Millennials may not be as vulnerable to serious health complications from COVID-19 as other generations, but they will still feel the effects pandemic’s economic fallout, according to a new report from Realtor.com
The rapid rise in unemployment and broader economic downturn prompted by the coronavirus outbreak has forced millions of Americans to dip into their savings to cover routine expenses. But while the coronavirus-fueled economic slump happened quickly, it will take a long time to recoup those funds.
The savings lost during the coronavirus outbreak in many cases were being set aside to put toward a down payment.
(Realtor.com is operated by News Corp NWSA, -2.56% subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)
On average, it will take nine months for a millennial to save the equivalent of one month’s worth of expenses, Realtor.com found. Altogether, researchers said it would take the average millennial 53 months, or over four years, to recoup the funds if they had no income for six months. (The report assumes a savings target of 10% of take-home pay, though the national savings rate average 6%.)
“Millennials may largely escape the worst of COVID-19, but with an unemployment rate of 13.4%, this age group is not immune from the economic fallout,” Danielle Hale, chief economist at Realtor.com, said in the report. “As they cobble together money for expenses from unemployment benefits and side-hustles, many will find that they need to dip into savings to cover necessities from groceries to rent.”
Making matters more difficult for would-be millennial home buyers, many mortgage lenders have imposed stricter requirements for applicants.
The savings lost during the coronavirus outbreak in many cases were being set aside to put toward a down payment.
In some of the most popular housing markets with millennials, including San Francisco, Nashville, Seattle and Denver, it would take much longer to recover that money because of higher expenses relative to income.
Making matters more difficult for would-be millennial home buyers, many mortgage lenders have imposed stricter requirements for applicants, including requiring a 20% down payment for many home loans. The national median down payment among millennials is just 8%.
Realtor.com found it would require an additional 6.5 years of saving to reach the 20% threshold, based on the national median listing price for homes. “Rather than saving for the extra years needed to buy into a pricey city, millennials could turn to suburbs or more affordable metro areas,” Hale said.
This article originally appeared on MarketWatch.
