Millennial Homebuyers Rely Less on Creative Financing, Survey Shows

Driven by rising household incomes, millennial homebuyers are significantly less likely to use creative financing strategies—such as family help, co-ownership, or renting out rooms—to afford their mortgage payments compared to just a year ago. A March survey reveals that only 51% of millennial buyers plan to use such measures, a sharp decline from 60% in July 2018. This trend indicates a shifting financial landscape for a key segment of the U.S. real estate market.

Why Are Millennials Needing Less Help to Afford a Home?

The primary driver appears to be stronger personal finances. According to Redfin's chief economist, Daryl Fairweather, "Over the last couple years, millennial household incomes have been rising, and America’s youngest professionals now earn more than previous generations did at this age." This economic boost, particularly among millennial women, has increased buying power. As a result, fewer buyers need external assistance to cover their monthly mortgage payments—the loan taken out to purchase a property.

The survey data highlights a dramatic drop in several specific strategies:

• Family Financial Help: Just 10% of millennial buyers planned to get help from parents or family, down from 17% a year earlier.
• Co-ownership: The share planning to co-own a home with someone other than a spouse or partner was cut in half, falling to 7% from 14%.
• Renting Rooms: Those planning to get a roommate to help pay the mortgage dipped to 11% from 14%.

What Creative Financing Methods Are Declining in Popularity?

The survey identified a clear downturn in nearly all non-traditional methods to afford homeownership. The intention to use short-term rental platforms like Airbnb also decreased, with only 10% of millennials planning to use this tactic, down from 12%. This suggests that buyers feel more confident in their ability to cover the mortgage based on their primary income alone, reducing the perceived need for supplemental rental income. Based on our experience assessment, this decline aligns with a strong job market and wage growth for professionals in this age group.

Is There Any Strategy Millennials Are Using More?

While most creative financing strategies declined, one approach saw a slight increase. The survey found that 31% of millennials said they planned to work a second job to pay for their mortgage, up from 29% the previous year. This was the only measure to grow in popularity. This may indicate that, even with higher incomes, some buyers in high-cost areas still feel the need for extra financial security, preferring to increase their earnings directly rather than relying on others or sharing their living space.

The key takeaway for potential buyers is that improving personal financial stability is the most significant factor in achieving homeownership. While creative tactics can provide a path to buying a home, stronger primary incomes are reducing reliance on them. Prospective millennial buyers should focus on their career trajectory and earnings potential as the most sustainable way to afford a home.