Millennials aren’t seeing as much value in buying a home as they once did, according to new data.
Millennials’ perception of the value of buying a home has dropped below 50%, according to a new survey from ValueInsured. According to the company’s quarterly Modern Homebuyer Survey, just 48% of millennials believe buying a home in America today is a good investment. That’s a record low, and a significant drop from 54% in the second quarter. Two years ago, 77% of millennials believed buying a home now was a good investment.
Fifty-eight percent of millennials agreed that buying a home was the best financial decision they could make for themselves and their families, a 10-quarter survey low. In another survey low, just over six in 10 millennials thought that buying a home was more beneficial than renting, according to ValueInsured.
While 76% of homeowners believe now is a good time to sell a home, just 39% of millennials who want to become homeowners think now is a good time to buy a home.
The ValueInsured Housing Confidence Index for millennials also hit a record low, posting a score of 56.9 on a 100-point scale.
Related to the slide in homebuying confidence, more millennials now associate homeownership with sacrifice. Nearly one in four said they would need to delay having children to own a home, and 32% didn’t believe that they could afford a healthy or balanced diet while saving for a home at current prices.
“Conventional wisdom assumed millennials were buying homes later because they chose to get married and have children later,” said Joe Melendez, CEO and founder of ValueInsured. “New research now suggests homeownership may be the cause, not the effect, of delated family formation. It is an alarming trend, and we see more acute evidence in expensive housing regions.”
Even among millennials who are still interested in becoming homeowners in the near future, the decision is often filled with anxiety, ValueInsured found. Forty-nine percent of motivated first-time buyers were concerned that rising mortgage rates would put currently affordable homes out of their reach. Sixty-seven percent were worried that they would not be able to save enough to buy a home they would actually like to live in. And 85% expected their down payment to eat up more than half of their personal assets.
“Most homebuyers experience a healthy amount of jitters before such a milestone purchase; that’s normal,” Melendez said. “But the new normal is highly anxious, inexperienced buyers bungee jumping without knowing if their safety harnesses will work. That is an unhealthy – bordering on dysfunctional – trend that our industry needs to mitigate to ensure we do not lose an entire generation of future homeowners.”
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