Millennials are placing a high value on homeownership these days.
In fact, they may prioritize it over other life milestones, including marriage and having children. A recent report from Bank of America—the Homebuyer Insights Report—indicates nearly three in four millennials consider homeownership a top priority. Respondents equated homeownership to a status symbol, linking it to personal and financial success.
What Changed for Millennial Homebuyers?
In previous publications of this report, millennials did not necessarily consider homeownership to be a top priority. In fact, in earlier versions, they stated they would prefer renting over ownership.
Possible reasons for this shift in thinking could include a new focus on the median of rising interest rates. Additionally, millennials who previously felt they had plenty of time in which to buy may be feeling differently now.
Furthermore, Bank of America Chairman and CEO Brian Moynihan says housing prices are up, and that the rates are rising.
Moynihan said his company is still originating plenty of loans—$10.5 billion in Q3, down from $13 billion last year. But, he added, “It will be a leading indicator of people’s belief in their wealth if you see housing prices tip over.”
Why Millennials’ Priorities Changed
According to the report, millennials’ perspective on homeownership has likely shifted because just under half believe renting long-term will be more expensive than buying. Slightly more—51 percent—are realizing they don’t need 20 percent of their purchase price in order to buy.
Furthermore, 69 percent of millennial renters expect their rent to increase every year or every other year. Almost half—48 percent—are already spending about a third of their monthly income on rent.
The survey defined millennials as those born between 1978 and 1995. Readers should note that a recent Freddie Mac survey indicated 78 percent of the entire population say renting is more affordable than owning. This finding implies potentially contradicting data to the BOA report.