Millennial Home Buyer Report: 2024 Edition

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  Written by Jaime Dunaway-Seale

Barriers to Homeownership | Effects of Interest Rates | Millennials’ Price Bracket | Offering Over Asking Price | Down Payment Woes | Savings vs. Debt | Buying Sight Unseen | Buying a Fixer-Upper | Millennial Migration | Homeowner Regrets 

Millennials’ housing woes have often been pinned on their long-abiding love for avocado toast and fancy coffee, but those vices are hardly the only barriers standing in the way of homeownership.

A majority of millennials desperately want homes, with 78% saying a home purchase is still part of the American dream. But the cohort has struggled to reach that financial milestone. In fact, 48% don’t think homeownership is affordable for the average millennial. 

Unfortunately, those who have managed the feat of buying a home are often robbed of its joy. One-third of millennials (33%) feel guilty for owning property when so many of their peers want a home but can’t afford it.

It’s a tough market for young buyers with high interest rates and a lack of available homes sending prices soaring. Overall, 93% of millennials say the market has impacted their home-buying plans, and 76% are concerned it will get worse before they buy a home.

To afford a home in their price range, 42% of millennials expect to make concessions on the characteristics of a home, and 29% expect to make financial concessions. They also expect to:

• Pay a higher interest rate than they’d like (39%)
• Make multiple offers (36%)
• Max out their budget (30%)
• Pay more than a home’s asking price (29%)

However, there are signs the market is slowly shifting back toward buyers after years of an extreme seller’s market. About 41% of millennials expect to negotiate more with sellers, and 26% expect sellers to lower their prices.

Still, 96% of millennials are concerned about purchasing a home, including not finding a home that fits their needs (35%) and having to make major repairs (35%).

To learn more about millennial home buyers, we asked 1,000 Americans who are planning to purchase a home by the end of 2024 about their plans, anxieties, and compromises they’re willing to make.

We compared this data to previous years to provide a clear snapshot of millennials’ home-buying experience — and the obstacles that stand in their way in 2024.

Half of Millennials Say High Interest Rates Are a Barrier to Homeownership

Millennial homeownership rates are lagging behind those of other generations because of several economic factors that stand in their way. In fact, 95% of millennials say they face barriers to homeownership.

For the second year in a row, high interest rates (50%) are the most common barrier, followed by expensive homes (46%) and saving for a down payment (42%).

Interest rates have climbed to nearly 7% — the highest rate in decades — causing a greater number of millennials to view them as an obstacle. In 2024, half of millennials (50%) say high interest rates are a barrier to homeownership, compared to 47% in 2023.

Millennials know interest rates are rising, but 20% of those who have already qualified for a mortgage say their rate was still higher than expected. That percentage is 3x higher than the 6% who said the same in 2023, indicating an increasing lack of preparedness among millennial home buyers.

It’s no surprise, then, that 67% of millennials regret not purchasing a home when interest rates were lower. But a majority of young home shoppers aren’t deterred by high rates. 

More than 3 in 4 millennial home buyers (78%) would consider accepting an interest rate that’s higher than the national rate of about 7%. What’s more, 65% would accept an interest rate of 10% or more, while 23% would accept a rate of 15% or more.

Boomers (49%), on the other hand, are over 2x more likely than millennials (22%) to consider an interest rate of only 7% or less.

Most millennials desperately need financing for a home, but high interest rates can add thousands of dollars to their mortgage payments — putting them in a financially precarious position. 

Consequently, 1 in 4 millennial homeowners (25%) regret that their interest rate is too high, while 1 in 5 (22%) regret that their mortgage is too expensive.

Millennials may be willing to risk high interest rates, though, because 68% plan to refinance when they decline. However, there’s no telling when rates will fall, and millennials could be locked into a high rate for years.

High Interest Rates Have Affected 96% of Millennials’ Home-Buying Plans

Nearly two-thirds of millennials (66%) say high interest rates make it a bad time to purchase a home. That’s not stopping millennials from buying a home, but 96% are adjusting their plans accordingly.

