Millennials More Likely To Have Emotional Connection To Their Home

Tue, 30 March 2021  |  housing 

With the pandemic shift to 'everything from home', the home has taken on more importance for American homeowners, Unison's 2021 "State of the American Homeowner" survey found. Homeowners are using their homes as offices, gyms, schools, shopping and much more. As a result, nearly ⅔ (64%) of respondents say living through the pandemic has made their home more important to them now than ever before.

According to the research, which surveyed 2,000 homeowners in the United States, homeownership brings positive feelings, with 91% of homeowners saying they feel secure, stable or successful owning a home. Seven in 10 (70%) homeowners feel emotionally attached to the homes that have kept them safe over the past year with 51% calling it a "key part of their life" — a significant increase compared to before the pandemic when 58% of homeowners had an emotional attachment to their home.

Despite financial instability caused by the pandemic, nine in 10 (90%) of American homeowners consider their home a financial asset (vs. a burden) — exactly the same percentage who said so before the pandemic. However, home finances are still a stressor for many homeowners, especially for younger homeowners and those navigating mortgage forbearance:

• 29% of homeowners had to take action in order to keep up with mortgage payments due to economic factors caused by the pandemic.
• Millennials were hit hardest: 61% of millennial homeowners had to take action in order to keep up with mortgage payments — with 17% dipping into their retirement savings, 16% delaying a home remodel and 11% renting out a portion of their home.
• 38% of millennial homeowners are in mortgage forbearance due to COVID or other circumstances, significantly higher than older generations (16% Gen X'ers, 1% Boomers).

"The COVID pandemic has made my house more important (essential) in my life than before," one respondent said. Another said, "The pandemic has made me appreciate my home more."

With the additional roles the home has taken on over the past year, many homeowners are interested in making changes to their homes to support their expanding use.

• Nearly half (45%) of homeowners are planning a home improvement during 2021 to make their home more comfortable — 72% of those who refinanced their home in 2020 are planning an improvement in 2021.
• 33% of mortgage-holding homeowners would tap their home equity for a renovation or improvement — a significant increase from before the pandemic when 21% said the same.
• Homeowners are evenly split on kitchen vs. bathroom: 14% of homeowners say a kitchen upgrade is the number one change that would improve their lives in the year ahead, the same percentage who say a bathroom remodel would do the trick.

"The American Dream of homeownership has taken on increased importance as the home has become the center of our daily lives, bringing our work, shopping, schools and gyms into where we live," said Unison CEO Thomas Sponholtz. "Many renters left their city apartments for larger houses in the suburbs, and many homeowners took on renovations, making their home more suitable to their expanding needs. As many have endured exceptional life and economic uncertainty and managed new or changing needs for their homes, it has never been a more important time to re-evaluate your investments as well as how you finance your home and life. This absolutely includes having a smarter way to tap into your home equity without debt in order to best adapt to your changing life situation and plans."

Many of those working from home during the pandemic, took action to make their homes (and Zoom calls) more comfortable: nearly a third (29%) of WFH homeowners converted a spare room into an office, and an equal number furnished their homes with office equipment or furniture; 23% upgraded internet or cellular service.

• Some millennial WFH families took to sharing spaces: 20% shared an office room with a spouse or partner, 11% had their kids share a room to convert their bedroom into an office.
• And some didn't: 17% purchased a space heater to work in the basement, 16% finished a basement, attic or other unfinished area to use as an office, 16% converted a closet into an office and 13% built or converted a backyard shed or tiny home into an office.
• Over half (57%) of WFH homeowners are working somewhere other than a dedicated office room.
• Some favorite spots for millennials include: the bed (13%), the couch (13%), the kitchen table (11%), while more creative spots include: the kids playroom (2%), the unfinished basement or attic (2%) or even the floor (6%).
• The creative spaces must be working okay: only 4% of homeowners rank a dedicated office space as the number one thing to improve their life in the year ahead, losing out to a kitchen upgrade, a bathroom remodel and better wifi.

Millennials are more likely than older generations to have an emotional connection to their home, and they're also more likely to put their future saving and retirement plans at risk to keep it. Over three quarters (78%) of millennials feel emotionally attached to their home (vs 70% Gen X and 69% Boomer) about the same amount (77%) who say living through a pandemic has made their home more important to them now than ever. Over half of millennial homeowners (53%) say they used to view their home as a burden, but now view it as one of the most important things in their lives. But their finances are less established, and for those navigating mortgage forbearance, they're more likely to be borrowing against their future savings.

• 42% of millennials say the economic volatility of the past year has made them doubtful about the future of their home and their ability to invest in it, compared to only 28% Gen X and 5% Boomers.
• Of the millennials who refinanced or thought about refinancing their homes last year, 37% did so to cover other life expenses and 31% did it to help pay down debts elsewhere — 15% did it because they couldn't make the mortgage payments.
• One in three (37%) millennials say that the COVID-19 pandemic has made them consider moving, with the biggest reason being needing more space (14%) followed swiftly by reducing living expenses (13%) and new job location flexibility (10%).
• Once mortgage forbearance programs expire, millennials in forbearance are planning to borrow against their retirement to pay for their mortgage: 29% are planning to dip into their 401(k), 27% plan to use their retirement savings, 23% are planning to take out another loan to cover the payments — 6% have no plan at all.

Many retired homeowners have paid off their homes and are funding their retirement with social security or a pension, giving them a sense of financial security, and homeowners planning for retirement are following the same model. Seven in ten (70%) retired homeowners' homes are fully paid off and nearly half (47%) say owning a home makes them feel secure - that it's a big financial asset. But the Fed is showing retirees' wealth in their home decreasing as they age and rock-bottom interest rates are putting pension funds and recipients at significant risk down the line - meaning this sense of security might be superficial.

• 80% of retired American homeowners are funding their retirement through social security and 70% with a pension — just 2% used funds from selling their home to fund their retirement.
• More than half (55%) of working age homeowners are planning to fund their retirement through social security and 36% with a pension — 59% are planning to fund their retirement with a 401(k).
• 89% of retired homeowners are confident in the amount of money or assets they had saved by the time they were retired.
• 68% of working-age homeowners are confident in the amount of money or assets they have saved to fund their retirement — significantly higher than homeowners pre-pandemic who were confident in their retirement savings (51%).

Source: Unison