Survey: Millennials able to rely more on savings for down payments on homes
More millennials are able to save up for a down payment on a home by taking money directly out of a paycheck while fewer buyers from this generation are using alternate sources of funding, according to a recent survey by the real estate company Redfin.
Redfin's report is based on more than 500 responses from people born between 1981 and 1996 who plan to buy a home within the next 12 months. These first-time homebuyers were asked to identify all applicable sources of income for their initial down payment on a home.
Seventy-two percent of respondents said they were able to save money directly from their paychecks. This share was up from a similar survey in March 2018, when 69 percent of millennials said they were saving money out of their regular income.
By contrast, millennials were less likely to name any other source of funding than they were a year ago. Earnings from secondary jobs had the largest decrease; 24 percent said they were saving toward a home purchase in this way, down 12 percentage points from the previous year.
Redfin said this trend is a result of strong wage growth combined with a slowdown in home price appreciation.
"Unemployment is at its lowest point since 2000," said Daryl Fairweather, chief economist at Redfin. "Millennials have never worked in an economy this strong before, and are now finally making enough from their paychecks to save for a home. The fact that they are less often needing to rely on family members or sacrificing retirement savings to fund a home purchase is another sign that millennials are finally gaining their financial footing."
Eighteen percent of millennials said they were receiving a cash gift from their family to help them buy a home, down from 24 percent in the previous year. Seven percent said they were tapping into their retirement account, while 6 percent said they were contributing less toward their retirement savings; both shares were down 6 percentage points.
Nine percent said they sold stock investments they owned to acquire money for a down payment, down from 13 percent in March 2018. Six percent said they were using money from an inheritance, a year-over-year decline of 6 percentage points.
While one in 10 millennials in March 2018 said they sold cryptocurrency to put money toward a down payment, the share fell to 3 percent in the most recent survey. Redfin said this was likely a result of a major decline in cryptocurrency value, including Bitcoin trading for less than half of what it was a year ago.
While the Redfin survey determined that millennials were less likely to use gifts from family members toward a home purchase, other studies have shown that this is an important source of funding among younger buyers. A recent generational study by the National Association of Realtors found that 28 percent of younger millennials and 21 percent of older millennials said their family helped them with the down payment.
A survey by the rental resource ApartmentList in late 2018 found that nearly one in five millennials expected that their family would contribute money toward their down payment. Another survey by the site in the spring of 2018 determined that about one in 10 millennials were regularly receiving parental assistance in paying rent, while 17.1 percent said they believed their parents would gift them money to help with a down payment if they bought a home.
MOST VIEWED MEDIA
MOST DISCUSSED STORIES