Half of millennials (50%) are saving more for a home because of high interest rates, while 40% are increasing their budgets. One-third of millennials also plan to:

• Put down a larger percentage on a home (33%)
• Buy a less expensive home (33%)
• Delay their plans to buy a home (33%)

Unfortunately, high interest rates have an outsized effect on millennial home buyers compared to older generations.

With greater wealth and less debt, boomers (9%) are 2x more likely than millennials (4%) to say interest rates have not affected their home-buying plans.

A Majority of Millennials Can’t Afford the Median U.S. Home

High interest rates make purchasing a home extremely expensive for many millennials.

But before the Federal Reserve began raising rates, unchecked inflation pushed the median home price to an all-time high — making homeownership an equally pricey endeavor for young home shoppers.

Either way, it’s a no-win scenario for millennials.

Although interest rate hikes have caused the inflation rate to drop, home prices remain near record highs. Consequently, 70% of millennials say inflation is still affecting their home-buying plans.

About 30% of millennials expect to max out their budgets in response to high prices, but even then, 35% are concerned they won’t be able to find an affordable home.

The median U.S. home costs $431,000, but a majority of millennials can’t afford that. About 57% plan to purchase a home that costs less than $400,000.

Unfortunately for millennials, 73% of boomers also plan to buy in that price range — increasing competition for the most affordable homes.

Two-thirds of millennials (68%) regret not purchasing a home when prices were lower. To own a home now, many would resort to drastic measures, including:

• Getting another job (32%)
• Moving to a more affordable rural area (21%)
• Renting out a room of their house to help with the mortgage (17%)
• Skipping other debt payments (16%)
• Creating a GoFundMe (15%)
• Moving to a less safe/developing neighborhood (14%)
• Delaying having kids (13%)
• Delaying their wedding (10%)

1 in 9 Millennials Would Still Offer $100,000 or More Over Asking Price for Their Dream Home

Competition in the housing market is less extreme than it was during the pandemic. But with home prices remaining sky high, millennials still expect a lot of challengers for the most affordable properties.

In fact, competition is increasingly seen as a barrier to homeownership. In 2023, about 28% of millennials said it prevented them from affording homes. That percentage rose to 39% in 2024 as higher borrowing costs prevent many millennials from being able to outbid other buyers. 

To beat the fierce competition, 79% of millennials would still pay above asking price for their dream home. However, that’s down from 85% in 2023, reflecting the realities of a changing market.

With rising interest rates making mortgages more expensive, millennials can’t afford to bust their budgets by making exorbitant offers.

At the height of the home-buying frenzy in 2022, about 1 in 6 millennials (17%) said they would pay $100,000 or more above asking price for their dream home. That percentage has declined every year since then, dropping to 1 in 7 (14%) in 2023 and only 1 in 9 (11%) in 2024.

Overall, millennials are limiting how much they’ll offer over asking price — if they do so at all. The percent of millennials who plan to offer only the asking price or less jumped 40% — from 15% in 2023 to 21% in 2024.

Millennials may be coming to terms with their financial limitations, but they are still more willing to take risks than fiscally conservative boomers. About 42% of boomers would only offer the asking price or less — making them 2x more likely than millennials to submit a lower offer.

Almost Half of Millennials Won’t Put Down 20% on a Home

High mortgage rates may be a barrier to homeownership, but the good news is they are not set in stone. There are numerous ways millennials can lower their rate, including a large down payment on a home.

A large down payment lowers the risk for mortgage lenders, leading to a lower rate. As a result, the percentage of millennials who plan to put down at least 20% on a home jumped from 39% in 2023 to 53% in 2024.

Saving for a down payment is a struggle for many cash-strapped millennials, though, with 42% saying it’s a barrier to homeownership. 

Acquiring the small fortune needed for a down payment requires sacrifice and comes at a cost. To afford a large down payment, millennials are:

• Cutting back on non-essential spending (36%)
• Finding an additional source of income (36%)
• Moving in with family (23%)
• Taking money from retirement/emergency funds (17%)
• Asking family or friends for money (14%)
• Not saving for retirement (11%)
• Not paying other bills or going into debt (8%)

Despite these thrifty actions, 47% of millennials say they still can’t afford a 20% down payment, and 32% worry their down payment will be too small to qualify for a mortgage.

