Millennials may be sacrificing privacy + freedom to afford their first home

Last week we discussed some of the top barriers that delay homeownership among Millennials who wish to buy in the near future. It is a topic we address frequently as new insights become available, for obvious reasons. A healthy influx of next-generation first-time homebuyer is vital to the health of our housing industry, and to our country’s economy at large. Home assets have always been the top household wealth builder in America; without housing wealth, it’s hard to imagine a next generation that can continue to grow a robust economy for our future.

This week we have interesting new data on Millennial first-time homeownership that has not been frequently addressed in the press. We all know about Millennials who live in their parents' home well into their thirties as byproduct of today’s unaffordable home prices and back-breaking student loan debts. In fact, at last count, 4 in 10 American Millennials now live in their parents’ home, the highest rate in 75 years and 10% higher than a decade ago. In some states, e.g, New Jersey, nearly half (47%) of all Millennials live in their parents’ home at the end of 2016.

It would appear then the ultimate goal for many Millennials would be to own their own home, and to finally obtain their much craved freedom, privacy and autonomy. New data shows this statement may only be half true.

It is true that most Millennials want to own a home – this desire is consistently recorded among 80% of all Millennials surveyed in ValueInsured’s quarterly Modern Homebuyer Survey, and echoed as recently as a week ago in an Apartment List survey reported by Forbes. But are all new Millennial homeowners achieving freedom, privacy and autonomy? Not quite, and not all.

It appears that in order to afford buying a home in today’s top of the market, increasingly more Millennial first-time homebuyers may have to sacrifice living peacefully alone. More of them are taking on roommates, rental tenants, and living with relatives as they make plans for their new home purchase:

  • A year ago, 3% of all Millennial first-time homebuyers said they would be buying their home to live with a rent-paying friend or roommate(s). Six months ago, that number increased to 5%. Today, 9% of all Millennials who plan to buy a home in the near future plan to live in it with a paying friend or roommate(s), tripled those who planned the same a year prior.
  • A year ago, as well as six months ago, 1% of all Millennials planned to take on a rental tenant in their new home. Today, 2% of Millennial first-time homeowners plan to do the same.
  • During the same period, more first-time homebuyers also plan on sharing their new home purchase with a family relative who is not a spouse, partner or their child(ren), from 8% in the Fall 2016 survey, to 9% in the Spring survey, to now recorded at 10% among all Millennial first-time homebuyers surveyed.

It might not be direct causation, but the correlation is certainly there. This is perhaps another way our growing issue of housing affordability has manifested itself. Even as Millennials leave their parents’ home or their rental apartment shared with roommates, even if a new home may now be under their name, the benefits of living with autonomy and privacy may not always be guaranteed for the next generation of homebuyers. At least not at today’s sky-high prices.