Young adults using pandemic savings for down payments
The hot real estate market has seen soaring homebuyer demand and a Zillow survey points to a possible contributor: Young adults are taking the money they saved during the coronavirus pandemic and putting it toward a down payment.
Zillow surveyed more than 1,200 young adults born between 1980 and 2003 (ages 18-41), collectively referred to as millennials and Gen Zers.
The real estate giant said nearly 3 million young adults have moved back home since spring 2020, but 83 percent of survey respondents reported saving money in at least one spending category during the pandemic. Of those respondents, 64 percent said they plan to use the savings for everyday living expenses, followed by 59 percent saying they plan to use their savings for a down payment on a home, according to Zillow.
Among all survey respondents, half said they planned to use pandemic savings on a down payment.
“Young people, particularly women and BIPOC [black, indigenous, people of color], were disproportionately impacted by the pandemic and more likely to suffer from job loss and housing insecurity,” said Zillow population scientist Manny Garcia in a statement.
“But during this difficult time, many young people say they saved on transportation, shopping, dining out and child care. Some who remained employed and saved enough for a down payment were able to join in on the hot pandemic housing market.”
Although in the wake of the Great Recession millennials were sometimes referred to as the “renter generation” or the “rent forever generation,” survey after survey has found that millennials are just as likely as past generations to aspire to homeownership as they age into their prime homebuying years. Zillow predicts there will be 6.4 million more households formed by 2025 due to “a huge wave of millennials now hitting their mid- to late 30s.”
“Millennial and Gen Z home consumers will not only drive housing demand for years to come,” said Zillow Home Trends Expert Amanda Pendleton in a statement.
“These tech-savvy generations that grew up with the Internet are changing the way we buy and sell homes, demanding new real estate technology that makes the process faster and easier, and makes moving a digital-first".
Zillow’s survey delved into how Gen Zers and millennials make housing decisions and found that 27 percent of respondents said they’ve been inspired by influencers or celebrities to make certain housing decisions, including buying a home. Men were more likely to report this (32 percent) than women were (21 percent).
Respondents were far more likely to say they discussed their housing decisions with their parents (71 percent), their friends (61 percent) or their siblings (50 percent). Only 16 percent reported discussing their housing decisions with their social media followers.
“Record low mortgage rates were the primary driver of our homebuying decision. My spouse and I knew we might not see rates this low again in our lifetime, and it allowed us to afford a larger home without stretching our budget,” said Haley Mills, Zillow communications coordinator and recent millennial homebuyer, in a statement.
“We moved quickly out of fear of missing out on a great home and overlooked details like the number of bedrooms, interior paint color and unkempt landscaping. However, those are the projects we’re excited to do together to make the house our own, with the help of influencers and friends to give us all the best design trends and DIY tricks.”
Despite remote work becoming more common during the pandemic, the majority of young adults surveyed said living close to work (61 percent) and having a short commute to work (63 percent) was either very or extremely important when considering where to purchase a home, Zillow said.