Nearly 2 in 3 Millennials Haven’t Saved Long Enough for a Home

Saving for a down payment and a home purchase is especially challenging for many millennials as elevated costs for everyday goods make it more difficult to set aside cash for the future.

Even in ideal economic conditions, saving for a home can take years. Financial experts recommend buyers earning the median U.S. salary save about 2.6 years — or about 2.6x their annual income — on the median priced home.

Home prices, however, have increased so rapidly over the past two decades that they now cost nearly 6x the median U.S. salary. In other words, the average buyer needs to save roughly six years to afford a home.

But 66% of millennials haven’t saved that long. About 1 in 8 millennials (12%) who plan on purchasing a home by the end of 2024 have saved for only one year or less, including 5% who haven’t saved at all.

As a result, many millennials are short of the amount needed to purchase even the most inexpensive homes. About 1 in 4 millennials (25%) have less than $10,000 in savings, while 1 in 8 (12%) have less than $1,000 in savings — including 5% who have nothing saved.

If millennials with $10,000 in savings used the entire sum on a 20% down payment, they could only afford a home worth $50,000.

1 in 4 Millennials Worry They Won’t Qualify for a Mortgage

Along with rising costs, significant debt obligations hinder millennials’ ability to save.

About 85% of millennials have some form of non-mortgage debt, with 22% owing more than $50,000 and 57% owing more than $10,000. That means the percentage of millennials (57%) who have $10,000 in debt is more than double the percentage (25%) who have $10,000 in savings.

Millennials are already one of the most indebted generations, but that hasn’t stopped them from piling on more. Millennials are 16% more likely than a year ago to owe more than $50,000 and 24% more likely to owe more than $10,000.

With so much debt, 25% of millennials worry they won’t qualify for a mortgage. Nearly 1 in 5 millennials (19%) think their credit card debt will be a stumbling block, while 1 in 7 (14%) think the same about their student loans.

Although home buyers of all generations have a wide range of non-mortgage debt, millennials tend to have more, leading to greater anxiety. Millennials are nearly 3x more likely than boomers to worry about their credit card debt and 2x more likely to worry about their student debt.

85% of Millennials Would Buy a Home Sight Unseen

Buying a home sight unseen was once unthinkable, but since the pandemic, young buyers have grown quite comfortable with the idea. About 85% of millennials would purchase a home without ever touring it in person.

Tech-savvy millennials feel comfortable buying just about anything online — including homes — but the same can’t be said for boomers. Just 60% of boomers would buy a home sight unseen.

Buying a home sight unseen is risky, and millennials would only consider it under certain circumstances. Millennials could be convinced to buy a home sight unseen if:

• The home is listed at a great price point (38%)
• The home is newly constructed (34%)
• Someone they know looks at the home on their behalf (34%)
• There is competition from other buyers (27%)
• The seller offers concessions (24%)

Notably, 1 in 5 millennials (21%) would also buy a home sight unseen if they thought interest rates were about to rise and they needed to move quickly on a home purchase.

Buying a home without seeing it in person may seem like a good idea to home shoppers who don’t want to miss out on a desirable property, but 1 in 8 millennial homeowners (13%) regret purchasing a home sight unseen — nearly double the 8% who said the same in 2023.

2 in 3 Millennials Would Purchase a Home With Asbestos, Mold

With a lack of homes on the market, sometimes the best way to acquire a property is to pursue homes that are not in high demand. Two-thirds of millennials (67%) would purchase a fixer-upper, compared to just 47% of boomers, who are more likely to be able to afford turnkey properties. 

To snag a home, a majority of millennials would suffer outdated design trends that can be easily and affordably changed. About 83% of millennials would buy a home with wall-to-wall carpeting, while the same percentage would buy a home with a lot of wallpaper.

