Job layoffs due to the COVID-19 pandemic may delay millennials from purchasing homes even longer.
According to a new report by Realtor.com, the average millennial will need to save for nine months to cover one month's expenses. With the current unemployment rate at 13.4%, some millennials who have lost income may need to dip into savings to cover day-to-day living costs. The report defined millennials as those currently aged 25 to 34.
It may take the average millennial more than four years to build their savings back up after six months of unemployment. The realtor.com report assumed average millennial expenses at $3,770 per month and a monthly household income of $4,240 after taxes. San Francisco and Nashville were the two markets where it would take a resident 10 months to recoup one month of savings.
In 2019, major urban markets did not have a large percentage of millennials on the path to homeownership. In Los Angeles, about 79 percent of millennials were not on a path to homeownership according to an Apartment List report, and part of this could have been because millennials as a generation were least likely to own a home. Though in the Apartment List report, 42% of millennials in Los Angeles wanted to own a home but did not have the down payment. Loss of income in 2020 could delay the realization of homeownership goals even further.
Danielle Hale, chief economist for Realtor.com, said this could delay millennials from purchasing a home for "years" and "push out the timetable" for home ownership even further.
Complicating the home-buying process for millennials are tighter restrictions for lending criteria – lenders are requiring higher credit scores and higher down payments for certain loans. Cities with higher populations of millennials tend to also to have higher living and housing costs.
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Pearl Wu
Pearl Wu is the editorial Recognition Desk Manager at ALM Media and oversees the administrative aspects of U.S. Legal awards. Please find our upcoming deadlines here.
