Millennial home buyers, or at least 72% of them, this year are saving for a down payment directly from their paychecks, up from 69% last year, according to a March survey of 2,000 U.S. home buyers and sellers commissioned by Redfin.
More than 500 respondents born between 1981 and 1996 responded to the survey. Redfin compared the results with those from a similar survey commissioned in March 2018.
Redfin asked all first-time home buyers the question: "How did you accumulate the money you need for a down payment? Select all that apply." Compared to a year earlier, every category but saving from primary earnings declined:
The fact that millennial home buyers are increasingly able to save money for a down payment and becoming less reliant on non-traditional funding methods likely has to do with the fact that wage growth for American workers hit a 10-year high in February after several years when wage growth fell far short of home price growth. The combination of strong wages and the housing market stalling late last year means that more buyers are able to save for their down payment using their primary income alone.
"Unemployment is at its lowest point since 2000," said Redfin chief economist Daryl Fairweather. "Millennials have never worked in an economy this strong before, and are now finally making enough from their paychecks to save for a home. The fact that they are less often needing to rely on family members or sacrificing retirement savings to fund a home purchase is another sign that millennials are finally gaining their financial footing."
It's also notable that compared to a year ago, the share of millennial respondents who sold cryptocurrency to fund a down payment fell dramatically, from 10% last year to just 3% in 2019. This is likely due to a similarly dramatic decline in the price of the digital asset. In early 2018, Bitcoin, the most popular cryptocurrency, was trading at around $10,000 for one bitcoin. As of this past March, that had fallen to under $4,000.