Most millennial renters in a recent survey by the rental resource ApartmentList said they plan to purchase their own home in the future. However, roughly half said they had not saved any money toward this goal, and a majority of respondents said they were having difficulty putting aside enough money for a purchase.

Millennials have been entering the housing market in larger numbers recently, with the National Association of Realtors determining in March that they accounted for 36 percent of home purchases in the past year – more than any other generation. However, ApartmentList said the homeownership rate among millennials is still lagging significantly before earlier generations at a similar age, citing an Urban Institute report on the subject.

The ApartmentList analysis of 6,400 millennial renters said millennials are facing challenges such as a shortage in starter home inventory in many markets and stagnant wage growth and limited job opportunities due to many members of the generation coming of age during the Great Recession. Millennials are often burdened with significant amounts of student loan debt as well.

Purchase plans

Nearly nine in 10 respondents—89.4 percent—said they plan to buy a home in the future. ApartmentList noted that while this shows a strong interest in homeownership among millennials, an increasing share of respondents has said they expect they will always rent their residence.

Just 4.4 percent of respondents said they expect to buy within the next year. A total of 30.4 percent said they don't expect that they will be able to buy a home for more than five years.

One in four respondents said they think they will be able to purchase a home in three to five years. Roughly 30 percent of respondents said they expect to buy a home in one to three years.

The survey noted that the expected home purchase timelines were largely consistent across many demographic factors, including income levels and educational backgrounds. However, respondents with the least education were more likely to say they think they will always have to rent their home.

Affordability

Asked why they were waiting to buy a home, 71.5 percent of respondents said they cannot currently afford to do so. This was more than twice as common as the next reason, not being ready to settle down, which was cited by 34 percent of respondents. A total of 28.1 percent of respondents said they were waiting to get married before considering a home purchase.

The down payment involved in a home purchase proved to be more of an obstacle than the regular payments on the home. A total of 61.7 percent said they couldn't afford this initial payment, compared to 29.1 percent who said they wouldn't be able to handle the monthly payments of a mortgage.

A total of 37.7 percent of respondents said they had bad credit which would inhibit their ability to get a loan. This fear varied considerably among different demographic groups. A total of 58.5 percent of black respondents and 51 percent of respondents who did not have a bachelor's degree were worried about their credit, while just 15.8 percent of Asian respondents and 19.4 percent of respondents with a bachelor's degree or higher level of education faced the same issue.

Nearly half of the millennials in the survey—48 percent—said they had not put aside any savings at all for a down payment. Thirty-four percent said they had saved less than $5,000, while 7 percent had saved between $5,000 and $9,999. Just over 11 percent said they had saved $10,000 or more.

ApartmentList said the survey also found that 43.3 percent of respondents were not putting any of their monthly income aside for a down payment, and that millennials frequently underestimated how much money they would need for a 20 percent down payment. While it is possible to buy a home with a smaller down payment, it can also result in higher interest rates and mortgage premiums.

The report estimates that just 11 percent of millennials in the survey would be able to save enough money for a 20 percent down payment within five years. It says about two-thirds would need to save for more than 20 years to reach this point.

ApartmentList says this waiting period is particularly pronounced in the most expensive markets in the United States. It estimated that more than four in five millennials in San Francisco—82.3 percent—would need to save up for more than two decades to make a 20 percent down payment.

Student loans

The survey also highlighted the effect that student loans have had on young homebuyers. Citing a 2017 study by the Federal Reserve Bank of New York, ApartmentList said outstanding student loan debt in the U.S. has increased 170 percent over the past decade. In the same period, the average debt owed by a graduating student increased 70 percent to $34,000.

The survey divided respondents into three groups: those without a college degree, those with a bachelor's degree or higher who were actively repaying student loans, and those with a bachelor's degree or higher who did not have any student loan debt.

Despite not having student loan debt, respondents without a college degree were also least prepared to buy a home. The average respondent in this group had saved up $1,472, and just 6.2 percent were capable of saving a 20 percent down payment within five years.

Among college-educated respondents, those with student loan debt had saved an average of $3,613 toward a down payment and 12.1 percent could feasibly make a 20 percent down payment within five years. Debt-free respondents were more than twice as likely to be prepared to buy a home, and had saved nearly three times as much. The average millennial in this group had saved up $10,397 toward a down payment, and 22.8 percent were capable of saving enough money for a down payment within five years.

Bank of Mom and Dad

Nearly one in five respondents—19.4 percent—said they expect that their family will offer to contribute to a down payment. However, the amount of the expected assistance was closely associated with a respondent's income, with wealthier millennials expecting family members to write larger checks.

Millennials making less than $25,000 a year expected an average of $4,358 in down payment assistance from their family. The expected assistance rose steadily with each income level, with millennials making $75,000 to $100,000 anticipating an average of $24,761 in down payment assistance and those making more than $100,000 typically expecting their family to chip in $51,172.

Family assistance significantly increased the share of millennials capable of saving up a 20 percent down payment within five years. Just 5.7 percent of those making less than $50,000 a year were capable of doing so on their own, but the share rose to 13 percent with assistance. A total of 19.8 percent of those making more than $50,000 a year could feasibly save up a down payment within five years without assistance, while 32.8 percent could do so with help from family.