Millennial homebuyers are shocked by closing costs, study finds

Home buying comes with a hefty price tag, not even including the down payment. Buyers, especially millennials, are caught off guard by the costs associated with purchasing a property, a study found.

The average home buyer spends almost $32,000 in home-buying expenses, research from Clever Real Estate shows. Such expenses include repairs and renovations (average of $13,498), moving costs, private mortgage insurance and closing costs.

Almost half of buyers surveyed, 48%, were taken aback by costs associated with house buying. Out of 1,000 adults participating in the questionnaire, 39% reported that costs exceeded their budget, while 38% said this would significantly impact their savings. 

The age group most surprised by such costs were millennials, with 63% reporting their shock. Forty-nine percent of Gen Z responders said these expenses exceeded their budget. By comparison, a 31% share of boomers said that the cost was out of budget for them. 

This survey was conducted on Sept. 26 and 27 this year and includes responses from those who recently purchased a home.

The majority of home buyers in the study say they had to compromise on their budget, with some reporting that they felt they overpaid for their house.

Despite this, close to 34% of buyers say they paid below the asking price for a property this year, up from 27% in 2022, when the rates were low and the market was more favorable to sellers.

Clever's report notes that the spend for homebuyers could increase in the near future.

"Buyers could incur an additional $12,944 in commissions costs on the average home if sellers opt not to pay the buyer's agent commission following the National Association of Realtors settlement in August," Clever wrote. 

The study notes that 66% of buyers with agents in 2024 had their commission covered by sellers, though going forward that is no longer a requirement. 

The challenges of an unaffordable housing market, high interest rates, and significant additional costs of buying a home have drawn the attention of politicians.

With the re-election of President Trump, there is hope that the new administration will open more federal lands for housing and slash some regulations, thereby making it easier to build additional homes.

Also, Trump has vowed to increase the deportation of immigrants, which he claims has contributed to home price increases, and to slash mortgage interest rates by steadying  inflation. However, critics question how such initiatives will impact other plans floated by the campaign involving tax cuts and tariffs.