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Millennial Home Buying Jitters Increase Due to Credit Concerns and More

Millennials housing confidence and enthusiasm plummet to record low in latest ValueInsured Modern Homebuyer Survey

Millennials’ perceived value in buying a home dropped below 50 percent, down significantly from two years ago, according to the latest ValueInsured quarterly Modern Homebuyer Survey.

  • In the third quarter of 2018, 48 percent of all millennials believe buying a home in America today is a good investment; this is a record low, down from 54 percent in the second quarter. The previous high was 77 percent two years ago.
  • Fifty-­eight percent of Millennials now agree buying a home is the best financial decision they can make for themselves and their family.
  • Just over six in 10 Millennials (61 percent) now believe buying a home is more beneficial than renting, again a survey low, down from a high of 83 percent two years ago.
  • While 76 percent of all homeowners believe now is a good time to sell a home, only 39 percent of Millennials who want to become homeowners believe now is a good time to buy a home.
  • The ValueInsured Housing Confidence Index for Millennials registered a score of 56.9 on a hundred-­point scale in Q3 2018. It is the lowest level recorded, down 1.7 points from Q2, and down 10.1 points from a year

In addition to reporting a steady slide in their conviction for home buying, more millennials now associate owning with sacrifices:

  • Nearly one in four (23 percent) believe they need to delay having children in order to afford to buy a home
  • Thirty‐two percent do not believe they can afford a healthy and balanced diet while saving for a home at today’s high prices
  • Thirty­‐one percent seriously consider relocating to another city to afford to buy.

“Conventional wisdom assumed millennials were buying homes later because they chose to get married and have children later,” says Joe Melendez, CEO, and founder of ValueInsured. “New research now suggests homeownership may be the cause, not the effect, of a delayed family formation. It is an alarming trend, and we see more acute evidence inexpensive housing regions.”

Millennials Tend to Be Overextended, Anxious Buyers

Among Millennials who are still interested and motived to become homeowners “in the near future,” their anticipation is often filled with anxiety. Among motivated first-­time buyers, 49 percent are concerned rising mortgage rates could make homes currently within their budget become unaffordable later; 67 percent are concerned they will not save enough for a home they would actually like to live in; and 52 percent believe a home they buy now will likely drop in value within one year. Sixty-­‐eight percent are concerned about another housing crisis, and 64 percent admit they will likely experience buyer’s remorse after reaching their homeownership goal.

Their trepidation could be explained by the high stakes these millennials plan to undertake. Eighty-­‐five percent in the survey expect their home down payment to represent over half of their total personal assets.

“Most homebuyers experience a healthy amount of jitters before such a milestone purchase—that’s normal,” Melendez said. “But the new normal is highly anxious, inexperienced buyers bungee jumping in without knowing if their safety harnesses will work. That is unhealthy, bordering on a dysfunctional trend that our industry needs to mitigate to ensure we do not lose an entire generation of future homeowners.”

View the infographic and details at valueinsured.com/trends.

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