Back in the days, young people got a job, got married, and then they’d buy a home. That was the American Dream. We all know it’s not quite as simple today. While 77% of today’s millennials still wish to achieve the American Dream of homeownership according to the latest ValueInsured Modern Homebuyer Survey, many face great challenges to get there. The actual millennial homeownership rate in U.S. today is 35.3 percent, the lowest level since the U.S. Census began tracking homeownership by age groups in 1982.
And among the lucky few who do get there, the home they get isn’t always what they dreamed of and, consequently, could trigger nervousness or buyer’s remorse at closing and beyond (a realtor’s worst nightmare). In ValueInsured’s latest quarterly survey, 85% of all millennial homeowners surveyed report to have made compromises when they bought their home, and had to give up features and qualities they wanted in the home in order to fit within their budget. In contrast, 56% of homeowners in all other age groups say they have made compromises, and only 34% of Baby Boomers say they did not get the home they wanted within their budget.
Among all surveyed millennials who currently live in a home they own:
Homebuyers are compromising
- 41% say the home they bought was smaller than what they wanted but had to compromise to fit within their home-buying budget
- 40% say they compromised on a location that was not one they desired;
- 41% say they had to give up some features in the home they had wanted, for example, air conditioning and heating system, types of kitchen appliances they wanted, type of flooring, or a fireplace;
- 37% say they do not like the style of home they bought
- 39% say they got less acreage or outdoor space than they wished for
It makes sense that the youngest homeowners who presumably have less purchasing power need to compromise the most. They also face the double-edged sword that unlike Baby Boomer homebuyers who are often looking to downsize, millennials need a home that can accommodate a growing family and is likely more expensive. Many millennials are also limited to buying within a commutable distance from jobs and city centers, and in desirable school districts where homes tend to cost more.
Millennials’ buying criteria notwithstanding, it is eye-popping that 85% feel they are living in a compromised home. It is perhaps not surprising that, in the same survey, millennials also report a strong desire to move in the near future: 80% plan to move to another home within 5 years, and 52% plan to move within 3 years.
It is quite a conundrum for millennials in this housing market. Majority who wish to own cannot afford to buy. Of the few who could, over 8 in 10 wish they bought a different home and want to move. 74% of them say now would be a good time to sell, but they can’t because prices to buy another home is too high, so they wait and try to time the market. It appears that for millennials, once you finally achieve the American Dream, there’s an obstacle course right around the corner, just in case you thought you could catch a breath.