What Stands Between Millennials and Home Ownership?
Millennials face economic challenges but may also be unprepared for building the proper financial foundation.
Nov 25, 2014, 01:27 ET
CHARLOTTE, N.C., Nov. 25, 2014 /PRNewswire/ -- LendingTree, the nation's leading online loan marketplace, has released the findings of its most recent survey, which examines millennial trends and attitudes towards home ownership. The survey, conducted online in September 2014, included 1,009 nationally representative respondents, ages 24 through 35, with at least some college education and an annual household income of at least $25,000. Contrary to some studies, LendingTree found that the millennial generation is still very much interested in home ownership, with only 4.4% of non-homeowner millennials citing no interest in ever owning a home. The survey reveals macro-financial challenges are significantly affecting millennial confidence and their ability to purchase a home. However, a lack of financial preparation among millennials is also a major factor holding back their participation in the housing market. This complete infographic summarizes the study.
The study revealed that only 43.4% of college educated millennials actually owned a home. When non-homeowners were asked, "What would allow you to consider purchasing your first home?" with the opportunity to select more than one choice, the responses were as follows:
- 67.4% cited a higher salary or income was necessary before they could buy a home
- 33.3% want to move to a more preferred area before buying
- 28.7% want to pay off student loans before becoming homeowners
- 25.7% said homeownership would be a possibility after they spent time and money on other things, such as traveling, investing and philanthropic missions.
"As the economy is rebounding, this market segment is still feeling longer-term effects of the recession," said LendingTree founder and CEO, Doug Lebda. "Underemployment and low salaries combined with high student debt and uncertainty about the future are a reality that is affecting the housing market. The demand is there, but until this age group sees higher salaries, lower debt levels, and feelings of settlement, millennial participation in the housing market will be slow."
Even though millennials may be facing economic and market burdens, they also have room to improve their own financial understanding. For example, 21.2% of millennials said they do not know their current credit score, and another 11.0% said they have never even checked their credit score. While credit score is only part of one's financial summary, it is a critically important factor in determining one's ability to borrow money for things such as a home. Checking one's credit score regularly is good practice for maintaining a healthy financial profile and the best way to avoid unexpected surprises when credit is needed.
The survey additionally found 44.8% of millennials have less than $5,000 in savings. Generally speaking, it is recommended to have at least three to six months of living expenses saved for unforeseen events. Although tight cash flows may explain limited savings, a surprising 9.5% of millennials cited they do not have or maintain a savings account, suggesting some millennials are missing the financial fundamentals necessary to become homeowners. With national down payments averaging roughly $30,000, many millennials are simply unprepared to enter the housing market.
About LendingTree, LLC
LendingTree, LLC is the nation's leading online loan marketplace, empowering consumers as they comparison-shop across a full suite of loan and credit-based offerings. LendingTree provides an online marketplace which connects consumers with multiple lenders that compete for their business, as well as an array of online tools and information to help consumers find the best loan. Since inception, LendingTree has facilitated more than 32 million loan requests. LendingTree provides access to lenders offering home loans, home equity loans/lines of credit, auto loans and more. LendingTree, LLC is a subsidiary of Tree.com, Inc. (NASDAQ: TREE). For more information go to www.lendingtree.com, dial 800-555-TREE, join our Facebook page and/or follow us on Twitter @LendingTree.
Contact:
Megan Greuling
704-943-8208
Megan.Greuling@tree.com
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SOURCE LendingTree
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