Millennials may feel comfortable painting and completing other easy DIY projects, but 35% fear making major repairs. Still, some are so desperate to own homes they would buy a property that needs major upgrades or poses serious health risks:

• 74% would buy a home that smells like cigarette smoke, compared to 49% of boomers.
• 68% would buy a home without central air conditioning or heating, compared to 58% of boomers.
• 67% would buy a home with asbestos, compared to 31% of boomers.
• 62% would buy a home with mold, compared to 31% of boomers.
• 62% would buy a home with termites, compared to 33% of boomers.
• 60% would buy a home with a leaky roof, compared to 42% of boomers.
• 58% would buy a home with foundation issues, compared to 27% of boomers.

Purchasing a fixer-upper may appeal to millennials who want to buy an affordable home without fighting the competition, but they’re not always as budget-friendly as they seem. 

More than one-third of millennials (34%) are concerned about the unexpected or hidden costs of homeownership, and fixer-uppers are certainly costly to repair and maintain.

In fact, nearly 1 in 5 millennial homeowners (18%) regret buying a fixer-upper.

More Than 1 in 5 Millennials Would Buy a Home Near an Airport, Railroad Tracks

Every real estate agent preaches the importance of location, location, location. But millennials don’t seem to be listening.

Millennials are more likely than older generations to purchase homes in undesirable locations, especially those plagued by noise. If it was the only home available in their budget:

• 27% of millennials would live near an airport — 3x more than boomers (9%).
• 21% of millennials would live near a railroad track — 1.5x more than boomers (13%).
• 20% of millennials would live near a busy highway — 3x more than boomers (7%).

Homes in these areas may be less expensive, but the surrounding noise can cause many negative effects, including mental health problems, chronic stress, and poor sleep.

Planes, trains, and automobiles are also sources of air pollution, but some young home buyers would take their chances with even deadlier pollutants.

About 1 in 7 millennials (15%) would live next to a landfill, which discharges methane gas. The substance is 21x more dangerous than carbon dioxide, so it’s no surprise 0% of boomers would willingly take the same risk.

Although buying a home in an undesirable area may make homeownership more accessible, purchasing a home in a bad location is the most-common regret among millennials. Overall, 27% of millennial homeowners wish their home was in a better location — up from 19% in 2023.

With millennials more willing to buy in less-than-ideal areas, they are nearly 4x more likely than boomers (7%) to regret a bad location.

90% of Millennial Homeowners Have Regrets About Their Home Purchase

A bad location and other poor choices can cause the American dream of homeownership to turn into a nightmare for some millennials.

Among the 33% of millennials who have previously bought homes, 90% have regrets about their first purchase — up from 82% in 2023.

After a bad location (27%), the most common regrets are:

• Bad neighbors (26%)
• An interest rate that’s too high (25%)
• A mortgage that’s too expensive (22%)
• Outgrowing the home too quickly (20%)
• Buying in an area that changed too much (19%)

The hidden costs of homeownership also prove to be a source of regret for homeowners. In addition to their mortgage, the average homeowner spends nearly $17,500 annually on taxes, insurance, maintenance, and repairs.

Although many buyers know their home will require additional costs, the actual amount is typically much higher than they expect, leading to regrets. Among millennial homeowners:

• 18% regret that their home requires too much upkeep
• 16% regret that the upkeep is too expensive
• 16% regret that the cost of homeownership is too expensive

It’s increasingly rare for any homeowner to walk away from a purchase with their dream home, but millennials report higher levels of disappointment.

While millennials will make rash decisions they may come to regret, boomers have the experience and the cash to purchase homes they know will be the right fit.

As a result, boomers (21%) are 2x more likely than millennials (10%) to say they have no regrets about their home purchase.

Methodology

Clever Real Estate surveyed 1,000 American adults who are looking to purchase a home by the end of 2024 to identify their home-buying preferences. The survey was conducted Oct. 24-25, 2023.

About Real Estate Witch

You shouldn’t need a crystal ball or magical powers to understand real estate. Since 2016, Real Estate Witch has demystified real estate through in-depth guides, honest company reviews, and data-driven research. In 2020, Real Estate Witch was acquired by Clever Real Estate, a free agent-matching service that has helped consumers save more than $160 million on realtor fees. Real Estate Witch’s research has been featured in CNBC, Yahoo! Finance, Chicago Tribune, Black Enterprise, and more.

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