This year's coronavirus pandemic and the accompanying recession have turned a lot of people's financial plans upside down. But those millennials who've been lucky enough to hang onto their jobs are fast-tracking their plans to buy a home, in part because the pandemic is helping them do so.
The nation's largest generation has been helped by record-low mortgage interest rates, according to a recent realtor.com® survey. Those low rates are helping to offset home prices that are at an all-time high in many places.
In addition, the survey results show that stay-at-home orders have helped these 20- and 30-somethings save money they might otherwise have spent going out, thus helping them amass a down payment.
The report is based on a June survey of 2,000 home shoppers who plan to purchase a home within the next year. Those planning to buy a home, of course, are more likely to still be employed. Almost half of millennials, 49%, pushed up their plans to buy a home due to the pandemic, according to the survey. Of the roughly three-quarters of millennials surveyed who are now working remotely due to the threat of contracting COVID-19, nearly two-thirds hope to buy a home because they can now telecommute.
Many are motivated to move because their current home doesn't fit their needs anymore (26%), according to the survey. A big backyard, a home office, and space for the kids to do schoolwork never sounded so good! The second most popular reason for wanting to buy was to accommodate a growing family (23%), while taking advantage of low interest rates and living in a safer community accounted for the rest.
"Wanting to capitalize on low mortgage rates and buy before prices go up even further is accelerating the buying timeline," says Hale. The average rate for a 30-year fixed-rate mortgage was just 2.88% in the week ending Oct. 1, according to Freddie Mac.
Just over two-thirds of millennials surveyed, 68%, have been able to boost their savings during the pandemic. And nearly half, 45%, are expecting to receive financial assistance from family and friends in paying for their new home.
Despite the extra money, more than half want to find a property that's on the affordable side of the price spectrum. About 36% want an entry-level home priced at or below $200,000, while 28% hope to find one priced between $200,000 and $350,000. About a third, 37%, are seeking a property with a $350,000 price tag and up. (The median home list price was $350,000 in September, according to the latest data from realtor.com.)
Even though those lucky enough to work remotely can live practically anywhere, about 49% of those surveyed said they want to stay within their current city. Meanwhile, 31% would like to move to the suburbs. Only 13% were seeking homes in another city within the same state, while just 8% wanted to move out of state.
"Being able to work remotely opens up more opportunities for people to move farther away from pricier cities," says Hale. "Because there aren't many homes for sale, being able to expand their search radius makes it more likely they'll find a home that works for them."
SOURCE: Realtor.com - Clare Trapasso - senior news editor of realtor.com and an adjunct journalism professor at the College of Mount Saint VIncent.