Millennials are on the move. A new survey by Realtor.com found that many millennials with secure jobs have accelerated their timeline for purchasing a home because of low mortgage rates and lifestyle changes. They’re using their pandemic experience to save more, too.
“One couple I’m working with told me they’re saving over $3,000 a month in commuting costs,” said Dana Bull, a real estate agent with Sagan Harborside Sotheby’s International Realty in Marblehead. “They’re setting aside these funds for a down payment for a larger house. Many of my clients who have been working remote for six months have been able to save more and, by taking advantage of rock bottom interest rates, they’ve increased their purchasing power.”
Sixty-eight percent of the 2,000 millennials surveyed by Realtor.com and the HarrisX opinion research company said they had saved more for a down payment while sheltering in place.
“Millennials have spent much less on their social life and travel since the pandemic,” said Jessica Quirk, a real estate agent with Coldwell Banker Residential Brokerage in Boston. “This savings has allowed them to come up with a down payment and put down roots in their community.”
In addition, nearly half (45 percent) anticipate getting down payment help from their family. In the cutthroat Boston housing market, a bigger down payment can be an advantage.
“A competitive down payment is imperative to demonstrating to a seller that your offer is strong and viable,” said Gary Moukhtarian, senior vice president of consumer finance at Webster Bank.
Bull said that about half of her younger buyers get family help.
Quirk agreed. “We often see parents helping with a portion of the down payment or outright buying the unit as an investment and renting it back to their child and his or her friends,” she said.
Many millennials turn to their family for additional funds so they can buy more quickly, Moukhtarian said. “One way they do this is through gift funds, which are allowed through many loan programs. However, it’s important to note that some programs also require reserves in the bank, generally equal to two months of principal, interest, tax, and insurance payments. Those reserves need to come from the borrowers' own funds, not from a gift.”
Why move now?
Among the survey respondents, 75 percent have been working remotely since the pandemic began. Of those respondents, 63 percent said they plan on purchasing a home because of their ability to work remotely. Nearly half (49 percent) said the pandemic has pushed them to buy a home sooner than their original timeline.
“The pandemic has millennials reconsidering their current living arrangements,” Bull said. “A lot of factors are causing them to accelerate their home-buying timelines, including the need for more space and the desire to take advantage of low interest rates.”
More than a quarter of respondents (26 percent) said they were driven to buy a home now because they’re tired of their current one, and 23 percent said the main driver of purchasing a home is that their family is growing.
In addition to historically low rates, Quirk said that her millennial buyers and other buyers are prioritizing their personal space and want extra room to work, as well as private outdoor space.
Where are they going?
Rather than a mass migration across the country, the Realtor.com survey indicated that nearly half of millennials (49 percent) plan to move within their current city. Nearly one-third (31 percent) plan to move from the city to nearby suburbs.
“Most of our millennial buyers are staying in the city,” Quirk said. “They know that eventually they’ll have to go back to an office and don’t want a long commute.”
Quirk said her millennial clients have discovered the parks and recreation areas of Boston even more now that the bars are closed.
“Boston is unique in that our city is a tech hub, and working virtually has come naturally to an already tech-savvy workforce,” Bull said. “My clients are taking advantage of remote working scenarios and flocking to surrounding burbs. Most of my clients are moving out of the city, especially those who have young children and want more space indoors and out.”
Quirk said that there’s more inventory in the city now than there has been in several years, which in combination with low rates should encourage people to buy now.
“When companies start making employees come back to the city, I think we’re going to see price increases and pent-up demand,” Quirk said.
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