwillingness to travel due to COVID restrictions (14%)
- Disliking current living space (12%)
- Something else (7%)
The survey included extensive other findings and can be found here.