Millennials have their own style when it comes to home buying

    Tired of squandering more than $2,500 a month on rent in downtown Washington, D.C., Tyler Hanson, 30, finally decided to buy a place for herself and her 4-year-old daughter.

    But she had a non-negotiable rule: One of her bi-weekly paychecks had to cover all her fixed monthly bills, including mortgage, utilities and student loan payment. It took Hanson about 18 months to find a $340,000 row house that met her benchmark, and it was far from her preferred neighborhood. But Hanson has no regrets that she stuck to her guns even though she was qualified by her lender for a home costing up to $430,000.

    Millennials have been driving home sales the past few years but they’re doing so like Hanson did—cautiously, USA Today reports.

    About 76% of 22- to 38- year-old recent homebuyers spent less than 30% of their monthly income on housing costs in 2017, the latest data available shows. That’s up from 69% in 2000 and 65% in 2009, according to Census Bureau figures.

    Hanson, for example, visited dozens of homes during her house hunt and was routinely outbid since she wouldn’t go more than a few thousand dollars above asking price. She was also frugal about her down payment, plunking down 3% of the purchase price

    Many young households “learned a lesson” from the drop in home prices a decade ago, says Doug Duncan, chief economist of Fannie Mae. “They’re being conservative.”  

    The share of frugal young homebuyers staying under the 30% income-to-housing costs threshold was just 54% during the tail end of the housing boom in 2006 and has climbed steadily since. It has been roughly flat at about 75% since 2013. That’s despite a strengthening labor market and faster wage growth, and lending standards that increasingly eased starting in 2014 before leveling off the past couple of years.

    A closer look shows millennials are being particularly prudent. The median income-to-housing cost ratio for 23- to 37-year-old homeowners has dropped from 18% in 2002 to 15.8% in 2017, the largest decrease among age groups from 18 to 62, according to Trulia, a real estate research firm. Read the full story.  

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