HOUSTON – (Realty News Report) – Millennials are buying homes — or at least trying to. Over the next two years, more members of this generation will reach age 32, the typical peak age for first-time homebuyers, than ever before, according to a recent Zillow report.
“As millennials go, so goes the housing market,” said Zillow economist Nicole Bachaud. “We are seeing that as millennials age, they are searching for homes that suit growing families. Millennial demand has pushed up home prices in areas with the most children. Competition for homes in these family-friendly neighborhoods should intensify as more millennials reach the key age of 32, adding to the affordability squeeze.”
Real Estate Witch, now part of Clever Real Estate, released the 2022 Millennial Home Buyer Report, which surveys the concerns, attitudes and experiences of millennial homebuyers across the country.
The report shows that many millennials feel stressed and worry the market may be reaching a bubble as they confront persistently low inventory and affordability challenges. To cope, 46% say they have increased their savings, and 43% report making offers above the asking price.
Millennials are also adjusting expectations: 42% have changed their timeline for buying (either delaying or accelerating), 47% have shifted their preferred location, and 34% have reconsidered desired square footage.
Financial considerations remain central. Rising interest rates motivated about one-third of millennial buyers, down from 40% in 2021. Social factors also influence decisions: 37% want to start a family, 31% need a dedicated remote-work space, and 27% are influenced by friends or peers who are buying.
Once moved in, many millennials don’t plan to stay long: 31% expect to move again within five years. Nearly half view homebuying as a good investment, and a similar share say they’ve made sacrifices to afford a home. Non-mortgage debt still weighs on buyers, but savings levels are rising—82% report having more than $10,000 saved, a 25% increase from the previous year.
Mortgage qualification concerns worry 45% of respondents; a competitive market troubles 59%, and high home prices concern 56%.
Some risk-tolerant millennials are open to buying sight unseen: 90% said they would consider it under certain conditions, including the right price (56%), a new-build home without prior owners (56%), high competition (48%), or seller concessions (49%). Modern listing tools support remote purchases, with 70% using live virtual tours, 65% relying on photos, and 59% asking a trusted person to inspect a property in person.
Bidding wars remain a common fear, with 43% expecting to pay more than the asking price. Fixer-uppers are increasingly acceptable: 82% of respondents would consider a budget-friendly fixer-upper, up from 67% in 2019. However, one in four buyers who choose such homes later regret it because of unexpectedly high repair and maintenance costs.
The ideal home size for millennials averages about 1,700 square feet, a return from pandemic-era preferences that briefly pushed desired sizes to around 2,400 square feet.
Among millennials planning to buy in the coming year, 98% expect challenges such as making offers on multiple homes (52%), accepting concessions on home features (57%), or having to rush decisions (42%). After closing, owners worry about hidden ownership costs (51%) and whether home values will hold over time (49%).
Industry forecasts suggest the recent surge in home price appreciation will moderate this year. CoreLogic’s Home Price Index and HPI Forecast for 2021 indicated that price gains were expected to start 2022 above 10 percent before gradually slowing to about 3.5 percent by December.
Feb. 8, 2022 Realty News Report Copyright 2022.
Photo Credit: Ralph Bivins, Realty News Report Copyright 2022
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