By Steve Tepper, CFP®, MBA

So that’s why they’re called millennials: At the rate they are saving, it’ll take a thousand years for them to have enough to buy a house.

According to a recent report from Clever Real Estate, about a quarter of millennials who said they want to buy a home have less than $1,000 saved up. Nearly 60% have no more than $10,000 saved up. About 25% are $10,000 or more in debt.[1]

As us “slightly-older-than-millennials” know, it can be a pretty pricey proposition to get yourself into a first home. It’s not just the down payment. There are closing costs, furnishings, renovations in the 100% likely event the home you find isn’t perfect, unexpected repairs, and, well, a few hundred other things.

Homeownership is important to millennials. A majority would consider delaying marriage or children to achieve the goal, according to the report. But even that may not be enough. On a modest $200,000 home (the average amount millennials plan to spend), a 20% down payment plus other known costs and a fair allowance for unknowns could easily push the money needed upfront into the high five figures. For a 30-year-old with $1,000 in the bank and a bunch of student debt, that could be a tough obstacle to overcome.

If you’re the parent of a millennial, some of that burden may be heading your way. Millennials are three times more likely than older generations to get help for a down payment from a family member. The report didn’t say how often the family member is dear old Uncle Frank and how often it’s you. Spoiler alert: It’s you.

While the desire for homeownership remains strong, it is no surprise that fewer millennials own homes. According to the Urban Institute, homeownership is at only 37% among millennials compared with 45% for Gen X and baby boomers when they were the same age.[2]

But for you parents, millennials aren’t wholly relying on Mom and Dad. Family money is expected to account for $10,000. A big majority (70%) of millennials will lower their down payment costs by putting less than 20% down. About 30% will work an extra job to save more. Because of their higher willingness to use social media for their house hunting, they are 20% less likely to use a real estate agent. And about 25% plan to spend less than $100,000 on their home.

Unfortunately, a lot of these decisions could have a long-lasting impact on their financial status:

• Putting less than 20% down will require expensive mortgage insurance. Also, less money down puts them at greater risk of being “upside down” if home values fall, which could impact mobility later.

• Going without a real estate agent could cost them more if they aren’t skilled negotiators and could leave them blind to a hundred other pitfalls and land mines in the home-buying process. If the seller is using one, the buyer is at a far greater disadvantage.

• A very cheap home comes with its wide assortment of issues, from unsafe neighborhoods to high repair costs (why is that house so cheap?) to low resale value. It will also likely be on the small side, which will make for difficulty when starting a family.

Real estate professionals estimate that “associated” homeownership costs, like repair and maintenance, averages about $1,100 per month. To the extent millennials stretch every dollar to close on a home and leave nothing behind for the unexpected broken water heater or leaky roof, those costs could end up on credit cards, at a high rate of interest.

Conclusion: The high desire among millennials to realize the American Dream of homeownership is admirable. But it’s important to have a solid financial plan, both to get to the closing table and to thrive in the years beyond. If you or a millennial you love are dealing with this decision, give your favorite advisor a call!