Forward-thinking millennials are buying homes – and they are happy about it. While “dreamers” reported last year that they wanted to skip the starter home, Bank of America’s second annual Homebuyer Insights Report revealed that millennials who have taken the plunge into homeownership are buying the house they can afford now and looking ahead to their ideal home in the future. In fact, a large majority (68 percent) of millennial homeowners say their current home is a “stepping stone” to their forever home.
Highlights from the report include:
- 68% of millennial homeowners surveyed say their current home in a “stepping stone” to their forever home
- 86% of millennial homeowners believe owning a home is more affordable than renting
- 35% of prospective homebuyers have already started to plan for a down payment, only 21% think they can currently make one
- 47% of prospective buyers think they would qualify for a down payment assistance program; of those, 87% say they would take advantage of these programs
- First-time buyers are juggling a variety of financial responsibilities: paying off debts/bills (61%), improving credit scores (47%), saving for a new home (45%) and paying off student loans (32%) are major priorities
- Current owners’ advice for purchasing includes: start saving sooner (60%), consider the maintenance costs and unexpected expenses (42%), create and stick to a budget (35%) and buy early to build equity (21%)
View the full report here.
“After years of seeing millennials sit on the sidelines, it’s clear some are recognizing it might not make sense to wait,” said D. Steve Boland, Consumer Lending executive for Bank of America. “We talk to younger buyers every day about homeownership, and they understand the benefits it can have on their long-term finances. They’re excited to get started but are taking a thoughtful approach by improving their credit and building their savings.”
Millennial homeowners are confident they made the right decision in buying. Nearly 80 percent report homeownership has had a positive impact on their long-term financial picture. A similar number (86 percent) believe owning a home is more affordable than renting. This is in sharp contrast to those consumers who have not yet purchased a home, as they are split on what’s more affordable: 54 percent say owning, compared to 45 percent who say renting.
In further defining homeownership, these 18- to 34-year-old owners are more likely than any other generation to associate it with adulthood (39 percent), and least likely to define it as the American dream (16 percent) and permanence (11 percent).
When looking back at their homebuying experience, current owners across generations would tell their younger selves to start saving sooner (60 percent), consider the maintenance costs and unexpected expenses (42 percent), and create and stick to a budget (35 percent). Twenty-one percent say buy early to build equity.
Prospective buyers are planning, but not pulling the trigger yet
While they are juggling a variety of financial priorities, including paying off debts and bills (61 percent), improving credit scores (47 percent) and paying off student loans (32 percent), nearly one in four prospective buyers see homeownership on the horizon, saying they will purchase their first home within the next two years. Furthermore, 35 percent say they have started to plan for a down payment.
Almost half of first-time buyers believe they need 20 percent or more of a home’s price for a down payment, which may be why just 21 percent think they can currently make one.
“Some prospective first-time homebuyers tend to believe their personal circumstances should line up perfectly, or that they need a 20 percent down payment. Yet there are many ways homebuyers can achieve responsible and sustainable homeownership much sooner than they think,” said Boland.
Experienced buyers say value of homeownership goes beyond dollars and cents
Just one-third of owners say a home’s value is determined by how much it cost to purchase. Beyond financial value, current homeowners also see clear emotional benefits of homeownership, as nearly all say they are proud of owning (95 percent) and treasure the memories they have made (91 percent). Only 21 percent say owning a home is a burden.
Furthermore, the majority (82 percent) of experienced buyers look for ways to make their current home more valuable, and 70 percent spend a lot of free time working on their home.
For additional information about the Bank of America Homebuyer Insights Report, visit www.bankofamerica.com/homebuyersreport. For information on home financing, visit www.bankofamerica.com/mortgage/home-mortgage.
Bank of America Consumer Lending
Bank of America’s Consumer Lending unit includes First Mortgage, Home Equity, Merrill Lynch Banking, and Consumer Vehicle Lending. Each business is focused on delivering a distinctive and consistent client experience through competitive product offerings, quality loan production, choice of multiple connection and delivery methods, and operational excellence based on a client’s unique attributes and relationship with us.
About the Bank of America Homebuyer Insights Report
This survey was conducted by GfK Public Communications and Social Science, using GfK’s KnowledgePanel®, which yields results that are statistically representative and projectable to the American population. The survey was conducted online January 24–February 2, 2017. A total of 4,906 adults age 18+ were surveyed, including 1,268 current homeowners and 435 prospective homeowners. In addition, an augment was conducted to achieve 300 adults in 10 local markets: Boston, Charlotte, Chicago, Dallas, Denver, Houston, Phoenix, Miami, St. Louis, and New York. The margin of sampling error for national data is +/- 3.0 percentage points.