First-time Buyers Overwhelmed? They Aren’t Alone
Three-quarters of first-time millennial homebuyers in 2020 said they are overwhelmed by the process.
It may have to do with lack of preparedness. For homebuyers in the TD Bank’s First-Time Homebuyer Pulse survey, 48% said they have not begun saving for a down payment, while 47% have not reviewed their credit report. Fifty-eight percent said they do not have a budget for buying a property, 74% have not spoken to a Realtor® and 70% have not contacted a mortgage lender. Despite this, more than half of want-to-be homebuyers in the survey said they have been actively searching for homes online, while 68% said now is a good time to buy a home.
“It continues to amaze me how many buyers begin their home search without first speaking with a mortgage lender,” said Rick Bechtel, head of U.S. Residential Lending at TD Bank. “A knowledgeable loan officer will work hand-in-hand with a buyer to help them understand mortgage and homeownership costs and establish a realistic budget. To put the cart before the horse is to pursue a significant life decision with possibly incomplete or inaccurate information.”
However, lack of planning isn’t the only obstacle millennials face in obtaining homeownership. Twenty-two percent said the cost of homes in their desired neighborhoods are too pricey for them to afford, while 36% think homes are overpriced. And they have their dealbreakers Nearly 40% said they want good schools and/or childcare nearby, while 38% prioritize closeness to work and 36% want to be close to family. However, 84% said they have the patience to wait until they find their dream home to purchase a property. Millennials are also cautious after living through the Great Recession. More than half witnessed had family or friends lose their homes, and 47% said they are more apprehensive about purchasing because of it. More than half of millennials said they are concerned about job stability, along with the state of the economy.
Yet, millennials are relying on more than their own perceptions. They have reported asking their parents for advice, housing and even money. Thirty-seven percent said they ask their parents for homebuying advice, and 49% said their parents are helping them afford a down payment, along with the other costs associated with homebuying, like closing costs.
“The millennial cohort of homebuyers is unlike any other in history,” added Bechtel. “They grew up during the explosion of personal technology, the fall of the housing market and the renaissance of the rental market. And as our survey found, their expectations of homeownership are shaped by all of it.”