Buying a home in Austin is increasingly challenging. There aren't many starter homes available, and even if there were, a new report says millennials wouldn't be able to snag them.
As part of an annual survey, Apartment List questioned millennial renters across the country about their plans for homeownership. The Austin metro area lines up with the national trend: A lot of young people want to buy a place, but they can't afford to right now, and they may not be able to any time soon.
Eighty-two percent of metro-area millennials plan to buy a home, but most say they need at least three years to prepare. Affordability is cited as the main reason for holding off, not surprising to anyone who's looked at the Austin market as of late.
While millennials understand that the market is pricey, they are underestimating what it will take to buy a home. Survey respondents think they need $23,194 for a down payment, but data from Trulia says first-time buyers should have $31,700 in the bank, 20 percent of the median price of an Austin-area starter home.
These perspective homebuyers have a long road ahead. Local respondents report having $2,910 in savings, with plans to contribute $194 each month. Based on the savings rate and down payment requirements, they'll need to save for almost 10 years to buy a home.
Austinites are not alone, as the disconnect is seen across the country. "Many do not seem to realize their financial predicament — 3 in 4 renters plan to purchase a home within the next five years, but their savings trajectories suggest that they may need a decade or more to afford it," says Apartment List.
The delay in first-time home purchases is part of what Apartment List calls an ongoing affordability crisis that is shaping the future of the housing market.
"Some may choose to delay settling down and having children, while others will migrate to family-friendly cities on the interior of the country. Given the size of the millennial population, either scenario will have a profound impact on homeownership and renting in our society."