Millennials are snapping up homes before they even see them, and it’s the latest way they’re bringing house hunting online

millennials home buying

Some millennials are finally making the leap into homeownership – and many are doing so without first seeing houses in person.

These first-time homebuyers are increasingly making offers on houses they’ve shopped for online, reported for The New York Times’s Debra Kamin. The trend is the result of a combination of factors, Kamin wrote: It’s socially distanced, an easier and less time consuming process for those buying a house in an area they’re not currently residing in, and a way to move swiftly in a cutthroat period when houses are flying off the market.

House hunting online is also second nature for a generation who grew up with the internet.

“Millennials are a more digitally savvy generation,” Sarah Pierce, head of operations at Better Mortgage, told Kamin. “When they come to us, they’ve looked on Zillow for a home, they’ve Googled mortgage rates. They’re not going down to their local mom-and-pop shop for a loan on Main Street.”

In a recent survey by Clever Real Estate, 44% of millennials said they would buy a home based on listing photos alone. And nearly 80% said they could be persuaded to buy a home sight unseen under certain conditions, like if it was a newly constructed home or if they had someone to look at the house on their behalf.

Both Zillow and Redfin told Kamin that they’ve seen traffic uptick exponentially to the 3D tours on their websites during the pandemic. Likewise, Rocket Mortgage, QuickenLoans, and loanDepot also told Kamin they’ve seen a surge in traffic as buyers turn to the internet to complete the homebuying process, from applying for loans to finalizing deals.

Millennials are also buying through Instagram

But millennials aren’t just taking to real estate and mortgage websites – they’re also house hunting on social media.

Millennials have been putting bids on fixer uppers featured in Instagram account Cheap Old Houses, which highlights historic homes that cost no more than $100,000 to buy, reported The New York Post’s Shayne Benowitz back in August. These “old houses” are typically found in smaller towns that have become enticing in the age of coronavirus and remote work.

A post shared by Cheap Old Houses ™ (@cheapoldhouses)

 

When Insider’s Libertina Brandt interviewed the Cheap Old Houses’ founder Elizabeth Finkelstein at the start of the pandemic, the Instagram account had 750,000 followers. Today, it has 1.5 million.

Finkelstein told Benowitz that the account helps make homeownership more attainable for millennials, many of whom have plenty of time on their hands during quarantine for restoration projects.

Millennials are driving the housing market

Online or not, millennials have been heating up the housing market.

More millennials bought homes last year than any other generation, according to Apartment List’s Homeownership report. The pandemic had accelerated a five-year trend in which millennial homeownership rates rose the fastest as the generation aged into the career advancement and prime homebuying stage of their 30s.

The millennial homeownership rate has climbed to 47.9% from 40% just three years ago, per the report. Families fleeing big cities for the suburbs and historically low interest rates, which made buying easier for those with enough money saved for a down payment, fueled the 2020 uptick.

As millennials turn their homebuying dreams into reality, they’re digitalizing house hunting in the process.

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Millennials led the 2020 housing boom, but it wasn’t enough to catch up to boomers

real estate agent
Millennials have finally started buying homes, but they’re still way behind other generations.

Despite fueling 2020’s boom in the housing market, millennial homeowners are still lagging behind.

More millennials bought homes last year than any other generation, according to Apartment List’s Homeownership report, as the pandemic accelerated a five-year trend in which millennial homeownership rates rose the fastest as the generation aged into the career advancement and prime homebuying stage of their 30s.

The influx of millennial homebuyers was goosed by families fleeing big cities for the suburbs and historically low interest rates, making buying easier for those with enough money saved for a down payment. Finally, homeownership had become more attainable for a generation famously behind in homebuying compared to previous generations.

But the surge isn’t enough for millennials to close the homeownership gap. 

Less than half (42%) of millennials are homeowners, per the report, compared to 48% of Gen Xers and 51% of baby boomers when they were the same age. While first-time home purchases increased from 31% to 33% in the past three years, the report said, the uptick doesn’t come close to the 50%-plus first-time buys during the pre-Great Recession “homeownership boom.”

The pandemic will likely continue to exacerbate this generational chasm, the report states, partly because it’s caused some millennials to delay homeownership or give up on homeownership entirely.

(The report looked at data from the US Census Bureau and the annual Apartment List Renter Survey, which polled 1,851 millennials.)

The millennial wealth gap makes it harder to close the generational wealth gap

Twenty-one percent of millennial survey respondents said the pandemic caused them to postpone buying a home. Of this cohort, 67% cited income loss and 21% said they had to dip into their down payment savings. And 18% of respondents plan to rent forever, with 74% of them citing affordability as the key reason. 

For over a decade, millennials have been shouldering student-loan debtsoaring living costs, and two recessions before the age of 40. This affordability crisis has made it difficult to save for a down payment, and it hasn’t helped that the demand for homes in 2020 has driven housing prices up.

The stark divide among millennials who find homeownership attainable and the peers who find it unattainable reflects the millennial wealth gap, in which one cohort of millennials is faring well and the other is struggling. As the pandemic intensifies this intragenerational gap, it’s become even harder for millennials to close the wealth divide that exists outside their generation.

That would be the vast generational wealth gap between millennials and boomers. Millennials hold four times less US wealth than boomers held at their age, per Fed data, and earn 20% less than boomers did, a report by think tank New America found.

It explains why fewer millennials own homes than their parents did at their age, and why, despite the millennial housing boom of 2020, the generation is still wrestling to make up for lost ground. 

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