High interest rates are millennials’ No. 1 barrier to homeownership, according to a new survey from Real Estate Witch, an online publication owned by Clever Real Estate that connects readers with expert real estate advice. Millennials refer to the cohort born from the early 1980s to mid 1990s, which means many are at an age older generations would have typically bought a home. Millennials have built less wealth than previous generations, delayed life milestones like getting married or starting a family, and lived with their parents for longer periods of time.
96% of millennials say high interest rates have affected their home-buying plans, and 70% say inflation has affected their plans. 93% of millennials say the real estate market has impacted their home-buying plans, and 76% are concerned it will get worse for buyers before they buy a home,
Half of millennials (50%) who plan to buy a home before the end of 2024 say high interest rates are a barrier to homeownership, and 67% regret not purchasing a home when rates were lower.
Surprisingly, more than 3 in 4 millennial home buyers (78%) would consider accepting an interest rate that’s higher than the national rate of about 7% — 65% would accept an interest rate of 10% or more, while 23% would accept a rate of 15% or more.
Millennials may be willing to accept a high interest rate because 68% plan to refinance if rates decrease.
In an effort to limit upfront costs, 47% of millennials plan to put down less than 20% on a home. Financial concerns run rampant, with one in four millennials (25%) worrying they won’t qualify for a mortgage. Alarmingly, the percentage of millennials who have $10,000 in debt (57%) is more than double the percentage who have $10,000 in savings (25%).
The study revealed a sense of desperation among prospective millennial homebuyers, with most open to purchasing homes with major issues such as asbestos (67%), mold (62%), and foundation issues (58%).
Even more, 79% of millennials would pay above the asking price to beat the competition for their dream home — down from 85% who said the same in 2023.
Unsurprisingly, 90% of millennial homeowners have regrets about their first home purchase, up from 82% in 2023. Common regrets include a less-than-ideal location (27%), problematic neighbors (26%), and high interest rates (25%).
