Millennials Account for 37% of Homebuyers, Over 50% of New Mortgages
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Millennials, the largest generation by population, are in or approaching the age range where Americans have historically purchased a home -- and data shows they’re the largest force in the housing market.
Despite unprecedented challenges, such as the COVID-19 pandemic, record-high home prices, and having to save up for a down payment, a number of millennials are taking out mortgages to buy more expensive homes. Even with those challenges, millennials who have yet to buy and don't struggle with increasing pessimism are eager to buy homes of their own.
Read on for a deeper dive into how millennials are emerging as a force in the home-buying arena.
Key findings
- 37% of homebuyers in 2020 were millennials, more than any other generation.
- Millennials were responsible for 53% of new primary home mortgages in April 2020.
- Almost half of older millennials are buying homes worth $300,000 or more, catching up to older generations.
- Despite being the largest generation by population, only 17% of homeowners are millennials.
- 42% of millennials were homeowners at age 30, compared to 48% of gen X and 51% of baby boomers at the same age.
- 18% of millennials expect to always rent, up from 11% in 2018.
- COVID-19 has impacted homeownership plans for 40% of millennials and has delayed buying for 21%.
- 63% of millennials have no savings for a home down payment.
- Saving for a down payment was the most difficult part of the homebuying process for 25% of homebuyers under 30.
37% of homebuyers in 2020 were millennials, more than any other generation
Millennials accounted for 37% of homebuyers in 2020, making them the largest homebuying generation in the market, according to data from the National Realtors Association.
Older millennials were responsible for 23% of home purchases while younger millennials were responsible for 14%, suggesting that there’s still plenty of room for additional homebuying from millennials as they reach the traditional peak homebuying years of their mid-30s.
Baby boomers have long dominated the housing market and still played a significant role in 2020, accounting for 32% of all homebuyers.
Gen X accounted for just 24% of homebuyers. Sandwiched between millennials and baby boomers, Gen Xers still play an important role in the housing market. They are in their peak earning years, have the highest median income of any generation, and have more kids at home than other generations.
| Generation | Birth years | Median age in group | Percentage of homebuyers |
|---|---|---|---|
| Gen Z | 1999–current | 21 | 2% |
| Younger millennials | 1990–1998 | 27 | 14% |
| Older millennials | 1980–2989 | 35 | 23% |
| Gen X | 1956–1979 | 48 | 24% |
| Younger baby boomers | 1955–1964 | 61 | 18% |
| Older baby boomers | 1946–1954 | 69 | 14% |
| Silent Generation | 1928–1945 | 78 | 5% |
Millennials were responsible for 53% of new primary home mortgages in April 2020
Per Realtor.com, 53% of new primary home mortgages went to millennials in April 2020, up 4% from April 2019. This is another sign that the generation is now a dominant force in the housing market.
Meanwhile, both Gen X and baby boomers saw a declining share of primary home mortgage originations from 2019 to 2020.
| Generation | Share of primary home purchase loans, mid-April 2019 | Share of primary home purchase loans, mid-April 2020 |
|---|---|---|
| Gen Z | 1% | 3% |
| Millennial | 49% | 53% |
| Gen X | 33% | 28% |
| Baby boomer | 16% | 15% |
Nearly half of older millennials are buying homes worth $300,000 or more, catching up to older generations
49% of homebuyers age 31–40 paid $300,000 or more for a home in 2020, and the median home purchase price for that cohort was $300,000, putting older millennials on par with Gen X and surpassing baby boomers.
That millennials make up a majority of homebuyers and are purchasing homes priced at what older generations can afford shows that they are a driving force in the housing market, despite the challenges they face.
Younger millennials, meanwhile, are the most frugal group. 70% purchased homes for under $300,000 and their median home purchase price was $229,000.
| Purchase price | Percentage of all buyers who purchased homes in price bracket | Homebuyers ages 22–30 | Homebuyers ages 31–40 | Homebuyers ages 41–55 | Homebuyers ages 56–65 | Homebuyers ages 66–74 | Homebuyers ages 75–95 |
|---|---|---|---|---|---|---|---|
| <$75,000 | 3% | 2% | 2% | 3% | 4% | 3% | 3% |
| $75,000-$174,999 | 23% | 29% | 17% | 18% | 24% | 21% | 26% |
| $175,000-$349,999 | 44% | 52% | 43% | 41% | 42% | 47% | 46% |
| $350,000-$399,999 | 8% | 5% | 10% | 10% | 8% | 9% | 5% |
| $400,000-$499,999 | 10% | 7% | 11% | 13% | 9% | 10% | 7% |
| >$500,000 | 15% | 6% | 18% | 17% | 16% | 13% | 15% |
| Median price | $272,500 | $229,000 | $300,000 | $305,000 | $276,900 | $270,800 | $266,700 |
Over 50% of Gen Z and millennials didn’t cite a specific reason for the timing of their home purchase
Despite mortgage rates dropping throughout much of 2020, only about 5% of millennials said they timed their purchases based on financing options. Instead, over 50% said it was "just the right time" and that they were ready to purchase a home.
