“Millennial” is one of the biggest buzzwords in the news lately, which should come as no surprise. The country’s millennials, who were born between 1980 and 2000, are a major part of the workforce and the spending population. The decisions that millennials make have direct and profound effects on the economy. 

Buying a home is one of the biggest economic decisions a person can make. But millennials are carrying more debt, putting off milestones like marriage and kids, and prioritizing their lives differently compared to their predecessors. What should we expect as millennials enter their prime home buying years? 

Millennials Want to Buy Homes, but Many Are Waiting

 

It is a little premature to believe headlines that say millennials aren’t interested in buying homes. Goldman Sachs puts the peak home buying years at 25 to 45 years of age. Not all millennials are in that range yet and none are past it; 22 percent of millenials are under 25 years old and 66 percent of them have yet to reach 31 years of age, according to Nerd Wallet. The median home buying age is 31 years old, up ever so slightly from 30.6 years in the early 1970s, according to the same Nerd Wallet report. 

So, the majority of millennials are not yet at the median home buying age, but that does not mean they aren’t thinking about it. Sixty-six percent of millennials who have bought their first home cite more living space as the top reason. The second biggest motivator is building equity, with 36 percent of respondents citing this reason, according to a Harris Poll done for SunTrust Mortgage. 

In 1980, people rented for a median of five years before buying. Now, the median is six years, according to Nerd Wallet. If millennials want to buy homes, why are they waiting? The top reason for the majority of millennials (72 percent) is, of course, affordability, according to Credit.com. In 1980, the median home value was $47,000. Now, the median home value is well over $100,000, according to CNN. That number is going to be even higher in the big, urban centers that attract millennials. 

Millennials are also putting off buying a home because they don’t feel ready for the commitment. Nearly half (45 percent) said they are not ready to settle down, and 36 percent said they are waiting to buy a home until after they are married, according to Credit.com.

Student Debt is Playing a Big Role in Millennial Home Buying Decisions

A young Millennial celebrates her newfound debt

Student debt is another factor weighing heavily on the minds of millennials. Since 1990, the median amount of student debt has risen by a staggering 163.8 percent, while median wages have crept up just 1.6 percent, according to the Huffington Post. Students who graduated in 2016 have an average of $37,172 in student debt, a six percent increase in just one year, according to Student Loan Hero. With so much debt, it is easy to see why millennials might be making home buying decisions differently than previous generations.                                                   

Nearly half of first-time home buyers (40 percent) have some level of student debt, which can make it difficult to save up for a down payment on a home. More than half of first-time home buyers (55 percent) said their student loans hampered their ability to save for a home, according to the National Association of Realtors. If millennials fall behind on their loan payments and damage their credit, it becomes even more difficult to get a loan to buy a home.                                                                                                           

Millennials Prefer Detached Homes

 

When millennials think about buying a home, most of them (68 percent) imagine buying a single-family, detached home, according to the National Association of Home Builders. This remains true across generations. More than half of Gen Xers, Baby Boomers, and seniors want a single-family, detached home. 

Millennials are also dreaming of bigger homes. Millennials currently have a median of 1,705 square feet of living space, but they hope to have a median of 2,375 square feet of living space, according to the same NAHB report. 

Single Women Are a Growing Group of Home Buyers

 

Married couples are still the largest group of home buyers, even amongst millennials, but other demographic groups are catching up. Between July 2017 and September 2017, 52 percent of millennials who bought a home were married, according to the Millennial Tracker from software company Ellie Mae. 

Single women are a growing group of home buyers, according to the National Association of Realtors report. The 2016 survey found that single women made up 17 percent of the total number of home purchases.

"Despite having a much lower income ($55,300) than single male buyers ($69,600), female buyers made up over double the amount of men (7 percent)," said NAR Chief Economist Lawrence Yun in the report. 

Millennials Want to Find Home Sweet Home for Their Dogs

 

Dogs beat out both marriage and kids as a home buying motivator. The Harris Poll conducted for SunTrust Mortgage found that 33 percent of millennial home buyers bought their first home to give their dog a yard and/or more space. Just 25 percent of millennial home buyers reported that getting married led them to buy a home, while having a child led 19 percent of millennials to buy their first home.

As the American Kennel Association pointed out, millennials are tying the knot and having kids later in life than previous generations. They are also spending more on their dogs compared to baby boomers.