Millennials were more inclined than Gen Xers to use personal savings, with 74% of millennials planning to use personal savings compared to 58% of Gen Xers. Additionally, millennials were more likely to rely on a spouse’s or partner’s savings, with 37% of millennials planning to do so compared to 23% of Gen Xers and 17% of baby boomers. When it comes to monetary gifts, 14% of millennials planning to buy a home within five years said they would use a family gift for their down payment, compared to 10% of Gen Xers and 4% of baby boomers.
In terms of saving for a down payment, millennials took the longest time, with an average of 3.75 years to save, while Gen Xers took 3.42 years and baby boomers took 2.75 years on average. The 2016 Consumer Expenditure Survey by the Bureau of Labor Statistics also showed that millennials save $7,624 per year compared to $12,347 for Gen Xers.
When it comes to barriers to homeownership, millennials faced more obstacles than other generations, with 82% reporting something keeping them from buying a home. The top problems cited were not having enough money for a down payment and having debt. Millennials also faced challenges such as not being able to afford a home in their desired area and not being able to find a home that meets all their needs. Additionally, student loan debt was a significant hurdle for millennials, with 19% citing it as a barrier compared to 11% of Gen Xers and 3% of baby boomers.
Despite these challenges, millennials are buying their first homes at a younger age compared to older generations, with the average age of first-time homebuyers being 25.2 for millennials, 29.4 for Gen Xers, and 30.4 for baby boomers. Over a third of millennial home buyers (35%) purchased their first home between ages 18 and 24, compared to 19% of Gen Xers and 23% of baby boomers.
When it comes to saving for a down payment, 79% of Americans planning to buy a home in the next five years are willing to make sacrifices. Millennials are more willing to make sacrifices compared to older generations, with 90% of millennials and 77% of Gen Xers willing to do so, while only 59% of baby boomers are willing.
Specific trade-offs that millennials are willing to make include forgoing a vacation (59% compared to 47% of Gen Xers and 45% of baby boomers), making coffee at home instead of buying it (42% compared to 34% of Gen X and 29% of baby boomers), delaying having children (28% compared to 12% of Gen X), delaying a honeymoon (24% compared to 13% of Gen X), and delaying marriage (18% compared to 9% of Gen X) to save for a down payment.
However, there may be a gap between plans and experiences, as only 36% of those who bought a home in the past five years and do not plan to buy in the next five years made changes to save for a down payment.
Overall, individuals need to consider factors such as saving enough for a down payment, not saving too much, the implications of paying PMI, and remembering to account for closing costs when saving for a down payment.
This data should be seen as qualitative and indicative.
This information is meant to provide a general direction and should be interpreted as such. It may not be entirely precise or quantitative, but it can still offer valuable insights and trends.