The 2021 housing market was the most lucrative—and competitive—ever recorded in U.S. history.
Fierce demand driven by historically low interest rates combined with limited inventory made conditions ripe for a boom. Home values swelled at a record-setting pace, spiking nearly 20% from September 2020 to September 2021. The historic rise exceeded the former highest yearly increase of 14%, which came prior to the 2008 crash. Although the market is starting to cool, buyers still face many obstacles.
A wave of first-time millennial home buyers entered this explosive market eager to own homes and raise their families. However, to afford homeownership in a competitive market, millennials are willing to take risks, including buying a home sight unseen (90%), purchasing a fixer-upper that needs major repairs (82%), and offering above asking price (80%), according to a study from Clever Real Estate.
The most common way millennials responded to the market was by increasing their budgets, with 46% expecting to max it out completely. The study found that one-third plan to purchase a home that costs more than around $405,000—the median U.S. home price.
Still, desperate buyers are more likely to experience financial remorse. About one-quarter of millennials who already own a home suggested their mortgage is too high.
The report revealed much more about the U.S.’s largest cohort of homebuyers.
Additional report findings:
- 90% of millennials would buy a house sight unseen, a 10% increase from 2021.
- One in six millennials would be willing to offer $100,000 or more above asking price for their dream home.
- Nearly half of millennials (46%) expect to max out their budgets when buying a home, with one-third (33%) planning to purchase a home that costs more than the median U.S. home price of about $405,000.
- Most millennials (82%) are more likely than boomers (62%) to purchase a fixer-upper, but one in four regrets doing it.
- 82% of millennials have more than $10,000 in savings—a 25% increase from last year—but one-third plan to put down less than 20% on their homes.
- 92% of millennials have some debt. Of those, 70% have more than $10,000 in debt, and one in three owe more than $50,000.
- As millennials spend less time at home, they want smaller homes—1,700 square feet on average, compared to 2,400 square feet a year ago.
- More than half (51%) of all respondents feel stressed or anxious about homeownership, with more than 40% fearing a potential housing market crash.
- Nearly one-third of millennials (31%) plan to live in their homes for less than five years.
“This survey speaks to the competitiveness of the market and the lengths millennials will go to own homes,” Jaime Dunaway-Seale, research analyst for Clever Real Estate, tells RISMedia. “Millennials have to approach home-buying differently than their parents. They’re much more likely than boomers to purchase a fixer-upper or use technology to buy homes sight unseen. But with millennials already burdened by so much debt, making these risky decisions often leads to financial regret.”
To read the full report, visit https://www.realestatewitch.com/2022-millennial-home-buyer-report/.