Millennial home shoppers are taking out larger loans says survey

A survey done in the USA shows that COVID-19 pandemic has made nearly half of millennial home shoppers are speeding up their home buying timeline

According to a recent realtor.com® and HarrisX survey of 2,000 home shoppers who plan on purchasing a home within the next year, millennial home buyers are planning to take out larger loans.

Data shows the largest generation in U.S. history is prepared for a competitive market and they aren’t above receiving financial assistance from family or friends to make their home buying dreams a reality.

“If there is any silver lining to the current economic landscape, it’s that mortgage rates are hanging around record lows. With little to no equity to leverage, millennial home buyers tend to take out larger loans. Historically low rates are making this more manageable, even with rising home prices,” said Danielle Hale, chief economist at realtor.com®.

“Additionally, shelter-in-place orders helped many who were fortunate enough to keep their jobs save for a down payment — one of the largest hurdles of buying a home. The combination of low rates and the opportunity to save is enabling many millennials to move up their home buying timeline.”

COVID accelerates millennials’ plans to purchase a home

• Of survey respondents, 75% of millennials have been working remotely since the COVID pandemic hit. Of those respondents, 63% said they plan on purchasing a home because of their ability to work remotely.
• Nearly half of millennial responents — 49% — reported COVID has pushed them to buy a home sooner than their original timeline.

Millennial home shoppers are taking advantage of virtual home search techniques

• Fifty-nine percent of millennials reported COVID has changed the way they are approaching their home search. Of those respondents:
  • Thirty-seven percent are spending more time researching properties online.
  • Thirty-five percent are spending more time looking at listings photos.
  • Thirty-two percent are spending more time watching listing videos.
  • Thirty-one percent are being more selective about the homes they decide to tour.
  • Twenty-seven percent are driving by the home to check out the neighborhood.

Millennial home shoppers are ready for some competition

• Seventy-one percent of millennial respondents expect some or a lot of competition in the market when shopping for a home.
• Luckily, 68% reported that shelter in place orders helped them save for their down payment.
• With home prices quickly rising, 45% expect to receive financial assistance from family or friends.

Millennial home shoppers are tired of their homes and they want room to grow a family

• Over a quarter — 26% — of millennials reported they were tired of their current home and that was driving their desire to purchase a home.
• Twenty-three percent of millennials reported a growing family as the main driver for wanting to buy a home.
• Twenty-two percent reported favorable home prices, 20% reported favorable interest rates, and 18% reported the desire to live in a safer neighborhood.

More than half of millennial home shoppers reported they are looking for a home below the U.S. median home price of $350,000

• Thirty-six percent are looking for an “entry-level” home at or under $200,000.
• Twenty-eight percent are looking for a home between $200,000 and $350,000
  • This means 63% of millennial homebuyers are looking to purchase a home at or below $350,000 — the median price of a home in the U.S.
• Meanwhile, 37% of millennials are looking for a home over $350,000.
• Fifty-four percent believe home prices have hit their peak.

Most millennials aren’t trying to move very far

• Nearly half of millennials — 49% — reported they want to move within their current city.
• Thirty-one percent reported from within the city to the nearby suburbs. According to the survey, millennials expressed a greater desire to move to the suburbs than Gen X or Baby Boomers.
• Thirteen percent reported from one city to another within the same state, while only 8% want to move to a completely different state.

The largest generation in U.S. history

Millennials are the largest generation in U.S. history, surpassing Baby Boomers. They were born between 1981 and 1997. For the last 5 years, they have been the dominant buying force in the market.

This survey was conducted in June with 2,000 home shoppers who plan on purchasing a home within the next year.

Mr Paul Ho, chief officer at iCompareLoan, said, “the survey is reflective of the views of millennial home shoppers also in Singapore. The fact that residential property prices here are rising despite the pandemic suggests among other things that people are speeding up their home buying timeline and are willing to pay competitive prices for them.”

“But millennial home shoppers should be careful in choosing the best mortgage loan that fits them. If they do that, they may be able to save tens of thousands of dollars over the tenure of the loan,” he added.