This is the generation that entered the Great Recession and the one that held more jobs than any other age cohort. And just as they were starting to get their financial footing, a pandemic swept through and put their progress on hold.
But millennials are nothing if not resilient. Despite repeated financial setbacks and stronger economic headwinds that were beyond their control, millennials now make up the largest share of homebuyers in the United States.
According to new data from the National Association of Realtorspeople born between 1981 and 1998 accounted for 43% of all home buyers in the United States last year.
Compared to Gen Xers (born 1965 to 1979) — 22% of whom are homebuyers, according to the Realtors group — and Baby Boomers (born 1946 to 1964), who make up 29%, Millennials are flocking to the real estate market.
This is partly because of the size of their cohort, around 66 million. And there’s strength in those numbers: Millennials have been the largest cohort of homebuyers since 2014.
“It’s a trend we’ve seen over the past two years, and we’ve seen even more of it in the past year,” said Brandi Snowden, senior analyst at the National Association of Realtors, who spoke about 2020, when millennials made up 37% of those looking to buy homes at a time when buying activity had increased during the pandemic shutdowns.
Given the financial hurdles they faced, how were millennials able to muster the means to buy homes? Experts say some have an ace up their sleeve: parents with cash on hand.
According to the National Association of Realtors, 25% of homebuyers between the ages of 23 and 31 have received down payment assistance as a gift from a friend or relative. That’s a figure that hasn’t changed much since at least 2014, when 26% of all millennials, then aged 33 and under, said they received their deposit as a gift.
“Millennials have income, but they can’t put down a down payment,” said former Atlanta Realtors Association president Cynthia Lippert, associate broker at Ansley Real Estate near Atlanta. “However, many have baby boomer parents giving gifts for down payments.”
Lippert said some parents are increasingly willing to shell out to get their adult children across the finish line, even if it means kids have to compromise on the types of homes they buy.
“Every millennial I’ve worked with has baby boomer parents on their toes,” she said. “They tell them that victory is in entering a house and that they have to give up their desire for that house to be perfect.”
The Association of Estate Agents confirms that the share of older millennials using proceeds from their first home to finance a new one hit 32% last year – a new high that suggests there are long-term benefits for millennials getting parental help with their first home purchase.
Tony Rodriguez-Tellaheche, owner and chief broker of Miami-based Prestige Realty Group, estimates that 25% of his millennial clients benefit from the help of their parents when buying a home.
They would be considered lucky, he said, because the majority of millennials still haven’t been able to save enough money to buy homes.
“The first thing is to get to the ‘am I able to buy in the first place?’ category,” Rodriguez-Tellaheche said. “That’s the main problem. A lot of millennial shoppers aren’t saving. A lot of them are still working paycheck to paycheck. They get an income, but it comes and goes, and they’re not not able to save enough to give 20 percent down.”
Data from the National Association of Realtors indicates that millennials between the ages of 23 and 31 were able to spend a median 8% of the purchase price on homes, while older millennials lower a median by 10%.
Despite the small number of down payments, banks are lending — and on generous terms — even as mortgage interest rates rise, Rodriguez-Tellaheche said.
“As long as you have the credit and you’ve been working for more than a year or two, the banks are looking to lend,” he said. “We had no problems finding the funding.”
Even though more millennials are becoming homebuyers, evidence suggests that many are still paying rent each month.
Among the 15 largest metropolitan areas in the United States, people between the ages of 25 and 34 made up no more than 11% of homeowners in 2019, according to the latest available census data.
A study published in December by RentCafe.com found that 49% of millennials are homeowners. This is still far less than the number of Gen Xers and Baby Boomers who own their homes (71% and 78%, respectively).
“The share of millennial owners has grown over the past five years, reaching 49% in 2020,” Michelle Cretu, communications specialist at RentCafe, said in an email. “However, that’s not enough to make them a ‘generation of owners’.
“The majority of millennials are still renters – around 51% – the largest share of any cohort.”