While their behavior thus far doesn't do much to validate it, a survey by Bank of America (BoA) finds that Millennials put a high priority on homeownership. In fact, among members of that generation responding to the company's 2018 Homebuyer Insights Report, 72 percent put owning a home near the top of their list, surpassed only by "being able to retire." Other important milestones named were traveling the world (61 percent) and getting married (50 percent), trailed by having children at 44 percent.
These priorities define what is or will motivate their first home purchase with only 9 percent saying having kids and 21 percent getting married. Financial considerations are larger motivations, with having enough for a down payment ranking first at 57 percent and having a higher salary named by 41 percent.
Many millennials equate homeownership with personal and financial success and said that thinking about buying their first home made them feel mature, independent, established, and empowered. D. Steve Boland, Head of Consumer Lending, said he was encouraged to learn that first-time buyers are already being purposeful in their home purchase planning, "and are considering who to buy with, when to buy, and where to buy." Fifty-seven percent say they plan to buy with a spouse while 37 percent are striking out into homeownership on their own. Eight percent plan to buy with a friend, sibling, or another family member.
First-time buyers were split on whether their first home would be a starter or a "forever" home; 50 percent specified each. They also preferred more square footage over a large backyard and preferred, by two-to-one, a garage over an extra bedroom and a modern layout over a house with "good bones." Three quarters wanted updated appliances more than an updated exterior. Location, location, location is apparently still the rule, as 90 percent would choose their preferred neighborhood compared to 10 percent who would pick a less desirable area with lower prices.
The survey put an extra emphasis on the opinions of renters and Boland said "it is clear there are inconsistencies and a knowledge gap in the 'own vs. rent' debate. Responses were pretty evenly divided between those who said renting long term would be just as or less expensive than buying (51 percent) and those who said buying would be cheaper (49 percent.) Yet, nearly 70 percent believe their rents will increase every year or two and 30 percent already pay more than 30 percent of their income for rent.
Rising rental costs also topped the list of things renters most disliked about renting at 52 percent. This was followed closely by other financial considerations - throwing money away and not building equity. Many renters also cited "not feeling like its truly home."
As to why they continue to rent, the strongest response was the lack of a downpayment (44 percent) followed by not knowing where they might be in a few years.
The survey, much like one conducted last year by Freddie Mac, found some persistent myths about homebuying among renters. The most common is that a 20 percent down payment is required to buy. Many renters also believe that "perfect" credit is a necessity.