The “alarming” way 1 in 3 millennials are financing their homes

Say goodbye to those retirement savings

TRD New York TRD WEEKEND EDITION /
Jul.July 29, 2018 01:21 PM

(Credit: Pixabay, U.S. Air Force graphic/Staff Sgt. Daniel Phelps)

About one third of millennials who buy homes are withdrawing from their retirement savings–or borrowing against it–to cobble together a down payment.

The finding comes from a survey conducted by Bank of the West of 600 millennials, aged 21 to 34, as cited by CNBC. For those surveyed who hadn’t yet taken the plunge into home ownership but were planning to, one in five are planning to use their retirement savings. Bank of the West’s retail head Ryan Bailey called it an “alarming” result.

“Millennials are so eager to become homeowners that some may be inadvertently cutting off their nose to spite their face,” he told CNBC. About 98 percent of the millennials surveyed want to buy homes.

Going into retirement funds may be masking an even bigger underlying issue, according to some financial advisers.

“If someone is contemplating dipping into retirement savings, they likely they haven’t been able to save up the required down payment to buy the house in the first place, which likely means they don’t have a good handle on their finances to begin with,” as adviser Stephen Jordan put it to CNBC.

Another explanation could be their prior debt load: a National Association of Realtors report from last year found that 83 percent of the generation who wanted to purchase homes said student debt was holding them back.

A Bankrate survey recently found that only 22 percent of millennials view real estate as a preferred investment. [CNBC]


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
40 East 72nd Street and Spiros and Antonia Milonas  (Getty; Google Maps)

Under water: Shipping magnate’s troubled UES condo is bankrupt

Under water: Shipping magnate’s troubled UES condo is bankrupt
U.S. home prices rose with Phoenix, Seattle and San Diego logging the biggest gains (iStock)

US home prices jump 5.2% in August

US home prices jump 5.2% in August
An estimated 12.8 million Americans would owe an average of $5,400 from missed payments (iStock)

Rent debt could reach $70B by year’s end: Moody’s

Rent debt could reach $70B by year’s end: Moody’s
19 Strong Place and 161 Warren Street (Google Maps, iStock)

Brooklyn’s luxury market has best week since before the pandemic

Brooklyn’s luxury market has best week since before the pandemic
14 East 11th Street and 21 East 61st Street (StreetEasy)

“Bidding war”: $28M townhouse tops luxury deals in Manhattan

“Bidding war”: $28M townhouse tops luxury deals in Manhattan
(iStock)

New home sale prices rise but buyers are hanging back

New home sale prices rise but buyers are hanging back
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...