Millennials need more housing money

Soaring rents driving millennials to seek money from their parents, or buy a value-priced home

It was just a few years ago that economists and real estate gurus were forecasting how millennials would upset the residential market apple-cart, renting plush apartments for years and years to maintain their freedom to move and travel while thumbing their noses at the generational staple of buying a home.

Now, lease prices are shooting up and the breadwinners in their twenties and thirties are having second thoughts, or relying on a helping hand. According to real estate trackers, millennials are in some cases reaching out to family members to pick up the tab or, in a twist, purchasing houses instead of leasing because residences are less expensive.

“Home and rent prices have been rising faster than incomes for decades, leaving many millennials struggling to pay rent and save for a down payment,” according to Apartment List online marketplace. The company found “one way that millennials afford high housing costs — with help from mom and dad.”

Examining survey results, Apartment List concluded that 7.9 percent of millennials who aren’t students received assistance from parents for monthly rent payments. One in three have the full bill paid. Meanwhile, 17.1 percent expect down payment support, with one in three looking for their parents to bankroll at least 30 percent.

Over the past 18 years, home prices have jumped 2.4 times faster than household income for people younger than 35, the company discovered.

“In a housing market where home and rent prices have risen much faster than incomes, it’s no surprise millennials turn to family for help,” Apartment List says. “But only some millennials have parents who are able to provide financial support. When primarily higher-income families are able to support their adult children, income inequality is transferred from generation to generation,” the firm points out.

In a separate report from Realtor.com says 23 percent of millennials reported “rising rent as a trigger for their purchase,” based on its spring homebuyer survey. “Fulfilling family needs” was a reason for one in six people in their 20s and younger 30s.

“We found some clear differences in priorities,” says Danielle Hale, chief economist for realtor.com. “For instance, older buyers are concerned with privacy and being able to age comfortably, while millennials place more emphasis on stability and personal expression,” she says.

Toluna Research conducted the Internet survey of more than 1,000 active buyers in early March.

According to Realtor.com, “Family needs took precedence for younger buyers,” topping the list at 17 percent. Another 14 percent chose stability and 13 percent claimed personal expression. Only one in every seven buyers younger than age 55 named privacy as chief priority, although it was the top selection for older buyers.

Rising rent is the leading factor pushing buyers ages 18 to 34 to purchase a home, named by 23 percent of property hunters. “This corresponds with steep increases in rents across the country in recent years, especially in many high-cost urban areas that have become magnets for millennials,” realtor.com says. Citing figures from the U.S. Department of Housing and Urban Development, rents increased in 85 of the top 100 metro areas, including nine places in which lease prices skyrocketed by double-digit percentages from a year ago.

The survey also showed that millennials favor contemporary and colonial homes, each with 10 percent share. Just 6 percent are keen on ranch homes, which are typically one story. By comparison, ranches were the top choice of older buyers. Another 11 percent had no home-style preference, according to realtor.com.

Realtor.com is operated by News Corp subsidiary Move, Inc. under a license from the National Association of Realtors.