- Nine out of ten millennial renters want to purchase a home, but few plan to do so in the near term. Of those who say that they plan to purchase a home, just 4.9 percent say that they will do so within the next year, while 34 percent expect to wait five years or more.
- 72 percent of millennial renters who plan to purchase a home cite affordability as a reason that they are delaying home ownership, with 62 percent pinpointing a lack of down-payment savings specifically. 48 percent of millennial renters have zero down-payment savings, while just 11 percent have saved $10,000 or more.
- We analyze millennial saving rates to estimate that two-thirds of millennial renters would require at least two decades to save enough for a 20 percent down payment on a median-priced condo in their market. Just 11 percent would be able to amass a 20 percent down payment within the next five years.
- Student debt is keeping home ownership out of reach for many millennials. We estimate that 23 percent of college graduates without student debt can save enough for a down payment within the next five years, compared to just 12 percent of college graduates who are currently paying off student loans. That said, those without a college education fare worst, with just six percent able to save a down payment within five years.
- Down-payment help from family can make home ownership more attainable, but this benefit accrues primarily to the highest earners. Of millennial renters who expect to receive assistance with a down payment, those with incomes over $100,000 per year expect to receive $51,172 on average, which is over ten times the average expected assistance of $4,358 for those making less than $25,000.
Millennials are on the verge of surpassing Baby Boomers as the nation's largest generation, and as such, this broad and diverse swath of the population will play a pivotal role in the fate of the American economy. Compared to previous generations, though, millennials are delaying many of the traditional markers of adulthood, and the question of when and if millennials will purchase homes looms large over the housing market. Despite recent increases, the millennial home-ownership rate still significantly lags that of previous generations at a similar age.
Several long-term macroeconomic trends have made home ownership a difficult goal for millennials to attain. Much of the generation came of age during or in the aftermath of the Great Recession, resulting in limited opportunities and stagnant wage growth in the crucial early stages of millennials' careers. Many millennials have also seen large student-debt burdens eat up the portion of their paychecks that may otherwise have gone towards down-payment savings. Meanwhile, construction of new single-family homes has lagged significantly in recent years, leading to a severe shortage of starter home inventory for millennials looking to buy.
In order to shed light on this important issue, Apartment List surveyed 6,400 millennial renters on their plans for home ownership. While the overwhelming majority of those surveyed would like to purchase a home at some point in the future, far fewer are financially prepared to do so in the near term. Among those who would like to own a home, 48 percent have nothing saved for a down payment, and we project that two-thirds would require more than two decades to save a 20 percent down payment based on their current savings rates.
Our survey shows that home ownership is still a goal that the vast majority of millennial renters aspire to, with 89.4 percent of respondents saying that they plan to purchase a home at some point in the future. That said, the share who expect to always rent has been on the rise in our survey,1 and compared to prior generations, millennials are less likely to view home ownership as central to the American Dream.
This finding is largely consistent across all demographic segments of our sample. Millennials of all races, genders, educational backgrounds and income levels aspire to eventually purchase homes, speaking to the deeply ingrained notion that doing so is a key milestone on the road to personal success. Notably, among the least-educated segments of our sample, a higher share of respondents plan to rent indefinitely, hinting at the difficult economic circumstances that many of these individuals face.2
Furthermore, for many millennials, home ownership seems to be an aspirational goal rather than an imminent plan. Just 4.4 percent expect to purchase a home within the next year, while 30.4 percent say that won't buy for at least five years.
Among those millennial renters who plan to eventually purchase a home, 71.5 percent cite affordability as a reason that they have yet to do so. Specifically, we find that saving a down payment is the primary financial obstacle keeping millennial renters from purchasing homes, with 61.7 percent of respondents who plan to buy saying that they can't afford a down payment. Meanwhile, just 29.1 percent say that they can't afford a monthly mortgage payment, indicating that programs offering down-payment assistance could have the potential to put home ownership within reach for a large share of millennial renters. To this end, several startups are prototyping new models of down-payment assistance, targeting millennials in particular.