37.7 percent of respondents cite concerns with their credit scores, a larger share than those who say that they can't afford a monthly mortgage payment. Notably, this factor varies considerably by race and education. Just 15.8 percent of Asian respondents are worried about credit, compared to a staggering 58.5 percent of black respondents. Similarly, credit poses an obstacle for 51.0 percent of those with less than a bachelor's degree, but just 19.4 percent of those with a bachelor's degree or higher.
That said, financial obstacles aside, many millennial renters simply don't want to be tied down by home ownership in the near-term. 34.0 percent say that they aren't yet ready to settle down in their current city, while 28.1 percent say that they want to get married or find a long-term partner before buying a home. These figures suggest that a preference for flexibility is also playing a role in millennials delaying home ownership.
48 percent of millennials have saved nothing for a down paymentThe extent to which amassing a down payment poses an obstacle to prospective millennial home buyers becomes even more clear when we ask our survey respondents about their current savings levels.
Nationally, the median-priced condo costs $244,100, meaning that $48,820 would be required for a traditional 20 percent down payment.3 However, just 11.1 percent of millennials have saved more than $10,000 for a down payment, while an astounding 48.0 percent have saved nothing at all. We also ask about respondents' ongoing monthly savings rates and find that 43.3 percent are putting none of their monthly income toward down-payment savings.
This lack of savings shows that while most millennials would like to buy homes, very few are able to make the financial strides necessary to turn that hope into a reality. Furthermore, many millennials may be underestimating the amount they will need to save for a down payment.
In the San Francisco metro, the nation's priciest market, the average survey respondent expects to need $99,300 for a down payment. While attaining that level of savings is surely daunting for all but the highest earners, a 20 percent down payment on a median-priced condo in the San Francisco metro requires the much larger sum of $175,180. We see this trend even in more affordable markets. In Phoenix, for example, a 20 percent down payment on the median-priced condo amounts to $33,400, but our survey respondents in the area expect to need $17,610, on average.
These disparities mean that many millennials may be planning to put down less than 20 percent, potentially resulting in added costs from higher interest rates and mortgage-insurance premiums. Respondents could also be expecting to purchase homes that are priced well below the median in their areas, likely a difficult prospect given the current lack of starter-home inventory in most markets. Alternately, some millennials may be planning to move to a lower-cost metro when it comes time to buy a home, but finding a balance between housing affordability and economic opportunity could prove difficult.
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