Each generation has their own take on the home-buying experience as each generation faces unique challenges to achieving the American Dream of owning a home. Despite the standard set by baby boomers, millennials are changing the rules and doing it their own way. Only 39 percent of millennials submit offers with the recommended standard of a 20 percent down payment. In fact, 21 percent of this generation is putting down the bare minimum: 5 percent or even less.
In addition to struggling to come up with a down payment, 33 percent of millennial buyers report difficult in qualifying for a mortgage and 43 percent claim to have experienced trouble in finding out what exactly they can afford. With inexperience a common trait among millennial buyers, the need for professional and reliable real estate professionals is high.
Most millennials either do not know, or are not confident in their buying power. Over 60 percent of millennials research rental units as a back up when searching for a home to buy due to common challenges in today’s market, including finding a suitable property that is affordable and finding a property within a short time frame. Compounding the problem, Zillow Chief Economist Dr. Svenja Gudell explains, “In many cities across the US, the housing market is extremely competitive, especially for first-time buyers who are looking to purchase a starter home. Young buyers often start their careers in fast-growing cities in which the market is particularly tough- and they’re trying to save for a down payment while making record-high rent payments.”
However challenging it can be for millennials to find a first home, that doesn’t mean they don’t jump on an opportunity when it exists. Over 53 percent of first-time millennial buyers make multiple offers on properties, and 37 percent throw their financial plan out the window. With a typical homeowner owning 62 percent of the home’s value at sale time, it appears 46 percent of millennials will not sell their existing homes in a desirable price range.
Generation Z, the up and coming generation behind the millennials, is also emerging into the housing market. Gen Z tends to be “tech-savvy yet risk-averse” according to Jeremy Wacksman from the Zillow Group. Gen Z buyers will likely find their own paths to home ownership, despite record high rent prices. While 37 percent of renters report not moving from their current location due to lack of affordability, the vast majority of Gen Z see home ownership as key to achieving the American Dream. According to Wacksman, “As they mature and look toward homeownership, it will be interesting to see how their aspirations and preferences will shape the housing market.”