Todd Morgano | November 10, 2023
In a world marked by skyrocketing inflation, rising mortgage rates, economic uncertainty, and environmental concerns, it might seem like the American dream of homeownership is slipping away, especially for millennials (ages 25-44). However, a recent nationwide survey we conducted paints a different picture. Despite the daunting financial challenges – including the simple monthly costs of owning a home - 89.5% of millennials still consider homeownership an integral part of their American dream.
When it comes to millennials home ownership, millennials are leading with their hearts over their heads. One striking revelation from the survey is that the desire to own a home is predominantly emotional rather than purely rational. A significant 63% of millennials desire to own a home simply because they like the idea of living in one. That’s a significantly higher percentage than the 44 percent of respondents who see homeownership as a means to build wealth and a long-term investment in their future.
Flying in the face of what you might intuitively believe, major life events like marriage and having children aren't the primary drivers of millennials' desire to buy a home. Only 23% cited marriage as a reason, and just 20% considered having children as a motivation. Millennials tend to view homeownership as a personal milestone rather than one that’s strictly tied to traditional family dynamics.
When asked about their ideal homes, 76% of respondents expressed a preference for single-family homes. Condominiums, apartments, and mansions lagged far behind in popularity, with 3.6%, 8.6%, and 3.7% favoring them, respectively.
What is a millennials perfect dream home? The survey identified several key factors. Location topped the list, followed by the number of bedrooms and the size of the home. Surprisingly, curb appeal ranked last. Even more surprisingly, features related to energy efficiency and smart home technology were not as important to this tech-savvy generation.
When it comes to millennials and home buying, many prefer to take a pass on homes that need a lot of work. Only 16% expressed interest in fixer-uppers, while 32 percent wanted a move-in ready home. Another 24 % preferred homes that needed only minor cosmetic repairs, and 13% preferred brand-new homes.
Where do millennials want their dream homes to be? The survey found that 40% prefer the suburbs, while 31 % want to live in or close to a city. Rural areas were less popular, with only 23% favoring them. Notably, those aged 35-39 were the most likely to opt for city living, with 41.2% expressing this preference. This trend may reflect millennials' desire for urban amenities, job opportunities, and cultural attractions.
When it comes to the most and least desirable states to live in, California and Florida emerged at the top of both lists. However, the reasons for choosing these states were primarily practical rather than political or environmental. Cost of living (54.3%), proximity to family (37.2%), safety and security (37%), and job opportunities (34%) were the driving factors. Interestingly, political considerations and concerns about escaping natural disasters were less influential in millennials' decision-making processes.
Despite their unwavering desire for homeownership, millennials face significant financial obstacles. According to the survey, the leading factor preventing millennials from buying a home is inflation, with 57.9% of respondents citing it as a major roadblock. Other impediments include insufficient savings (47.7%), insufficient income (42%), child expenses (33.2%), student debt (23.1%), and medical debt (19.4%).
Only 14% of millennials believe their homes will be smaller than their parents’ home. Forty-six percent anticipate larger homes, and 40% expect their homes to be about the same size. Notably, there are significant differences in expectations between genders and regions. Men are more likely to expect larger homes than women, with 53% of men anticipating this compared to 39%of women. Regional differences also play a role, with only 36% of those in the Midwest expecting larger homes compared to roughly 50% in the West, 49% in the Northeast, and 47% in the South.
The COVID-19 pandemic prompted a surge in remote work, but, surprisingly, modifying a home office ranked at the bottom of the list when millennials were asked where they would spend money to make their homes just right (2.7%). Instead, the living room/great room (52.5%), kitchen (48.4%), and main bedroom (40.3 %) were the top priorities for investments. Men were 10% more likely to allocate funds to the bedroom, while women were 10% more inclined to invest in the kitchen.
Millennials appear to be uncertain about how mortgage rates and climate change might impact their decision to purchase a home.
When asked whether climate change would influence their decision, 54.4% were unsure, while 35% believed it would make them more likely to buy a home. Only 10% considered it a reason not to buy. Intriguingly, 44% of men were more inclined to buy a home due to climate change, compared to 28% of women.
Regarding mortgage rates, there was no clear threshold that triggered alarm among millennials, as responses varied across a range from 4 to 12 %. This suggests that millennials are adaptable and may still consider homeownership even in a market with moderately higher mortgage rates.
If you’re a business in the home space, you know millennials are the biggest wave of homeowners working through the market and that rising inflation, home prices, and mortgage rates are making the homeownership experience more costly and challenging.
Now may be an especially good time for companies to emphasize products and services that improve and simplify the lives of millennials. Millennials are looking for great values (e.g., high-quality products that are low cost, long-lasting and easy to install and maintain). Companies also may want to double down on more education and handholding. Our survey shows that while the desire for home ownership among millennials is strong, their ability to afford a home is compromised, and – because their lives are busy – they don’t have much patience for doing extra work to achieve their goals.
Want to know more?
Read the press release on PR Newswire
Download the full survey or check out our video ‘The Shifting Attitudes of Millennial Homeowners’.
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Todd Morgano is a senior vice president with Falls & Co. He leads a variety of integrated marketing initiatives and helps companies develop strategies to reach their customers and clients across multiple platforms and channels.