American Dream of homeownership is very much alive

A new realtor.com survey finds homeownership continues to be part of the American Dream, even for millennials who were long considered “the rent generation.” With rising prices and a shortage of inventory, majority of those responding to the survey noted they are fully aware of the competition they are facing. Many have been searching for a home for over a year.

“Americans, even millennials who many thought would never buy, have a strong preference for homeownership for the same reasons many generations before them have — to invest in a place of their own and in their communities, and to build a solid financial foundation for themselves and their families,” said realtor.com senior economist George Ratiu.

The realtor.com Harrisx survey of more than 800 prospective homebuyers who plan to purchase their first home in 2021 found 43 percent have been searching for a home for more than a year. One-third (33%) have been in the market between six and 12 months. About one in seven (14%) have been searching for three to six months, and 10 percent just entered the market in the last three months.

Respondents across all generations and 59 percent of this year’s first-time homebuyers said homeownership is their top reason for buying a home. The need for more space ranked second by millennials, while 34 percent of Gen X and Gen Z buyers cited being able to invest in a property as their reason.

Forty-seven percent of millennials, many of whom have been saddled with student loans, said the biggest obstacle to finding a home is coming up with a down payment. This also was true for 44 percent of Gen X and 38 percent of Gen Z respondents.

“The current housing market is very challenging for first-time homebuyers due to the scarce inventory, but it is not impossible to break through. I would advise first-time homebuyers to first get pre-approved by a lender so they know their money situation and what they can afford and consult a Realtor who can help them formulate the best strategy for finding a home,” said Joanne Fraser, president of the Silicon Valley Association of Realtors.

At a recent association SILVAR Realtor district virtual meeting, Caroline Wolf, private mortgage banker with Wells Fargo Home Mortgage, said she helps millennials understand what may qualify for a mortgage loan when their compensation is made up of salary, bonus, stock options, and restricted stock units. She explained lenders will look in the rearview for a twoyear history of income. They also look forward to estimate future potential earnings.

“When looking at compensation, it’s like peeling an onion. We need to look at all the layers,” said Wolf.

Wolf indicated many millennials are conservative and want to put a large down payment in order to lower their monthly mortgage payments. “There are also cases when millennials prefer to hold on to their stock for the potential appreciation rather than placing the extra money toward a down payment,” said Wolf. “I also try to make sure buyers understand and are grounded on other expenses incurred when purchasing a home.”

Twenty-nine percent of survey respondents said they started their home search online with nearly a third checking listings at least once a day, if not more. Finances are top of mind for many first-time homebuyers, with nearly a quarter (24%) responding they began saving money and changed their spending habits, while 20 percent figured out their budget. The most common ways respondents save are setting aside a certain amount from each paycheck (50%), cutting discretionary expenses (45%), such as gym memberships and eating out for lunch, and putting away lump sums from annual bonuses, tax returns and gifts (29%).