The availability of homes on the market and home prices weren’t significant factors, either -- housing supply has been historically low and prices historically high.
| Primary reason for the timing of home purchase | All homebuyers | Homebuyers ages 22–30 | Homebuyers ages 31–40 | Homebuyers ages 41–55 | Homebuyers ages 56–65 | Homebuyers ages 66–74 | Homebuyers ages 75–95 |
|---|---|---|---|---|---|---|---|
| It was just the right time, ready to buy a home | 51% | 62% | 56% | 45% | 50% | 46% | 43% |
| Did not have much choice, had to purchase when did | 15% | 13% | 14% | 21% | 14% | 13% | 12% |
| It was the best time availability of homes for sale | 12% | 10% | 11% | 12% | 11% | 15% | 14% |
| It was the best time mortgage financing options available | 5% | 6% | 5% | 4% | 4% | 3% | 6% |
| It was the best time improved affordability of homes | 4% | 4% | 4% | 3% | 4% | 6% | 5% |
| Wish had waited | 2% | 2% | 2% | 2% | 2% | 2% | 3% |
| Other | 12% | 4% | 9% | 12% | 14% | 16% | 17% |
COVID-19 has impacted homeownership plans for 40% of millennials and has delayed buying for 21%
The COVID-19 pandemic and its economic impact are the clearest and most extraordinary challenge millennials face as they reach their mid-30s. According to a survey by Apartment List, 40% of the generation say the pandemic has impacted their homeownership plans, with 21% saying COVID-19 has caused a delay in homebuying.
Financial hardship caused by the pandemic has dimmed homeownership prospects for some millennials.
Two-thirds of millennials who had homebuying plans delayed by COVID-19 cited loss of income as the reason. Meanwhile, 21% had to dip into money saved for a down payment for pandemic-related reasons.
The pandemic has also brought significant changes to daily life, including how people work and what neighborhood features they value. Along those lines, of millennials that have delayed homeownership due to the pandemic, 28% said they were reconsidering what type of home to purchase while 27% said they were rethinking whether to buy altogether.
| COVID-19 impact on homeownership plans | Millennials experiencing impact |
|---|---|
| Covid-19 has had a direct impact on homeownership plans | 40% |
| Delaying homeownership | 21% |
| Reason COVID-19 has delayed homeownership | Millennials reporting this delay |
|---|---|
| Partial or total loss of income | 67% |
| Reduction of down payment savings | 21% |
| Reconsidering what type of home to purchase | 28% |
| Rethinking whether to buy | 27% |
18% of millennials expect to always rent a home, up from 11% in 2018
Overall, millennials are more pessimistic about their prospects for owning a home than in previous years -- 18% of millennials in 2020 said they expect to always rent, up from 12% in 2019 and 11% in 2018.
Finances were the primary concern of those that said they expect to always rent. That’s not surprising, given the COVID-19 pandemic and housing prices being at record levels.
74% cited the inability to afford a home, 32% said they wanted to avoid maintenance and other costs that come with owning a home, and 21% said that buying a home is a financial risk.
| Year | Percent of millennial renters who "expect to always rent" |
|---|---|
| 2018 | 11% |
| 2019 | 12% |
| 2020 | 18% |
| Why do you expect to always rent? | Percentage of millennials |
|---|---|
| I cannot afford to buy a home | 74% |
| I like the flexibility that renting provides | 34% |
| I prefer to avoid home maintenance and other added costs | 32% |
| Buying a home is financially risky | 21% |
| Other | 11% |
Saving for a down payment was the most difficult part of the homebuying process for 25% of homebuyers under 30
A quarter of homebuyers under 30 and 18% of homebuyers between 31 and 40 years old said that saving for a down payment was the hardest part of the home-buying process, per the National Association of Realtors.
Older cohorts were much less likely to cite saving for a down payment as the most difficult aspect of homebuying, a likely reflection of having more time to boost their wages and save.
Putting together a down payment on a home is typically a multi-year exercise in disciplined saving -- not an easy feat in usual times and made tougher by the pandemic and sky-high home prices.
| All homebuyers | Homebuyers age 22–30 | Homebuyers age 31–40 | Homebuyers age 41–55 | Homebuyers 56–65 | Homebuyers 66–74 | Homebuyers 75–95 | |
|---|---|---|---|---|---|---|---|
| Saving for a down payment was most difficult task in buying process | 11% | 25% | 18% | 11% | 4% | 1% | 1% |
Of the 83% of millennials that saved cash during the pandemic, 59% said those savings would go toward a down payment on a home
While COVID-19 has created financial hardship for many, 83% of Gen Zers and millennials were able to save money during the pandemic, and 59% said that they would put those savings towards a down payment on a home, according to a survey from Zillow.
| What millennials will do with cash saved during pandemic | Percentage of millennials |
|---|---|
| Everyday living expenses | 64% |
| Down payment on a home | 59% |
Gen Zers and millennials that were able to save over the past 18 months did so because the pandemic interfered with regular expenses, like childcare, and some discretionary spending, like shopping and travel.
