Millennials Reset the Rules When Buying and Selling Homes

Millennials (aged 18-37) are the largest segment of today’s home buyers, representing 42 percent of all buyers who purchased a home in the past 12 months. Despite continued frustration with affordability, an overwhelming buying and selling process, and a desolate housing market, these young buyers dropped $514 billion on the U.S. housing market over the last year.

New data from the Zillow Group Consumer Housing Trends Report 2017 shows how millennials are searching for and purchasing homes in a market that’s particularly cutthroat for first-time buyers seeking a starter.

They search with speed and passion

Millennials are most likely to consider new construction (60 percent) and make up more than a third (36 percent) of all new construction buyers. When they shop for homes, more than half of millennials (62 percent) also shop for a rental, which means they know from the get-go that a home purchase isn’t guaranteed.

Millennials spend the least time of any generation searching for their home: 3.9 months compared to the silent generation (5.6 months), baby boomers (4.7 months) and Generation X (4.4 months). Nearly half of millennials (47 percent) spend less than three months searching, and 88 percent use online resources to search — more than any other generation.

Millennials relish experiences, so it’s no surprise that they’re visual buyers who want to know what a home will be like to live in: 58 percent say professional photos play an important role in their decision, and 45 percent say a live virtual tour is just as important.

Millennials are also the exception to the rule on staging: 41 percent of millennial buyers say a staged home is important in their decision to buy, compared to only 26 percent of Generation X, 13 percent of baby boomers and 6 percent of silent generation buyers.

They pull out all the stops to finance their home

The down payment is millennials’ biggest hurdle, because they frequently start their careers in fast-growing, fiercely competitive cities. Plus, they’re often saving for a down payment while paying sky-high rents. Only 1 in 5 (21 percent) put down the recommended 20 percent for a down payment, and about the same number of millennials (20 percent) make the minimum down payment — less than 5 percent — to get a home loan.

And there can be vast differentials in the down payment, depending on the market: For the median U.S. home, the difference between a 5 percent and a 20 percent down payment is about $30,000. In Los Angeles, the difference is about $90,000.

To get their down payment, 29 percent of millennials rely on family and friends for financial help. Nearly 1 in 3 (31 percent) use multiple sources to come up with the cash.

If they’re fortunate enough to find a home to purchase, more than half of millennials (53 percent) make multiple offers on their first home. More than one-third (37 percent) say they went over budget compared to 29 percent of all buyers.

Looking for more insights into today’s home buyer? The Zillow Group Consumer Housing Trends Report 2017 is the largest-ever survey of U.S. home buyers, sellers, owners and renters. It asked more than 13,000 U.S. residents aged 18 to 75 about their homes — how they search for them, pay for them, maintain and improve them, and what frustrations and aspirations color their decisions.