The U.S. real estate market is topsy-turvy in the pandemic economy. There are fewer homes for sale than usual, and more competition. Prices are up in most markets, yet slipping in others. How do millennials, with their growing families and increasing housing needs, fit into this confusing picture?
A new survey by Point2, a real estate search site, asked 6,780 millennials (ages 25 to 40) about their buying plans. The results suggest the largest generation is woefully unprepared for homeownership.
While 74 percent of millennials surveyed indicated they wanted to buy a home with a year, about 88 percent of them didn’t have enough saved to make the average U.S. down payment, about $62,000. In fact, 14 percent reported no savings at all.
Roughly 40 percent estimated they’d need $10,000 or less to put down on a home. In reality, among the 100 largest U.S. cities, only in Detroit would $10,000 be enough for a standard 20 percent down payment on a median-priced home. In San Francisco, at the other end of the scale, the down payment required is more than 20 times than in Detroit, about $218,000.
Given that the typical U.S. household historically saves 8 percent of its income, millennials need to buckle down, if they can afford it, and save more. A possible glimmer of hope: Americans of all ages have begun to put some money away during the pandemic. In April the average savings rate catapulted to almost 34 percent of income, though it dropped to about 14 percent by August, according to the U.S. Department of Commerce.
This week’s chart, based on Point2’s survey, shows the top and bottom 10 cities among the 100 largest in the U.S., ranked by median home price, and how long it would take millennials to save for a down payment in each.
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