SEATTLE, Oct. 22, 2019 /PRNewswire/ -- Home value growth is slowing compared to recent years, but that hasn't made affording one any easier, especially for younger generations. A majority of home buyers (55%) 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.
Millennial and Generation Z home buyers tend to give up the most to buy a home, with 71% making at least one financial tradeoff to fund their home purchase. Meanwhile, 57% of Generation X home buyers and 33% of Baby Boomer or Silent Generation buyers say they made a financial sacrifice to buy a home.
For the most part, buyers take on more work and less play to fit a home purchase into their budget. Cutting back on entertainment spending is the most common sacrifice home buyers make, followed by working more hours or picking up a second job and postponing or canceling vacation plans.
However, some buyers – particularly younger ones – make more serious tradeoffs. For example, 13% of millennial and Gen Z home buyers skipped healthcare services, compared to 8% of Gen X buyers and 3% of older buyers. Younger buyers are also more likely to reduce or cancel some type of insurance coverage to save money for a home purchase.
Coming up with a down payment is a frequent obstacle for homebuyers and, as home values rise, saving for a down payment takes longer than it used to. Most home buyers also carry some type of debt, which can make it harder for them to buy a home without making other financial adjustments.
Going over budget on a home purchase also tends to lead to financial sacrifices. Almost a third (29%) of younger buyers go over budget on their home purchase, compared to 23% of Gen X buyers and 22% of Baby Boomers. Of those who do go over budget, a third (33%) say they did so because they fell in love with a home above their price point, while others bought a home in better condition or in a more expensive neighborhood than planned.
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. Nearly half (47%) of younger buyers with mortgages received a gift or loan from family or friends for part of their down payment, compared to 33% of Gen X buyers and 13% of older buyers.
"The fact that homebuyers have to make tradeoffs to save for the down payment is not surprising," said Kathryn Coursolle, economist at Zillow. "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."
The 2019 Zillow Group Report on Consumer Housing Trends is the 4th annual largest-ever survey of U.S. home buyers, sellers, owners and renters, and asked 13,000 U.S. household decision makers aged 18 and older about their homes – how they search for them, pay for them, maintain and improve them, and what aspirations and challenges drive their decision. Data from the full report is available for free to the public at www.zillow.com/report, and custom analyses are available to journalists by emailing press@zillow.com.
Financial Sacrifices Buyers
Made
| Millennials &
Generation Z
| Generation X
| Baby Boomers &
Silent Generation
| All
Buyers
|
Reduced spending on
entertainment (dining out,
concerts, movies, etc.)
| 29%
| 27%
| 17%
| 25%
|
Picked up additional work (more
hours, additional job, etc.)
| 24%
| 22%
| 7%
| 18%
|
Postponed or cancelled vacation
plans
| 18%
| 18%
| 13%
| 16%
|
Reduced monthly payments or
cancelled
technology/communication
services (cable, cell phone,
internet, etc.)
| 20%
| 16%
| 6%
| 15%
|
Reduced or eliminated saving for
retirement
| 14%
| 13%
| 10%
| 13%
|
Postponed or cancelled upcoming
health services
| 13%
| 8%
| 3%
| 8%
|
Reduced or cancelled insurance
coverage
| 11%
| 7%
| 3%
| 7%
|
Reduced or eliminated college
savings
| 10%
| 6%
| 1%
| 6%
|
Rented out a portion of the home
| 8%
| 6%
| 1%
| 5%
|
Did something else
| 2%
| 2%
| 5%
| 3%
|
None
| 29%
| 43%
| 67%
| 45%
|
About Zillow
Zillow® is transforming how people buy, sell, rent and finance homes by creating seamless real estate transactions for today's on-demand consumer. Zillow is the leading real estate and rental marketplace and a trusted source for data, inspiration and knowledge among both consumers and real estate professionals.
Zillow's proprietary data, technology and industry partnerships put Zillow at nearly every major point of the home shopping experience, helping consumers search for and get into their new home faster. Zillow now offers a fully integrated home shopping experience that includes access to for sale and rental listings, Zillow Offers®, which provides a new, hassle-free way to buy and sell eligible homes directly through Zillow; and Zillow Home Loans, Zillow's affiliated lender that provides an easy way to receive mortgage pre-approvals and financing. Zillow Premier Agent instantly connects buyers and sellers with its network of real estate professionals to help guide them through the home shopping process. For renters, Zillow's innovations are streamlining the way people search, tour, apply and pay rent for leased properties.
In addition to Zillow.com, Zillow operates the most popular suite of mobile real estate apps, with more than two dozen apps across all major platforms. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG) and headquartered in Seattle.
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SOURCE Zillow