Whether it’s not making any big purchases or foregoing a doctor’s visit, millennials and Generation Z are serious about becoming homeowners and making sacrifices to do so, according to Zillow.
“Younger buyers are more likely to make serious financial tradeoffs to buy a home, such as skipping healthcare services or cutting back on insurance,” Zillow states in a release.
This isn’t hard to believe as more and more Millennials and Generation Z are leaving college with an average of $37,000 in student loan debt in 2017. As the total student loan debt has soared to more than $1.4 trillion in the U.S., becoming homeowners after college may take more sacrifice.
“Home value growth is slowing compared to recent years, but that hasn’t made affording one any easier, especially for younger generations,” Zillow wrote in a press release. “A majority of home buyers (55 percent) make some sort of financial sacrifice, like cutting their entertainment budget or reducing their savings, in order to buy a home, according to the 2019 Zillow® Group Consumer Housing Trends Report.”
According to Zillow, at least 71 percent of Millennial and Generation Z homebuyers make some sort of financial sacrifice to purchase a home. Additionally, 13 percent of these generations stated they put off health care services to afford buying a home.
“The fact that homebuyers have to make tradeoffs to save for the down payment is not surprising,” said Kathryn Coursolle, economist at Zillow, in a press release. “That’s pretty much the study of economics: how people make decisions when they can’t have everything. But todays tradeoffs are non-trivial and often cut into more than just the ‘nice-to-haves.’ Indeed, some of those who manage to buy young are foregoing going to the doctor or paying for insurance. To buy young means sacrificing more, ostensibly for the ability to sacrifice less, later.”
Some of the biggest sacrifices went to reducing spending on personal entertainment — eating out, movies and media, by 29 percent. Additionally, 24 percent of Millennials and Generation Z homebuyers reported they put in extra hours at work or found a second job to afford their home. Another category to take a big hit was spending on technology, internet, cell phone bills and other services with 20 percent of Millennials and Generation Z stating they gave up these services to purchase a home.
“While millennials and Gen Z are more likely to make financial sacrifices to get their home, they’re also more likely to receive help from others,” Zillow wrote in a press release. “Nearly half (47 percent) of younger buyers with mortgages received a gift or loan from family or friends for part of their down payment, compared to 33 percent of Gen X buyers and 13 percent of older buyers.”