Millennials Hoping to Buy a Home in the Next 5 Years Need to Emphasize Savings
We read about it regularly; millennials aren’t doing so hot. Luckily, Apartment List has conducted a few surveys that will give us some insight into how millennials are doing in terms of being able to own a home in the near future.
If you know any millennials you’ve probably heard some variation of “how can I buy a home when I can’t afford a down payment/can’t save enough for a down payment while renting.” Apartment List analyzed the financial well-being of 10,000 millennials, who are currently renting, across the country. At the outset, millennials, as a whole, understand that property ownership is a major step in the right direction if your goals are to generate wealth in the future. So what do the numbers show? Nearly half of millennial renters have not taken any steps towards saving enough for a down payment.
Approximately 1,300 millennials surveyed have more than $10,000 saved for a down payment; 800 millennials have between $5,000 and $10,000; 3,100 millennials have between $1 and $5,000; and 4,800 millennials have absolutely nothing saved. While one could argue that it’s rough out there for millennials (rent, and cost of living are outpacing wage growth), it is important to understand that when saving is the goal, everyone learns to go without in order to obtain their goals. This article does not suggest that millennials are to blame for their economic struggles, but if the economy won’t change then you need to change (for better or worse).
Another particularly worrisome number for millennials is that only a quarter of renters categorized as millennials will be able to afford a ten percent down payment on a median priced home over the next 60 months. The survey does note that if student loan obligations were so significant (those without student loans save approximately $100 more per month, or $1,200 per year) that removing those obligations would increase this number to 38% nationally and up to 50% in areas like Houston or Minneapolis. These numbers decrease to 13% when the target is 20% of a median priced home.
Ultimately, this survey shows that Millennials are facing tough circumstances, but this should not be read to mean that there is no hope. The bottom line is that you should be aware of the economic climate you live in, and adjust your savings and budgets accordingly. Money doesn’t grow on trees, but that doesn’t mean you shouldn’t be proactive about your goals.
At the Chernov Team we understand that knowledge is power, and knowledge of how the market is looking for millennial buyers is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.