Fewer young people have been buying homes in their 20s and early 30s, compared to previous generations: Only 37 percent of people aged 25-34 owned in 2018, compared to 45 percent of both Gen Xers and baby boomers when they were that age.
But as millennials get older and more financially stable, they're expected to increasingly become a driving force in the residential real estate market. That's according to a recent survey of 1,000 Americans, of whom just over half were aged 18 to 34, from home buying platform Clever Real Estate.
So, how much are they spending?
They're being conservative. About 30 percent of millennials who are planning to buy a home in the next year say their price range is between $100,000 and $199,999, while another 27 percent say they plan to spend between $200,000 and $299,999.
Only 5 percent of survey respondents say they plan to spend $500,000 or more.
"This makes sense, considering that millennials are still relatively new to the workforce and lack the spending power of older generations," the survey says.
It's worth noting that Clever's definition of millennials skews young, which could affect conclusions about their purchasing power. Pew Research Center's widely accepted definition says millennials are those aged 23 to 38.
Regardless, the steep cost of buying a home has been shown to pose a problem for younger buyers in numerous surveys.
Nearly 40 percent of Clever's millennial survey respondents say that being able to save enough for a down payment is the top obstacle they face in becoming homeowners while another 20 percent say that their biggest barrier to entry is the fact that homes are too expensive.
"This is where millennial-centric issues like student debt and rising rent prices really factor into the equation," Clever reports.
Although millennial households are generally earning more than other generations did at the same age, the survey says, significant obstacles, such as higher costs of living and higher student loan burdens, make it tough for young people to enter the market.
These barriers to entry are even higher for young people living in costly cities like New York or San Francisco, where median home prices are $829,000 and $1.3 million, respectively. By contrast, the median home price in the U.S. overall is $275,000.
Despite the difficulties they face, most young people truly want to become homeowners. A full 72 percent of millennials (defined as those aged 24 to 41) say owning a home is a top priority, according to Bank of America's 2018 Homebuyer Insights Report. By contrast, only 50 percent list getting married and 44 percent list having children as top priorities.
That's partly because over half of millennials think homeownership translates to "personal success," Bank of America found.
Many millennials want to buy because the idea makes them feel "mature, more responsible" and "more like an adult," says Kathy Cummings, senior vice president of homeownership solutions and affordable housing programs at Bank of America.
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