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When you think about millennials and what their ideal living situation might be, what comes to mind? An urban loft in a former shoe factory with floor-to-ceiling windows offering a view of the downtown skyline, all within walking distance of the city’s trendiest bars and restaurants? A pricey Silicon Valley apartment with plenty of roommates to share the rent so everyone can afford to work on their start-up company? These living arrangements might be appealing to some millennials, but when it comes to buying a home, this group’s tastes are more conservative than you might think.
Millennials — defined as those born from 1980 through 1999 — make up the largest share of homebuyers and mostly want single-family homes in the suburbs, according to the 2022 National Association of Realtors® Home Buyers and Sellers Generational Trends Report.
"Some young adults have used the pandemic to their financial advantage by paying down debt and cutting the cost of rent by moving in with family,” said Jessica Lautz, NAR's vice president of demographics and behavioral insights, in a press release. “They are now jumping headfirst into homeownership."
That’s likely because the median age of a millennial homebuyer is around 30 years old, a typical age for settling down and having kids.
Eighty-one percent of younger millennial homebuyers (23 to 31 years old) were purchasing for the first time, the NAR found. Just under half — 48 percent — of older millennial buyers (32 to 41 years old) were first-time buyers. (Related: Buying your first home)
The NAR report also found:
- 3 out of 5 recent buyers – 60 percent – were married couples.
- 19 percent were single females.
- 9 percent were single males.
- 9 percent were unmarried couples.
The highest share of unmarried couples were younger millennials at 21 percent. Single-female buyers significantly outnumbered single-male buyers across all generations. The highest percentage of single-female buyers in today’s market hail from the silent generation, the cohort born before the baby boomers, at 27 percent. (Related: 5 tips for single females buying a first home)
Debt challenges for millennial home ownership
But debt continues to be a significant barrier for many when attempting to buy a home. Part of that is due to student loan debt. NAR found that younger millennials had the highest share of student debt at 45 percent, with a median amount of $28,000.
Twenty-seven percent of younger millennials cited that saving for a down payment was the most challenging step in the homebuying process. Nearly 1 in 3 — 29 percent — of younger millennials received down payment help in the form of a gift or loan from a friend or relative and 24 percent lived with friends or family, an opportunity to live rent free and save. (Related: Savings strategies for a down payment)
"Not surprisingly, younger generations typically upgraded in size and price while older generations purchased more affordable properties," Lautz said. "The majority of all generations bought single-family homes at higher shares than other housing types, and younger buyers dispelled the myth that they are flocking to city centers. When it comes to location, the suburbs and small towns are the places to buy."
Where millennials buy homes
According to a study by CoreLogic, a real estate data and analytics company, millennials want to buy in locations in the metro Midwest markets where homes are more affordable or in metro areas with high-tech job opportunities.
CoreLogic listed San Jose, California, as having the highest percentage of millennials applying for a home mortgage (64 percent), followed by Austin (61 percent), Seattle (61 percent), Pittsburgh (61 percent), Boston (60 percent), and San Francisco (60 percent). Salt Lake City, Milwaukee, Minneapolis, and Buffalo were also among the 10 metros with the highest percentage of millennial applicants.
Top home features ― what millennials are buying
According to a survey of millennial homebuyers by the National Association of Home Builders:
- 82 percent want a garage (1, 2, or 3+ cars).
- 54 percent want access to public transportation.
- 40 percent want 3 bedrooms, while 47 percent want 4 or 5.
- 57 percent want an exercise or media room.
- 74 percent want a single-family detached home; only 15 percent want townhouses and 7 percent want condos.
- 76 percent want an open or partially open living-dining area.
- The median desired square footage for millennials is 1,905.
Additionally, millennial homebuyers want homes that are high tech.
“Many old neighborhoods in highly sought-after locations are being rebuilt to attract these millennial buyers,” CoreLogic noted in its research. “These homes are smart — with the refrigerator, oven, lights, water heater, and locks entirely integrated and wirelessly connected. Even barbeque grills are now being connected!”
With this interest also comes sustainability concerns, CoreLogic noted, with many millennial homebuyers seeking out solar energy power and other green-home options.
In addition, the NAR survey found that millennials are a transient bunch. For buyers 36 and younger, the expected length of time they intend to remain in their home is 10 years, compared with 20 years for boomers.
Millennials are redefining the real estate market. As housing prices surge amid record low inventory, many are leaving their urban lifestyle behind in favor of affordable homes in the suburbs. And they’re not necessarily waiting to get married before they buy.
Discover more from MassMutual:
When student loan and 401(k) compete
Saving money and staying safe when shopping for a loan
Cancer and young adults: Financial challenges
This article was origianlly published in September 2016. It has been updated.
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