Are millennials finally ready to buy?
Millennials. When will they start buying?
According to a new report from HSBC Group’s Behind the Bricks, which surveyed more than 1,000 Americans, more than 80 percent of millennials who aren’t homeowners plan to buy in the next 5 years. Seventy-one percent said they are saving more for a down payment, but also waiting to make more money before purchasing.
However, with home prices expected to grow faster than salaries, there are hurdles millennials face. Salaries are expected to increase 1.9 percent this year, and last year, home prices grew 4.8 percent. Nearly half of millennials said they cannot afford to buy the kind of home they’d like to, and 57 percent of millennials who purchased a home in the last 2 years spent more than they had initially planned.
“This study highlights that young people strongly value home ownership, yet there are significant challenges to making the dream a reality for millennials around the world. The perfect storm of stagnating salaries and rising house prices, paired with the need for improved financial planning can make buying a home a deferred reality,” said U.S. Head of Mortgage Origination and Sales for HSBC David Gates.
However, while most millennials dream of homeownership, many are not prepared for it. Thirty-two percent reported that they have no overall budget in mind, while 54 percent only have an approximate budget. Yet, millennials are more willing to make sacrifices to be able to purchase a home. Fifty-five percent reported they would consider spending less on leisure and going out, 41 percent said they would considering buying a smaller place and 27 percent would delay starting a family.