Wage growth fuels a shift in how millennials fund down payments

Millennial homebuyers have become more likely to use savings from their primary paychecks to fund down payments as wages have increased, a recent survey finds.

Almost three-quarters or 72% of respondents used earnings from their main job as a down payment source, according to the March survey by Redfin. A year earlier, the share of respondents identifying their primary paychecks as a source of down payment funds was 3 percentage points lower at 69%.

The percentage of consumers that used other sources of cash to put money down on a home was lower in every other category this year.

Down payments

The steepest drop was in the percentage of millennials that used earnings from secondary jobs to fund down payments. Only 24% used this source of cash, as opposed to 36% the previous year.

The share of millennials that used cryptocurrency sales to fund down payments also has fallen, possibly in response to Bitcoin's drop in value late last year. Just 3% of millennials used cryptocurrency to help fund their down payments in the most recent survey, comped to 10% the previous year.

Sales of stocks, which declined in value late last year, also were used by a smaller share of millennials to fund down payments. Almost 10% of respondents sold stock to put money down on homes, as opposed to 13% in the last survey.

The percentage of millennial borrowers who received cash gifts from their families fell to 6 percentage points to 18%, and those that reported receiving an inheritance they could use to help pay for their down payment fell 6 percentage points to 6%.

Fewer also dipped into or withheld money from their retirement savings in order to fund a down payment. The share that contributed less to retirement savings fell 6 percentage points to 12%, and the share that pulled money from a retirement fund early was down by 6 percentage points at 7%.

Redfin's findings are based on the responses of more than 500 people surveyed who are part of the millennial generation. In total, Redfin surveyed 2,000 U.S. residents with plans to buy a home in the coming year.

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