In Illinois, millennial homebuyers are a dominant presence from Chicagos busy urban market to the states small towns.
Within this equilibrium, millennials transitioned in large numbers from renting to owning.
Why are millennials such a dominant buyer group in Illinois?
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Another factor is Illinoiss relative affordability compared to coastal markets.
This was attributed to Illinoiss slightly lower cost of living and home prices paired with decent incomes.
Urban vs.
Rural: Where Are They Buying?
Millennial homebuying is happening in all these tweaks, but there are notable urban-rural differences.
In contrast, suburban and downstate areas see millennials primarily buying single-family houses.
That said, rural parts of Illinois face a different challenge: out-migration of young adults.
Those who do stay in rural areas often have strong community ties or remote/work-from-home jobs.
But many have settled permanently into new areas, effectively redistributing millennial homeowners across the state.
What Types of Homes Are Millennials Buying?
At the same time, condominiums and townhomes have an important place in the millennial homebuying story.
These attached housing types are especially popular among younger buyers and those in urban areas.
In Chicago, condos make up a large share of total sales due to the citys many multi-unit buildings.
Others have embraced multigenerational housing, purchasing homes that can accommodate extended family under one roof.
Lastly, its interesting to note that many millennials value quality over sheer size when choosing a home.
A key trend of 20182023 is millennials upsizing moving from smaller dwellings into larger ones.
On the flip side, downsizing moving to a smaller home has not been very common for millennials yet.
Downsizing is typically associated with empty-nesters and retirees (older generations).
Millennials, however, are mostly in the upsizing phase of life rather than downsizing.
Few millennials have owned a large home long enough to decide its too much space.
A noteworthy development during the pandemic years was the rise in millennials buying second homes or vacation properties.
Staying Put or Moving Away?
Do Illinois millennials tend to stay in one place or are they frequently on the move?
One of the biggest influences on relocation during 20182023 was the rise of remote work.
When remote or hybrid work became common, a lot of younger adults re-evaluated where they wanted to live.
As mentioned, remote workers were far more likely to consider moving during the pandemic.
From 2010 through 2020, Illinois saw more people moving out than moving in most years.
Notably, Illinois has lost a significant number ofyoung, high-earningmillennial residents to other states.
This was the third highest loss in the nation, behind only California and New York.
In a healthy housing market, first-time buyers usually make up around 40% of home sales.
These first-time buyers are predominantly millennials (given the age bracket).
However, in the late 2010s and early 2020s, first-timers faced enormous hurdles.
In 2023 it slipped even further to around 24%.
This means less than one-quarter of buyers were newcomers, a sharp drop from the typical 40%.
It reflects how long it took millennials to save for a down payment and feel secure enough to buy.
Manyyoungermillennials simply delayed buying and continued renting into their 30s.
Financial Challenges and Solutions
Additionally, low down payment mortgage options have been crucial.
These loans make ownership possible without requiring decades of savings.
Another notable aspect is that many millennials get help from family for their down payment.
This aligns with a Redfin finding that over a third of millennials planning to buy expected family help.
Family assistance can be a game-changer turning years more of renting into an immediate purchase.
Mortgages and Financing Habits
How are Illinois millennials financing their home purchases?
The vast majority of millennial homebuyers take out mortgages to buy homes very few can pay all cash.
Millennials are typicallyhigh-leverage borrowers, meaning they borrow a large percentage of the home price.
Millennials mortgage choices are also heavily shaped by external economic conditions.
For example, the interest rate environment did a 180-degree turn during this period.
In 20182021, rates were historically low (even under 3% at times in 202021).
By 20222023, mortgage rates spiked above 6%7%, a two-decade high.
This reduced millennials buying power and made monthly payments hundreds of dollars more expensive on the same loan amount.
Older vs.
This means not all millennials are alike in their housing journey.
Younger Millennials (approx.
ages 2534) This subgroup is largely in the first-time buyer stage.
Older Millennials (approx.
ages 3544) This subgroup is moving into the trade-up or even second-time seller stage.
Millennial Buyer Presence: Perhaps the biggest difference is the sheer presence of millennials in the market.
The market then was dominated by Gen X and Baby Boomers.
Fast forward to 20182023: millennials became the largest homebuying generation.
One measure of this shift is homeownership rates.
Housing Market Conditions: The market itself was very different between the two periods.
Economic Factors: The economic backdrop for millennials changed dramatically between the two periods.
The 2008 crash hit millennials just as many were starting their careers.
By the time we get to 20182023, the economy (pre-COVID) was in a long expansion.
This enabled more millennials to afford homes and gave them confidence.
Behavioral Changes: The mindset of millennials also evolved.
The difference is they did it later.
In Illinois specifically, the 20082017 decade was one of stagnation and recovery.
By contrast, 20182023 was a period of expansion and new highs for home prices in Illinois.
