Buying a home may seem like an out-of-reach goal for most millennials, especially as headlines portray the generation as one that’s invested all its money into avocado toast and therefore can’t handle the responsibility of a mortgage or pull together enough savings for a downpayment. But in reality, many millennials already are homeowners (or are planning to be), and they’re buying homes on their own terms, within their own budgets. “Millennials are already the largest group of home buyers today,” says Amy Bonitatibus, Chase Home Lending’s chief marketing and communications officer. “They see the value in homeownership and are doing their research and preparing financially, so they can buy when they’re ready.” To find out more about the unique ways this generation is approaching home buying, we teamed up with Chase, who recently surveyed 1,000 millennials — both current homeowners and those who haven’t yet bought homes — about their home-buying habits and interests.
Homeownership is without a doubt a serious financial commitment, but it’s also one that can provide financial and emotional stability — key reasons why millennials may want to become homeowners. Two thirds of those surveyed by Chase said they believe that, regardless of homeownership status, buying a house is “one of the best investments you can make.” It’s also something this generation is not waiting on, ditching the notion that homeownership is meant only for later in life when you have a family.
“It used to be that people would feel they had to wait until they reached a certain milestone, like getting married or making a certain amount of money, before they bought a house, since they would anticipate living there for 30 or 40 years,” says Tricia Lee Riley, a Brooklyn-based associate real estate broker for Compass, who estimates half of her clients are millennial first-time buyers. “Now, clients come in, knowing that they want to get a start on buying something now.”
Homeownership may also be well within the reach of many millennials’ current financial situations. Chase’s survey found that a whopping 96% felt confident or semi-confident they could afford their current home, a key factor in security and stability. “If anyone is even casually considering buying, I encourage them to sit down with a lender at their local bank branch and run numbers, just to have a sense of what sort of loan you would be working with if you were to buy a home,” says Riley, who adds that, contrary to what many of her clients assume, debt — especially student debt — doesn’t automatically preclude you from a home loan.
Bonitatibus agrees: “Working with an expert advisor can make a big difference. There are so many calculators and tools online that it can be overwhelming, especially to someone buying their first home,” she says. “Mortgages are like houses — they come in all different shapes and sizes. Talking to an advisor early on can help you understand different loan types and get you prequalified for a mortgage that’s right for you.”
When Karen Lehmann, 29, an online audience strategist at Refinery29, set out to buy a home with her husband, they were surprised by the loan offer they received, given their ages and mutual combined income. “We decided that we wanted to look for houses that were about half that amount, to give us some wiggle room in our budget for future renovations and also to minimize our eventual monthly mortgage payment.”
One of the key reasons Lehmann and her husband decided to purchase a home was to be able to have outside space. They’re not alone: In the survey, a third of millennials said the size of outdoor space was a key factor in choosing a house. “Millennials have a sense of what they plan to do to their home and know that a house can be a template for customization,” Riley notes.
That includes renovations. “[This is a generation of] savvy buyers who are aware of the options available to them, including renovation projects,” Riley says. Nearly 70% surveyed by Chase said they plan to finance home renovation projects. These homeowners plan to borrow an average of $19,000, with popular renovation projects focusing on kitchens, bathrooms, landscaping, and creating decks or other outdoor spaces.
[This is a generation of] savvy buyers who are aware of the options available to them, including renovation projects.
Tricia Lee Riley, associate real estate broker at Compass
Sure, five figures can give anyone sticker shock (especially after a down payment and closing costs), but in Lehmann’s experience, budgeting for renovation costs up front — even before you put in an offer — can give you a realistic sense of what budget you’re working with, what may be doable, and how you can create a home you love from one you just like on first viewing. “When we saw the house we ended up buying, we knew the kitchen was small and dated. We got estimates and knew it would be pricy to complete a kitchen renovation, but we also knew, since we were looking under budget for homes, that it would be something we could swing.”
Lehmann and her husband put in an offer and, like nearly one-third of millennials surveyed, got to work on a kitchen renovation, knocking down walls and raising the ceiling to create an airy, open-concept first floor they love. “If we had gone house hunting with that specific kitchen in mind, we either wouldn’t have found it or may have found it in a much larger, more expensive house. Knowing we could do our own renovations was helpful in considering different properties.”
Even those who aren’t quite ready to pull the trigger on a home are still thinking about it. According to the survey, three out of four non-homeowner millennials still regularly discuss eventually buying property. Additionally, 40% of millennials plan to purchase in the next three to five years. Even if you aren’t planning to purchase a home just now, Riley says there are still proactive steps to take so you can be a savvy, competitive home buyer in the future. “It’s important to do your research, know any weak points you may have in your finances, and take steps to address them.”
“Millennials aren’t waiting,” says Riley. “They’re ready to buy homes now.”