First-time homebuyers and Millennials are better educated than they used to be about the homebuying process, but they aren’t utilizing the programs available to them.
Only 23 percent of consumers were familiar with low-down payment programs, including more than 2,500 down payment assistance programs offered by state and local housing finance agencies, according to a new study by Down Payment Resource and Freddie Mac.
Other recent studies find Millennials view buying a home as a priority, so what’s keeping them from pulling the trigger?
Mounzer Aylouche, vice president of homeownership programs at MassHousing, said that Millennials are cautious about buying a home or apply for a loan because of student debt, record-high home prices and lifestyle choices.
“Millennials are taking their time to make big decisions, like having a family or buying a home,” Aylouche said. “This age group has witnessed the Great Recession and were aware of that financial crisis. Some may not trust the system – some are even afraid of the system – and are cautious about getting into too much debt.”
Finances aren’t the only thing holding them back; the most affordable options in the Greater Boston area inhibit a preferred urban lifestyle.
“On the other side there’s mobility. Millennials are comfortable in urban cities and want to be close to Boston. They may not have an interest in moving outwards where affordability is much better,” Aylouche added. “They may value owning a home, but don’t see the value in moving so far out unless it’s 100 percent the home they want.”
The quality of information homebuyers are receiving is also a factor, said Paul Yorkis, former president of Massachusetts Association of Realtors and owner of Patriot Real Estate.
“Many Millennials are talking with their parents about what it takes to buy a house, and what their parents are sharing with them is what it took to buy a house when their parents were looking,” Yorkis said.
After teaching a first-time homebuyer course for over a decade, Yorkis said he has found that people don’t understand the many options for low-down payment loans available from the state and housing organizations.
“It’s now an urban legend to say that Millennials and first-time home buyers need to have at least 15 percent down to buy a home,” he said. “It’s just not true.”
So how will Realtors and lenders convert hesitant Millennials who may be educated in their options, but are still afraid to move forward?
The future of first-time homebuyer conversion depends on the demand and supply of homes in the market, Aylouche said. Once the supply increases and home prices relax, he thinks Millennials will be less reluctant to enter the market.
“At the end of the day the decision is personal,” he said. “They have to be ready for it.”
