Only about 7 in 10 save directly from paychecks
With having enough money for a down payment as the top concern among first-time millennial homebuyers, many in the age group are going beyond their paychecks for their savings, according to Redfin analysis.
Redfin analyzed a March survey of 2,000 US residents and focused on the more than 500 respondents between the ages of 24 and 38 who said they planned to buy their first home in the next 12 months.
The study found that 50% said they were most concerned about having enough money for a down payment. Other top concerns were affording a home in their preferred location (45%) and rising home prices (41%).
While a majority of millennials (69%) saved for a down payment directly from their paychecks, others resorted to other sources and tactics. Among those millennials, 36% took on a second job, 13% pulled money out of retirement funds early, and 10% sold cryptocurrency. Some lucky millennials resorted to a cash gift from their family (24%) or an inheritance (12%).
Redfin noted substantial differences in how millennials came up with a down payment when broken down by income levels. Millennials in households earning more than $100,000 per year were less likely than those earning less to have saved directly from paychecks. Also, millennial households earning more than $100,000 were more likely to have received an inheritance or cash gift from family or to have dipped into their retirement savings.
"For millennials who have launched their careers while working to pay off student loans in the last decade, having enough to set aside toward a down payment would have been a significant accomplishment," Redfin Senior Economist Sheharyar Bokhari said. "These results reveal some of the inequalities that have been exacerbated in the years following the recession, with the well-off having more flexibility and thereby ability to become homeowners and build more wealth, through advantages like financial support from family and the opportunity to invest in the stock market."