Young homebuyers are back in the game, but it's going to take some prodding to put their names on a deed.
A survey by TD Bank found that, as of mid-2015, 60% of Millennials (ages 24-35) were planning to buy a home over the next two years. To say that this is an improvement from even a year before is understating the matter. When The LendingTree conducted a similar survey in September 2014, 67.4% said a higher salary or income was necessary before they could buy a home, 28.7% wanted to pay off student loans before becoming homeowners and 25.7% said homeownership would only be a possibility after they spent time and money on other things, such as traveling, investing and philanthropic missions. Even that was being optimistic.
“Underemployment and low salaries combined with high student debt and uncertainty about the future are a reality that is affecting the, housing market,” LendingTree founder and chief executive Doug Lebda said at the time. “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.”
They clearly aren't ready, as evidenced by the 21.2% of Millennials who did not know their current credit score, the 11% who said they have never even checked their credit score and the 9.5% who did not have or maintain a savings account. Even early last year, when a survey by The Principal found that just 38% of Millennials owned their own homes, that same survey found that many were paying for regular expenses such as their cell phone bill (12%), car insurance (8%), health insurance (7%) and rent (7%) with help from their parents. That could be because 20% of respondents listed student debt as their largest budget item, with the average student loan debt that year hovering around $33,000.
“Most Millennials we spoke with haven’t done the math to determine what level of savings they should be targeting, but all agreed that they weren’t doing enough.” said Jerry Patterson, senior vice president of retirement and investor services at The Principal.
However, Joe O’Boyle, a retirement coach for Voya Financial Advisors, has witnessed with his Generation X and Millennial clients in the entertainment, legal and medical industries in Beverly Hills, Calif., the impossible is possible with the right planning. As he notes, even Millennials with good jobs, who can afford to live on their own, take help offered by their parents and live at home so that they can save money for their first home.