The upshot is that millennials are buying houses – but not at the rates that consumers in the same age cohort have historically bought homes.
But while millennials may be driving the real estate markets, data released by the Urban Institute’s Housing Finance Policy Center indicates that generationally speaking, they are participating in the homeownership markets less, with an ownership rate running 8 percent to 9 percent behind previous generations.
In general, the data agrees that when it comes to homeownership, the majority of millennial sellers are white, college-educated, earning a household income over $100,000 and have parents who own homes.
The Down Payment Dilemma According to data released last month by Redfin, affording a down payment was the leading concern among millennials looking to purchase a home in the last 12 months, with 50 percent of millennial respondents noting down payment woes.
While 24 percent of millennial respondents reported gift money from family as an expected source of funds for a down payment, that expectation grew to 40 percent among households with income north of $100,000.
In fact, the median average down payment rate on first-time mortgages in the U.S. is 5 percent – and the FHA program allows first-time buyers to go as low as 3.5 percent.
In high demand metro markets, where home prices can average at or about $500,000, saving up for a down payment – even a 3.5 percent down payment – could take a matter of years.
New Methods of Access Run by lender CMG Financial, HomeFundMe gives otherwise qualified (by credit score and income) homebuyers a way to crowdfund down payments and other associated costs from family members and friends.
HomeFundMe allows consumers to take crowdfunded gifts from a wider range of their friends and family network, and on average helps users raise about $2,500 toward their down payment costs.
But for customers like Reese and Kyle Rademacher, who were turned away by a credit union because their savings weren’t enough for a down payment and closing costs, the ability to use an outside-the-box solution like HomeFundMe was the difference between being able to afford to buy a home and not.