Why Aren’t Millennial’s Becoming Homeowners?

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Published on October 1, 2019

Earlier in August, LendEDU released a report that analyzed data from a survey of current millennial homeowners to better understand how the largest living generation is approaching the home-buying process.

As a compliment to that report, LendEDU also wanted to look into millennials that are not yet homeowners to see where they stand in their journeys towards purchasing a home, or if they even plan on targeting that financial milestone.

Have bad memories from the 2008 financial crisis or even a lack of knowledge when it comes to mortgages prevented millennials from becoming homeowners? How long do millennials anticipate it will take to finally own a home, and will they put off other life goals to buy one?

Do millennials have a good grasp of crucial mortgage information? When they do start searching for a home, how will they attack the process, and will they seek a mortgage from a traditional bank like Wells Fargo or a non-banking lender like Quicken Loans?

This report explored all of those questions and more. With millennials growing up during the height of the sub-prime mortgage-induced recession, in addition to being a tremendously important generation due to its size and earning power, millennials’ thoughts towards homeownership and mortgages are fascinating to study.

In addition, the fact that this study focuses on millennial’s that are not yet homeowners makes the topic doubly interesting as we can get a better feel for where the generation might take the real estate and mortgage markets.

Full Survey Results

(The following data derives from an online survey of 1,000 millennials between the ages of 23 and 38.)

(1) Do you currently own a home?

  • 58% of respondents answered “Yes”
  • 42% of respondents answered “No”

(2 — Asked only to those who answered “No” to Q1) Do you wish to become a homeowner at some point in your life?

  • 89% of respondents answered “Yes”
  • 11% of respondents answered “No”

(3 — Asked only to those who answered “No” to Q1 & “No” to Q2) Have memories from the 08-09 financial crisis, spurred by sub-prime mortgage lending, led you to not want to become a homeowner?

  • 13% of respondents answered “Yes”
  • 67% of respondents answered “No”
  • 20% of respondents answered “I’d rather not say.”

(4 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) How many years do you anticipate it will take you to become a homeowner?

  • 6% of respondents answered “Less than 1 year”
  • 65% of respondents answered “1 to 5 years”
  • 21% of respondents answered “6 to 10 years”
  • 6% of respondents answered “10 to 20 years”
  • 2% of respondents answered “Over 20 years”

(5 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) Do you believe that a lack of knowledge when it comes to homeownership and mortgages has prevented you from already owning a home or taking longer than expected to become a homeowner?

  • 55% of respondents answered “Yes”
  • 41% of respondents answered “No”
  • 4% of respondents answered “I’d rather not say.”

(6 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) Are you putting any of the following life goals on hold until you finally purchase a home? (Select all that apply)

  • 13% of respondent answers were “Marriage”
  • 16% of respondent answers were “Having children”
  • 13% of respondent answers were “Having a pet”
  • 14% of respondent answers were “Changing jobs”
  • 6% of respondent answers were “Other”
  • 38% of respondent answers were “None of the above”

(7 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) Are any of the following preventing you from already being a homeowner? (Select all that apply)

  • 26% of respondent answers were “Lack of savings”
  • 24% of respondent answers were “Low income”
  • 10% of respondent answers were “Overwhelming student loan debt”
  • 5% of respondent answers were “Overwhelming credit card debt”
  • 6% of respondent answers were “Other debt”
  • 17% of respondent answers were “Poor credit”
  • 8% of respondent answers were “Haven’t found the right home yet”
  • 3% of respondent answers were “Other”
  • 1% of respondent answers “None of the above”

(8 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) Have you previously applied for a mortgage and have been rejected?

  • 10% of respondents answered “Yes”
  • 88% of respondents answered “No”
  • 2% of respondents answered “I’d rather not say.”

(9 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) Do you anticipate that you will use a mortgage to finance the purchase of your home?

  • 75% of respondents answered “Yes”
  • 25% of respondents answered “No”

(10 — Asked only to those who answered “No” to Q1, “Yes” to Q2, & “Yes” to Q9) When you eventually start shopping for a mortgage, do you intend to get multiple quotes to compare the best offers or just one quote?

  • 78% of respondents answered “Multiple quotes”
  • 6% of respondents answered “Just one quote”
  • 16% of respondents answered “I’m not sure.”

(11 — Asked only to those who answered “No” to Q1, “Yes” to Q2, & “Yes” to Q9) When you eventually start shopping for a mortgage, do you think you will handle the vast majority of the process online or through an in-person mortgage broker or lender?

  • 22% of respondents answered “Online”
  • 52% of respondents answered “In-person”
  • 26% of respondents answered “I’m not sure.”

(12 — Asked only to those who answered “No” to Q1, “Yes” to Q2, & “Yes” to Q9) When you eventually start shopping for a mortgage, do you intend to take out a mortgage with a traditional bank like Bank of America or Wells Fargo or a non-banking lender like Quicken Loans or Loan Depot?

  • 53% of respondents answered “A traditional bank”
  • 8% of respondents answered “A non-banking lender”
  • 39% of respondents answered “I’m not sure.”

(13 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) As a percentage of the total purchase price, generally what is the minimum down payment required to purchase a home?

  • As a percentage of the total purchase price, the average millennial respondent answered “37%.”

(14 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) True or False: If you fail to put 20% down to purchase a home, you must pay private mortgage insurance (PMI)?

  • 60% of respondents answered “True” (Correct)
  • 40% of respondents answered “False”

(15 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) From start to finish, how many days do you think it typically takes to get a mortgage?

  • The average millennial respondent answered “72 days” when asked how long the mortgage process typically takes from start to finish.

(16 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) Generally speaking, what do you believe the minimum annual income needed is to take out a mortgage?

  • The average millennial respondent answered “$58,818” when asked for the minimum annual income needed to take out a mortgage.

(17 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) True or False: In order to qualify for a mortgage, you must have a perfect credit score?

  • 33% of respondents answered “True”
  • 67% of respondents answered “False” (Correct)

Follow the Link here to see the full post and report

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