Apartment List recently published their annual report on millennials and homeownership. Their research indicates that most millennial renters want to purchase a home, but based on current savings rates, many will need a decade or more before they can afford a 20% down payment. Faced with stagnant incomes and rising home prices, many millennials will be forced to delay homeownership, migrate to more affordable cities, or take on more debt.
Their report raises the question – why aren’t millennials saving? Some have blamed rising student debt loads, while others suggest that millennials are financially irresponsible. They have released research indicating that, in general, college-educated millennials with student debt have to save for 10 years to afford a 20% down payment, compared to 5 years for those without debt. Their analysis also suggests, however, that this is at least partly by choice – millennials with student debt payments spend just as each month as those without, instead of cutting back on discretionary expenses to save more for a home.
Among millennials without a college degree, however, the outlook for homeownership is bleak. Faced with rising rents and stagnant incomes, most are not saving enough. They also receive much less financial support from friends and family, and will need more than 15 years to save enough for a 20% down payment.