Purchasing a home right now is challenging for first-time homebuyers, millennials, and most Americans. But for those millennials who were able to maintain steady employment throughout the pandemic-related lockdowns and stay-home recommendations, money saved, in some cases, went toward purchasing a home.
"For nearly one-third (31%) of millennial first-time homebuyers, the ability to save extra money during the coronavirus pandemic helped them accumulate the money needed for a down payment," says the new report from Redfin, which surveyed more than 1,500 Americans who plan to buy or sell a home in the next 12 months. More than 100 millennial first-time homebuyers responded to the question about down payments.
While the most commonly cited method of accumulating enough for a down payment was "saved money directly from paychecks," (48%), that method is followed by "the ability to save extra money during the coronavirus pandemic," (31%). Other popular methods included working a second job (27%), cash gifts from family (20%), and selling stock investments (19%).
The U.S. personal savings rate climbed to 33.7% in April 2020, up from a pre-pandemic rate of 7.2% in December 2019. It has remained at an elevated level, clocking in at 27.6% in March, according to the Federal Reserve Bank of St. Louis and the U.S. Bureau of Economic Analysis, which track the percentage of personal disposable income saved by Americans in any given month.
Redfin also determined that while the pandemic motivated some homeowners to relocate, it simultaneously was the impetus for an almost equal amount of others to stay put.
Thirty-seven percent of all homebuyer respondents (regardless of age) are purchasing a home later than originally planned because of the pandemic and 32% are buying a home sooner than originally planned.
Explains Redfin contributors:
The popularity of remote work is fueling demand for spacious homes, and it's also motivating people to move to entirely different areas. But rising prices and a home supply shortage are among the factors causing would-be buyers to pause their home search.
"Roughly half of my clients are people moving to the Central Valley from the Bay Area because they want to live in a bigger home for less money, and a lot of them only need to commute into the city once or twice a week, if that," said Steven Majourau, an agent in Stockton, Tracy and other parts of California's Central Valley. "They're selling a large condo or townhouse for close to $1 million—or a small single-family home for more than $1 million—in San Francisco, San Jose, or the East Bay and buying a large house here in the Central Valley for around $700,000."
Read the report in full at Redfin.com.