A recent study on millennial homebuyers conducted by Michigan State University’s master of science in marketing research program and United Shore Financial Services in Troy revealed that 96 percent of millennials in metro Detroit would be more inclined to buy a home if they were aware that a down payment on a home could be the equivalent of two months’ rent.
Based on a survey that was distributed nationwide to millennials between the ages of 25 and 34, 67 percent thought that a minimum 20 percent down payment is required on home purchases. Only 7 percent were aware that down payments could be less than 5 percent.
In the study, 70 percent of millennials indicated that “saving for a down payment” was their primary obstacle to buying a home. Because of the perceived high costs of homeownership, millennials working and renting in metro Detroit may be more inclined to look elsewhere.
“You have to get millennials off the fence to start bidding on homes and buying homes and starting the process,” says Mat Ishbia, United Shore president and CEO. “Housing inventory will open up once you have more people out there trying to buy homes. A lot of people don’t know the opportunities that exist because they think they need a 20 percent down payment or a 30 percent down payment.”
Ishiba adds that a more knowledgeable and active base of millennial homebuyers would lead to increased demand for real estate agents, mortgage brokers, home builders, and contractors in the area.