One of the leading reasons why Millennials may need longer to enter the housing market is that student debt has prevented them to start saving for a mortgage down payment. Approximately two-thirds of young adults say that they haven’t started saving for a home and additionally, from the ones already in the process, many save a relatively small share of their income. At this savings rate, prospective buyers with the median household income might end up needing ten or 20 years to save up for a down payment in some of the more expensive metropolitan areas in the United States. Furthermore, Millennials have been slower in settling down and starting a family which means that a lot of young adults prefer renting over buying because of the flexibility it offers.
This is not to say that Millennials are uninterested in becoming homeowners eventually. In 2020, one in three U.S. Millennials said that they are currently saving to buy a home. An overwhelming share of new homeowners in cities such as San Jose, Boston, Denver, Minneapolis, and Buffalo are Millennials. While the coronavirus (COVID-19) has led to unemployment rates spiking and many people facing income insecurity, it has also helped the ones less affected cut spending and increase saving. As a result, 28 percent of young American adults say that the pandemic has actually increased their interest in becoming homeowners.