By choosing more affordable markets, their money goes further
Millennials are settling on more affordable markets while making lower down payments, according to new data from Realtor.com.
According to the report, enough millennial homebuyers consider affordability above of other factors that many of them are moving to housing markets that previous generations regarded as less desirable – like Buffalo, N.Y., which tops the most affordable markets for millennials.
"The stereotype that millennials primarily choose to buy homes and live in large metro areas isn't the reality," said Javier Vivas, director of economic research at Realtor.com. "Results show millennials' expansion is more heavily conditioned by affordability than in prior years, so their eyes are set on less traditional secondary markets where homes and jobs are now available and plentiful."
“Within the last year, millennials have moved to affordable areas with strong job markets where they have more buying power,” Realtor.com said. “At the end of 2018, the median price of a mortgaged home purchased by millennials was $238,000, $26,000 less than the median price of a home mortgaged by baby boomers and $51,000 than Generation X.”
Realtor.com’ data also revealed that since 2015, millennials have consistently made lower down payments than any other generation. The average down payment for millennials was 8.8% of the purchase price in December 2018, while Generation X was at 11.9% and baby boomers at 17.7%.
“Given that the majority of millennial homebuyers are searching for their first homes and do not bring equity from a previous home, it's no surprise they are putting down smaller down payments,” wrote Realtor.com. “This is likely a driver of their activity in more affordable markets, where their money goes further.”