Apartment List recently conducted a survey of more than 30,000 renters across the United States, asking questions about their plans for homeownership, affordability, and savings for a down payment.
Our research indicates that the vast majority of millennial renters (79 percent) want to purchase a home, but that affordability is the biggest obstacle that they face. You can see our national report (with data for 93 metros and 130 U.S. cities) at this link.
Today, we dive into the results for the Houston metro specifically.
Most Houston millennials plan to purchase a home soon…ish
In the Houston metro, 82 percent of survey respondents do want to purchase a home. Of these, the majority (30 percent) intend to buy a home within the next 3 to 5 years. The next largest group (24 percent) are planning to purchase in 2 to 3 years.
Affordability poses the biggest obstacle to homeownership
The biggest obstacle for Houston millennials wanting to buy a home is affordability, with 72 percent of respondents listing it as a reason for delaying homeownership.
In contrast, only 35 percent said that they were not ready to settle down, and 35 percent were waiting to be married. Houston renters also seem to put a high priority on flexibility, as those who expect to always rent said it was the no. 1 reason they would do so.
Houston millennials overestimate down payment costs
To compare millennial expectations for the cost of a down payment with reality, we asked them how much they expected to need for their own down payment. The median price of a 20 percent down payment for a starter home in the Houston metro is $18,515, and the average millennial expectation of how much they need for a down payment is $21,610 – a difference of 14 percent.
This is relatively unique in that millennials in many other cities tend to underestimate how much they would need in order to put a down payment on a starter home in their area.
The fact that the estimated down payment amount needed is higher than what a starter home actually requires here, suggests that millennials in Houston may be looking to buy nicer, larger homes from the get-go, rather than a basic starter home.
Millennial homebuyers in Houston need less than six years to save
In order to determine how long millennial renters will need to save for a down payment, we also asked them the following questions:
- How much have you saved for a down payment so far?
- How much help (e.g., from family) will you be receiving for a down payment?
- How much of your monthly income do you put towards saving for a down payment?
This allowed us to estimate how many years it will take them to save enough for a 20 percent down payment on a home.
At the current savings rate in Houston, it will take millennial homebuyers about 5.6 years to save up enough for a down payment. This compares to 5.9 years in Dallas. Overall, Texas cities did relatively well, compared to other cities across the nation, such as Seattle at 12.8 years or San Francisco at 27.8.
Overall, despite the challenges that Houston millennials have with affordability, homeownership still seems within reach, as most can afford a down payment within six years. This compares favorably against San Francisco (27.8 years), Los Angeles (20.0), NYC (10.4) and Chicago (5.4).
Millennials even seem to be planning save a bit more to buy that dream home, instead of settling for just the basics. Given Houston’s affordability, we might even see millennials from other states flock here when they realize they can’t afford to buy on the costly coasts!
Yuki Graviet Knapp is a Content Marketing Associate with the Growth Team at Apartment List and is a resident of the Bay Area.