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How long it takes millennials to save enough to buy a home

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New data shows that if a typical millennial saves even a penny of disposable income, it will take them four years to pay the down payment on a home.

That’s if the median income of US millennials is $85,233 and you can save 20% on a $413,000 median down payment (US median). Analysis by real estate broker Redfin.

The typical millennial currently leaves about 26% of their income to save after covering expenses, according to Redfin calculations. This is down from his 30% in 2020.

But despite the study’s predictions, it could be four or more years before many millennials can afford the down payment.Save all disposable income It’s not realistic to continue for many years, and this study uses median income, but the median income tends to be higher than the median because a small number of high-income earners influence the results.

In addition, Redfin research shows that millennials’ disposable income is shrinking with inflation. Their average income has increased by 9.7% since 2020, while spending has increased by about 17% due to rising housing, food and gas costs.

Rental costs are particularly high. Median monthly rent increased 13.5% Year-over-year in July, according to Redfin data.

One bright spot, though, is that income tends to peak between the ages of 45 and 54. According to financial services site BankrateAs such, millennials are likely to earn more as they get older.

It is also possible that wage increases will eventually catch up with inflation. But in the meantime, housing has only become more expensive for millennials.

This is a rough patch for millennials right now.

Shehariyar Bokhari

Redfin Senior Economist

“This is a rough patch for millennials right now,” said Sheharyar Bokhari, senior economist at Redfin. “But their long-term outlook is that they are going to make more money as they get older, take ownership and become mainstays that drive the economy.”

To estimate the median income for millennials, Redfin used 2020 US Bureau of Labor Statistics (BLS) income statistics updated with recent BLS wage growth data. Budget estimates are based on the BLS’ 2020 Consumer Spending Survey and have been updated using recent consumer price index data. Redfin used proprietary data for house and rental prices.

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