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M REPORT | 49 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Factors Influencing Young Adults' Saving and Buying Behaviors Researchers say purchasing a home is a priority for many millennials and Generation Zers–here are some of the things driving their decisions. P urchasing a home right now is challenging for first-timers, millennials, Generation Zers, and most Americans. But for young adults who were able to maintain steady employment throughout the pandemic-related lockdowns and stay-home recommendations, money saved, in some cases, will go toward purchasing a home. Three in five millennial and zoomers who responded to a Zillow survey said they plan to use money saved during the pandemic toward a down payment on a home. Behind "paying for everyday living expenses," that was the most common way respondents who saved over the past year said they plan to spend their money. Zillow Researcher Manny Garcia reports that "homeownership still appears to be a priority and aspiration among those sometimes called the rent forever generation," referring to a Business Insider article on millennials opting out of homeownership. While many young adults were not so fortunate—with almost 3 million moving back home since spring 2020 due to pandemic- associated financial issues—Zillow surveyed 1,200 who kept working and found that 83% of them had saved in at least one spending category. When asked how they will employ said savings, 64% said they plan to use it for everyday living expenses, followed by 59% saying they planned to use their savings for a down payment on a home. Zillow also sought answers to the buying behaviors of millennials, the largest generational group of home buyers, and Generation Zers, who are beginning to age into homeownership years. As for preferred location, about 44% of young adults said they somewhat or completely preferred a home in a remote area, while 36% said they preferred the big city. About 20% reported no preference. And despite increased opportunities to work from home, 61% still consider living close to work very or extremely important when considering where to purchase a home. Seventy one percent of millennials and zoomers report discussing their housing decisions with their parents, and 61% discuss with friends. Half discuss their housing decisions with their siblings, while some 29% say they discuss this with their grandparents. Only 16% reported seeking advice from social media followers, however about 25% of respondents said social media influencers and celebrities impacted their housing decisions. Men are more likely than women to say influencers inspired their choices. Friendliest Cities for Less-Experienced Borrowers Analysts ranked the most favorable metros for first-time homebuyers, weighing average down payments, debt-to-income ratio, and more. W hen it comes to purchasing a first home, shoppers will weigh several key factors prior to choosing a lender—what will the down pay- ment look like? What percentage of that down payment will the homebuyer be required to put down? What types of loans are available? What credit score will be necessary in order to secure a loan, and what is the cost of liv- ing compared to monthly housing payment? The answers are bound to be different depending on location. The online-loan marketplace LendingTree offers some insight into the relative "friendliness" of American metros by way of its annual ranking of local markets, gauging the best for first time buyers. Considering the aforementioned factors—average down payment, average down payment percent- age, share of buyers utilizing a Federal Housing Administration (FHA) loan, percentage of buyers with credit scores below 680, and share of homeowners who spend 30% of more of their monthly income on housing costs— LendingTree's research team deter- mined that Kansas City, Missouri; Oklahoma City, Oklahoma; and Louisville, Kentucky, took the top three spots. "Though each of these areas fall near the middle of the pack when it comes to the share of buyers using FHA loans, their high rank- ings across other categories make them appealing to first-timers," LendingTree analyst and author Jacob Channel reasons. Oklahoma City, Kansas City, and Buffalo, New York, reported the lowest down payments at $33,188 in each region, which is considerably lower than the average down payment of $63,216 across the full 50 metros. "This means buyers in these areas likely don't need to save up as much to make a down pay- ment as they might in other parts of the country," Channel notes. Oklahoma City and Kansas City, along with Salt Lake City, also reported the lowest percentage of down payment paid by borrower at an average down payment percent of 10.4, which is about 4 basis points lower than the average across the 50 metros in the study. Memphis, Tennessee; Las Vegas, and Virginia Beach, Virginia, were home to the largest share of buyers who have credit scores below 680. Slightly more than 25% of buyers in these areas have credit scores below 680. (A recent study showed credit requirements loosening a bit nationwide.) The author notes that FHA loans can be especially helpful for cash-strapped, first-time buyers in expensive areas because they require a smaller down payment than some other loan types, so it's not surprising that three California cities—Los Angeles, San Diego, and Sacramento—topped the list for FHA lending. As for the estimated debt to in- come ratio, Indianapolis; Raleigh, North Carolina; and Buffalo con- tain the smallest share of house- holds that are spending 30% or more of their monthly income on housing, which the author calls "good news for first-time buyers who may not be earning as much as more experienced buyers."