Millennials: Tech-Savvy, First-Time Home Buyers in the Suburbs
April 17, 2017 | Amanda Riggs
Millennials, buyers ages 36 years and younger, make up the largest share of home buyers by generation at 34 percent of all home buyers in 2016 (down from 35 percent in 2015). This group was born between 1980 and 1998 and is the largest share of buyers for the fourth consecutive year. Sixty-six percent of Millennials are married couples and this age group has the largest share of unmarried couples at 13 percent. Millennials have smaller families—they have the largest share with only one child under the age of 18 years living at home at 22 percent. Overall, 49 percent have one or more children.
Millennials are most likely to rent an apartment (56 percent) or live with friends or family (20 percent) as their previous living arrangement. The primary reason that this generation purchase homes is the desire to own a home of their own at 50 percent and they state that it is just the right time to buy (60 percent).
Millennials account for the largest share of first-time home buyers at 66 percent. This generation primarily buy previously owned homes (89 percent) for a better price (44 percent) and new homes (11 percent) to avoid renovations or problems with electricity and plumbing (48 percent). Millennials account for the smallest share to purchase multi-generational homes at seven percent. When they did purchase multi-generational homes, the primary reason is for cost savings at 34 percent.
Buyers aged 36 years and younger are the most likely to purchase in the suburbs or a subdivision at 57 percent. Equal to buyers 37 to 51 years, they purchase within a median of 10 miles from their previous residence. More than other generations, they purchase homes for the quality of the neighborhood (66 percent), convenience to a job (65 percent), overall affordability of homes (50 percent), quality of school districts (40 percent), convenience to entertainment and leisure activities (25 percent), and convenience to parks and recreational facilities (22 percent).
They have a median household income of $82,000. They purchase the least expensive homes at a median home price of $205,000. This generation of buyers purchase the smallest homes in size at a median square feet of 1,800, equivalent to buyers 62 years and older. They also purchase the oldest homes at a median year of 1984.
Commuting costs are the most important to Millennials, 39 percent said this was very important. Compared to other generations, Millennials are also the most likely to say that they compromised on the price of the home, size of the home, lot size, style of the home, and distance from their job. Millennials have the shortest expected tenure in the home at a median of 10 years, on par with buyers 71 years and over.
More than other generations, Millennials are the most likely to look online for information about home buying and talk with a friend or relative as the first step in their home search process. They are the most likely to find the home they purchased using the internet (56 percent), most likely to frequently use the internet in their search (93 percent), and most likely to use a mobile device to search for homes (86 percent). Finding the right property is the most difficult step for Millennials at 57 percent. Millennials are the most likely to move with life changes (29 percent), move with a job or career change (20 percent), outgrow the home (19 percent), and want a nicer home with added features (10 percent).
Millennials are the most likely to finance their home purchase at 98 percent. The median percent financed is 93 percent, the highest share among the generations. Millennials are the most likely to use savings (75 percent) and a gift or loan from a friend or relative (29 percent) as the source of their downpayment. Buyers 36 years and younger are the most likely to say saving for the downpayment is the most difficult step in the home buying process at 23 percent. Among those who had difficulty saving, 55 percent of Millennials have student loan debt and 32 percent have car loans, more than other age groups. Overall, 46 percent of Millennial home buyers had student loan debt. They are the most likely to use an FHA loan (27 percent) and least likely to use a conventional loan (56 percent) compared to other generations. Millennials are the most likely to feel that their home purchase was a good financial investment at 85 percent.