The American Dream is the No. 1 Reason Why Millennials Want to Buy a Home

Rhea-AI Summary

According to a recent survey by realtor.com, homeownership remains a key aspiration for millennials, despite challenges such as rising prices and limited inventory. The HarrisX survey of over 800 prospective first-time buyers revealed that 59% aspire to homeownership primarily for investment purposes. Many are searching for over a year, with 44% citing insufficient down payment funds as a barrier. Notably, location is the top desired feature among buyers, while 53% anticipate competition in the housing market. This underscores the ongoing struggle for potential homeowners amid growing demand and limited supply.

Positive

• 59% of prospective buyers wish to own a home for investment.
• 43% of respondents have been searching for more than a year, indicating strong commitment.
• Homeownership remains the top choice across generations, showcasing broad appeal.

Negative

• 44% lack sufficient down payment, hindering their ability to purchase.
• 34% cannot find homes within their budget due to rising prices and low inventory.
• Millennials are particularly struggling with affordability, with 47% citing down payments as their biggest obstacle.

SANTA CLARA, Calif., March 25, 2021 /PRNewswire/ -- Homeownership is very much a part of the American Dream, even for millennials, long considered "the rent generation," a new realtor.com^® survey finds. However, rising prices and a shortage of available homes for sale is making it more difficult for people to achieve their goal.

The realtor.com^® HarrisX survey of more than 800 prospective homebuyers who plan to purchase their first home in 2021 sheds light on the aspirations and challenges facing those who are embarking on one of life's biggest financial decisions.

"Americans, even millennials who many thought would never buy, have a strong preference for homeownership for the same reasons many generations before them have -- to invest in a place of their own and in their communities, and to build a solid financial foundation for themselves and their families," said realtor.com^® Senior Economist George Ratiu.  "However, today's first-time homebuyers face unprecedented challenges brought on by a lack of available homes for sale and double-digit price growth. They are resilient though, with many in the market searching for their home for more than a year."

The survey found 43% of those queried have been searching for their home for more than a year. One-third (33%) of the respondents have been in the market between six and 12 months, an indication that buying a home in today's market is not easy. Approximately one in seven -- 14% -- have been searching for three to six months and 10% just entered the market in the last three months.

I want to be a homeowner and build equity
Long considered an important fabric of the American Dream, becoming a homeowner remains the No. 1 reason this year's first-time homebuyers are in the market. Three of the top four responses centered on the financial benefits of owning a home. When asked, "Why are you planning to buy a home?" The top response, at 59%, was "I want to be a homeowner". "I want to live in a space that I can invest in improving" ranked second at 33%, followed by the "need for more space" at 31% and "I want to build equity" at 22%.

Homeownership ranked as the top choice across all generations surveyed -- Gen X and older (40+) at 68%, millennials (aged 24-39) at 62% and Gen Z (18-23) at 45%. Millennials ranked the need for more space second among their reasons for buying a home, while Gen X and Gen Z both cited being able to invest in a property at 34%.

A needle in a haystack
When asked why they have yet to purchase a home, 44% responded that they don't have enough for a down payment and 34% stated that they haven't been able to find a home within their budget. This points to affordability and lack of homes on the market as significant challenges facing first-time homebuyers, especially this year when inventory is at an all-time low and listing prices have been growing at double digits for more than six months.

Millennials -- many of whom have been saddled with student loans -- are struggling the most to save, with 47% responding that the biggest obstacle to finding a home has been coming up with money for a down payment. This also was true for 44% of Gen X and 38% of Gen Z respondents. Millennials also are having the hardest time finding a home within their budget at 37%, followed by 33% for Gen X and 30% for Gen Z.

Location, quiet location...
The old adage when it comes to real estate is it's all about location, and this year's first-time buyers reinforced that. At 38%, location ranked as the top feature potential homebuyers are looking for, followed by a quiet location at 33%, a large backyard at 32% and a garage at 29%.

Gen Z ranked location as their No. 1 choice at 37%, followed by garage at 35% and updated kitchen at 26%. Quiet location and large backyard tied for fourth with the youngest cohort of buyers at 25%. For millennials, location tops the list at 40%, followed by a large backyard at 37% and quiet location at 32%. Potential buyers aged 40 and over are looking for a quiet location (43%), location (35%) and a good community/neighbors (33%).

Despite the popularity of reality home improvement shows, only 11% of this year's first-time homebuyers say they are willing to take on a fixer-upper with 43% indicating they want a move-in ready home. The remaining 46% said they would be willing to take on some repairs.

Searching online, saving are important first steps
When asked what they did first when they decided to purchase a home this year, 29% said they started searching online with nearly a third checking listings at least once a day, if not more. Finances are top of mind for many first-time homebuyers with nearly a quarter (24%) responding that they began saving money and changed their spending habits, while 20% figured out their budget.

The most common way to save is setting aside a certain amount from each paycheck (50%), while 45% said they also cut out discretionary expenses, such as gym memberships and eating out for lunch. Twenty-nine percent put away lump sums from annual bonuses, tax returns and gifts.

With a majority of respondents having been in the market since last spring, they are fully aware of the competition they are facing. Fifty-three percent expect a lot or some competition with one in five first-time homebuyers expecting a lot of competition.

Methodology: Realtor.com^® commissioned HarrisX to conduct a national survey of consumers. The total sample size was 830 adults. The survey was carried out online. The figures are representative of all U.S. adults (aged 18+) who were identified as likely first-time buyers. The sampling margin of error of the survey was +/- 3.6 percentage points. Results were weighted for age, gender, region, race/ethnicity and income where necessary to align them with their actual proportions in the population.

About realtor.com^®
Realtor.com^® makes buying, selling, renting and living in homes easier and more rewarding for everyone. Realtor.com^® pioneered the world of digital real estate more than 20 years ago, and today through its website and mobile apps is a trusted source for the information, tools and professional expertise that help people move confidently through every step of their home journey. Using proprietary data science and machine learning technology, realtor.com^® pairs buyers and sellers with local agents in their market, helping take the guesswork out of buying and selling a home. For professionals, realtor.com^® is a trusted provider of consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com^® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a perpetual license from the National Association of REALTORS^®. For more information, visit realtor.com^®.

Media Contact
Janice McDill, janice.mcdill@move.com

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SOURCE realtor.com

FAQ

What percentage of millennials want to buy a home in 2021?

According to the survey, 59% of millennials wish to buy a home primarily for investment.

What are the main challenges facing first-time homebuyers in 2021?

Challenges include insufficient down payment funds (44%) and difficulty finding affordable homes (34%).

How long are potential homebuyers searching for a home?

43% of prospective buyers have been searching for over a year.

What is the top feature first-time homebuyers are looking for?

The top feature is location, with 38% of buyers prioritizing it.

How do millennials find homeownership opportunities?

29% of millennials start their home search online, with many checking listings daily.

What is the expectation of competition in the housing market for 2021?

53% of first-time homebuyers expect a lot or some competition in the market.