Most millennials will tap home equity to finance a renovation: Chase
Most millennials are purchasing fixer-uppers in order to afford a home, signaling more home equity financing opportunities for lenders at a time when equity levels have already surpassed housing bubble peaks.
About 87% of millennials are planning a home renovation, with 75% intending to finance their renovation by tapping the equity in their home, according to a Chase Home Lending report conducted in conjunction with Pinterest.
Because millennials comprise the largest cohort of homebuyers, millennial borrowing habits help dictate trends for the industry. Last year, 89% of millennials purchased previously owned properties, which typically are lower in cost but have room for improvement, according to the National Association of Realtors.
Homebuyer affordability hit its lowest point since the housing bubble burst, so starter homes are among the only options helping the generation enter homeownership, according to Wells Fargo.
Homeowners looking to remodel are 1.5 times as likely to search for financial planning tips, and millennial searches on Pinterest for budget-conscious DIY projects are up 300% from a year ago. This comes at a time when household home equity nears $15 trillion, an increase of more than $1 trillion from the prior high achieved during the run-up to the crisis in the first quarter of 2006, according to a TransUnion study.
Many millennials "are jumping into plans to take their fixer-uppers and turn them into their dream homes. Nearly 95% of the millennials said they planned some kind of renovation in the next three years," Amy Bonitatibus, chief marketing and communications officer for Chase Home Lending, said in a press release.
Chase Home Lending debuted its "Pins & Properties: Chasing Your Dream Home" study with Pinterest at the Pinterest New York office with TV personalities Drew and Jonathan Scott of HGTV's Property Brothers.
Last year, Chase released a similar report on millennial trends with the Property Brothers and Google at the search website's New York office. The data suggested young adults were increasingly interested in home buying.