A new report from real estate listing website Zillow reveals the homebuying habits of millennials, who are between the ages of 18 and 34 and account for roughly 42% of homes purchased today.
The first-annual Zillow Group Report on Consumer Housing Trends found that despite renting longer than baby boomers, millennials are spending just as much on homes and that those homes are only slightly smaller than the ones purchased by their parents’ generation.
Nearly one-third of buyers said savings alone isn’t enough for a down payment on a home, and so they are relying on gifts, loans, retirement savings and other sources to make up the difference.
In what it bills as its first comprehensive look into the consumer behavior patterns around homeownership, Zillow teamed up with market research firm Lieberman Research Worldwide to poll more than 13,000 current home buyers, sellers and renters.
In many ways, the survey’s findings are expected: Nearly half of those purchasing homes today are first-time buyers. Seven in 10 are shopping with a spouse or partner. And eight in 10 buyers are looking for a single-family home, mostly in the suburbs.
However, Zillow notes in the 167-page report that millennials differ from previous generations in their approach to the buying process. For one, this generation is more likely to rely on social media as well as input from family and friends to inform their purchase decision. The median age of first-time home buyers is 33 years old versus the median age of repeat buyers at 42.
Millennials (70%) will solicit the help of a real estate agent either online (26% of buyers) or through personal referral (33%), though older buyers are more likely to use an agent.
More homeowners today are black/African-American, Latino/Hispanic or Asian/Pacific Islander than previously, according to Zillow. Latinos/Hispanics make up 14% of homebuyers but only 9% of homeowners today. That group is expected to account for more than half of household formations in the U.S. from 2020 to 2030, the Urban Institute reported earlier this month, but a tightening credit market could negatively impact their buying power in the housing market.
Tight inventory conditions and rising home prices have made the market more competitive for buyers across the board. Zillow notes in its report that the average home search takes 4.2 months, with fewer than half (46%) of buyers getting the first home they put an offer on. Demand for single-family homes is consistent nationwide, while consumer desire for townhomes is stronger in the Northeast and West, where population growth is particularly stressing inventory.