More young Americans are buying homes—and some smart homebuying strategies can put that goal within reach for you, too.
Millennials are the largest group of homebuyers in America, according to the National Association of Realtors' Home Buyers and Sellers Generational Trends 2019 report. And this isn't really news: Americans born after 1980 have made up the biggest chunk of homebuyers since 2014, when they surpassed baby boomers, according to NAR's historic data.
There are still signs that buying is a struggle for many. Millennials are reaching homeownership later in their lives than both Gen Xers and baby boomers did, according to a 2018 Urban Institute study. That's due to a combination of factors including home affordability, the burden of student loan payments, and delaying marriage.
And folks under 35 still only make up 9.8% of all homeowners, a figure that has fallen in 80% of markets since 2010, according to Grow's analysis of U.S. Census Bureau data.
These four strategies can make it easier to afford that first home.
When Mandy Roth, 27, moved to San Diego from New York in 2015, she got an apartment with two roommates in La Jolla. When she started looking to buy in 2017, she got sticker shock: The median home price in the affluent seaside community is $1.4 million, according to Zillow. That was nearly five times her budget.
So she broadened her search to find other areas that were a fit for her needs and budget. The marketing professional ended up purchasing a $300,000 one-bedroom condo in Pacific Beach, a San Diego neighborhood where the median list price is 46% lower than La Jolla.
Almost 70% of millennials are willing to buy a home that needs some work, according to data from real estate site Clever. That can be a smart way to save.
"The condo I purchased was definitely more of a fixer-upper," Roth says. "But I could really see the potential in the home." Some of the home's features and fixtures were a bit outdated, with a pink bathroom sink and popcorn ceilings. She upgraded these fixtures and replaced the carpet with hardwood, all for around $7,000.
Make sure to do your research before buying a home that isn't move-in ready, though, to gauge the scope, and the expense, of the project you're taking on.
Savings for a down payment and closing costs can be the biggest hurdle for would-be homebuyers. The idea of putting down 20% can be daunting. The good news is you may not need that much.
The typical mortgage borrower puts down 7.6%, or $20,250, according to numbers provided to Grow by Attom Data Solutions. Some low down payment mortgages only require 3% for a down payment—or even nothing, in some cases.
To avoid scrambling to come up with a down payment, consider setting up a small monthly automatic deposit from your checking to savings account. Or designate a portion of your tax return each year to go towards a down payment.
Many cities and states have down payment assistance programs that help first-time homebuyers. Colorado offers first-time homebuyers down payment assistance of up to 3% of the home's purchase price, and that doesn't have to be repaid. It's rare, but your employer might even throw in some cash: Two percent of employers offer down payment assistance, and 3% offer mortgage assistance, according to a 2018 report from the Society for Human Resource Management.
Buying a home seemed like a distant goal for Amanda Potter, 29, and her 33-year-old fiancé, who didn't have enough saved up for a down payment. But in 2017, her employer, N2 Publishing, announced a homebuying assistance program for employees who'd been at the company for at least two years. The goal was to help younger employees who were missing out of the long-term benefits of owning a home.
Potter used the $7,000 in employer assistance to purchase a two-story home in a subdivision outside Wilmington, North Carolina, for $209,000 in 2018.
"We wouldn't have been able to afford the home without the program," Potter says. "It is no exaggeration to say it would have taken a decade longer to save up for that down payment."
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