Millennials, long chastised for their lack of homeownership, may be facing an additional hurdle: the coronavirus.
With many still suffering from large student loan debt, along with graduating during the Great Recession and struggling to find sufficient salaries, the path to homeownership has not been easy for millennials, and now they are facing another setback.
A realtor.com® study found that it would take nine months for the average millennial to recuperate a month of expenses when taken out of their savings. And with millions of Americans losing their jobs during the pandemic, or going without pay, it will impact homebuying.
According to the report, the millennial homeownership rate, which is 43%, is 22% below the overall homeownership rate, which is 65%. With many millennials renting, those who have been saving for a down payment may have had to dip into their savings to cover daily living expenses. Realtor.com® found that after expenses, millennials in counties with more than 100,000 residents had less than $500 of disposable income, and that was pre-COVID-19. For the average millennial, if they use one month’s of living expenses out of savings, it will take them nine months to reach their original sum again. And that’s with aggressive savings of 10% per month of their take-home pay.
Additionally, more banks have changed their standards, and are now requiring a 20% down payment. Based on the average home price of $320,000, for millennials who had planned to put down 10%, they now need to double that, which will take another 6.5 years, the report found.