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%) 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 New York metro specifically.
Are millennials planning to buy a home soon?
In the New York metro, 74% of survey respondents want to purchase a home. Of these, the majority (35%) intend to buy a home within the next three to five years.
The next largest group (31%) plans to buy in five or more years from now. This is relatively on par with the rest of the nation, where 32% of millennial renters also plan to buy a home within the next three to five years.
Affordability poses the biggest obstacle to homeownership
The biggest obstacle for New York millennials wanting to buy a home is affordability, with 81% of respondents listing it as a reason for delaying homeownership. In contrast, only 36% said they were not ready to settle down, and 35% said they were waiting to be married.
For those who expect to always rent in the NYC metro, affordability was the number one reason they said they would do so, with the second reason being the high priority they place on flexibility.
NYC millennials properly estimate 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% down payment for a starter home in the NYC metro is $42,800, and the average millennial expectation of how much they need for a down payment is $42,970.
This is very surprising, given that most millennials across the nation tended to under or overestimate the necessary amount for their down payments. Millennials in places like San Francisco or Washington D.C. underestimated down payment costs by 105% and 27%, respectively.
How long does it take to save for a down payment?
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% down payment on a home. At the current savings rate in the NYC metro, it will take millennial homebuyers a little over a decade — about 10.4 years — to save up enough for a down payment. This compares to 9.1 years in Baltimore, 11.9 years in Washington D.C. and 10.1 years in Boston.
Living in the NYC metro is no joke when it comes to prices, and the same is true for buying a home. Millennials in New York are relatively on track with the rest of the nation when it comes to their planned timing in buying a first home. Unlike the rest of the nation, however, New York millennials are almost spot-on with their estimates of how much a down payment will cost. This holds implications as to whether or not millennials in the NYC metro will be actually able to purchase a home in the amount of time that they hope to do so.
Yuki Graviet Knapp is a Content Marketing Associate with the Growth Team at Apartment List and is a resident of the Bay Area.