Millennials comprise the majority of potential first-time homebuyers, which means that real estate agents are always on the lookout for more millennials purchasing their homes this year. However, a recent study shows that millennials are not saving enough for the down payment on their dream homes.
As previously reported here on Realty Today, 2016 is expected to see an increase in the number of millennial homebuyers. Certain measures were done to attract first-time homebuyers into purchasing a new house this year such as the introduction of entry-level or starter homes in the market.
These entry-level homes were introduced in order to attract the younger population, particularly the millennials, into buying their own homes, which were cheaper by $50,000 to $100,000 than the median prices of homes in the market. However, a recent study shows that the millennials are not saving enough for the down payment.
A recent Apartment List survey showed that millennials had lower expectations when it comes to the amount they had to pay for the down payment on their dream homes, reports Realtor.com. For example, those living in San Francisco thought that they would need $69,650 to pay for the down payment.
However, the said amount was less than half of what was required in the current market. This meant that the respondents were not saving enough to pay for the required down payment to own a house these days.
This also meant that millennials in San Francisco would take 28 years to save the 20 percent down payment required in their area if they continue to save their money at the same rate. The same could be said to residents in Sacramento wherein renters thought they only needed $26,720 as down payment, when the current market dictates an average down payment of $43,580.
The publication, however, notes that the above-mentioned figures would only be true if the millennials will not increase their savings at all. One can also pay for a lower down payment if he or she has good credit ratings.