52% of 18-to-29-year-olds were also living with their parents in July 2020 -- a record-high share -- which likely resulted in savings on housing costs for many.
There is some concern that would slow household formation, which can drive new housing demand. However, the share of 25-to-29-year-olds living with their parents declined to 21.5% in the winter, as did the share of 18-to-24-year-olds that were not students.
63% of millennials have no savings for a home down payment
Despite millennials accounting for a plurality of homebuyers, 63% of the generation have not begun to save for a home down payment, a survey from Apartment List reveals.
While a down payment isn’t necessary to buy a home, it does come with important benefits. A larger down payment increases the chances a mortgage lender offers a better rate. Making a down payment of at least 20% is usually required to avoid mortgage insurance, a cost that’s tacked onto mortgages and insures lenders against the mortgage defaulting.
Saving for a down payment can seem like a monumental task, but it’s never too late to start. Figuring out how much you need to save, where to put your savings, and establishing a timeline can form the foundation of a budget that will make the homebuying journey manageable.
| Current savings for a down payment | Percentage of millennials |
|---|---|
| $0 | 63% |
| $1–$4,999 | 14% |
| $5,000–$9,999 | 8% |
| $10,000+ | 15% |
Older millennials put 10% down on average when buying a home
Older millennial homebuyers made an average down payment of 10% in 2020 and younger millennials put down 6% -- the lowest of any age group and well below the 20% threshold that is encouraged.
| Age group | Median down payment percentage |
|---|---|
| All homebuyers | 12% |
| Homebuyers age 22–30 | 6% |
| Homebuyers age 31–40 | 10% |
| Homebuyers age 41–55 | 13% |
| Homebuyers age 56–65 | 18% |
| Homebuyers age 66–74 | 23% |
| Homebuyers age 75–95 | 21% |
Overall, millennials are making a smaller down payment than the overall average for first-time homebuyers. According to data gathered by the National Association of Realtors, 27.8% of first-time buyers put at least 20% down in the first quarter of 2021, and the share of first-time buyers putting 20% down has grown every year over the past decade.
Despite being the largest generation by population, only 17% of homeowners are millennials
Only 17% of homeowners are millennials, despite being the largest generation, entering peak homebuying age, and accounting for most home sales, per the Census Bureau.
In short, the data reveals that the majority of millennials still face challenges to entering the housing market.
| Generation | Share of all homeowners |
|---|---|
| Gen Z | 1% |
| Millennial | 17% |
| Gen X | 28% |
| Baby boomer | 42% |
| Silent Generation | 12% |
42% of millennials were homeowners at age 30, compared to 48% of gen X and 51% of baby boomers at the same age
Just 42% of millennials at age 30 were homeowners, compared to 48% of Gen X and 51% of baby boomers when they were the same age, according to data compiled by Apartment List.
| Generation | Homeownership at age 30 |
|---|---|
| Millennials | 42% |
| Gen X | 48% |
| Baby boomers | 51% |
Despite challenges, millennial homebuyers have arrived
Millennials have overcome significant challenges in becoming the largest generation in the housing market.
Despite accounting for more home purchases and more mortgages for primary homes than any other generation, many millennials are still working toward overcoming barriers to homeownership, such as the economic fallout of the COVID-19 pandemic and record-level home prices. Plus, millennials are behind the pace of older generations for homeownership and are making below-average down payments.
But there is no question that millennials have arrived as a significant force in the housing market. And as more of the generation explores homebuying and becomes homeowners, they have the potential to not only drive the market but reshape the home-buying process.
Sources
- Apartment List (2021). "Apartment List's 2021 Millennial Homeownership Report."
- Apartment List (2020). "Homeownership Rates by Generation: How Do Millennials Stack Up?"
- Joint Center for Housing Studies of Harvard University (2021). "After a brief return, young adults quick to move out of parents homes as the pandemic continues."
- National Association of Realtors, (2021). "NAR Home Buyer and Seller Generational Trends."
- Pew Research Center (2020.) "A majority of young adults in the U.S. live with their parents for the first time since the Great Depression."
- Realtor.com (2020). "Q1 2020 Generational Propensity Report: Millennial Homebuyers Continue to Expand Their Mortgage Share Despite Initial COVID-19 Disruptions."
- Zillow (2020). "After Years of Decline, Household Formation Rates Were Improving Pre-Pandemic. Now What?"
- Zillow (2021). "Americans Want Digital Tools to Complement Traditional Home Shopping."
- Zillow (2021). "Young Adults Who Saved During the Pandemic Likely to Put it Toward a Down Payment."
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