Millennials – those born roughly 1981 to 1996 – have become a driving force in the Illinois housing market over the past five years. By 2022, more than half of millennials owned their homes nationwide, a major milestone for a generation that came of age during the turbulent housing crash of 2008. In Illinois, millennial homebuyers are a dominant presence from Chicago’s busy urban market to the state’s small towns.
Despite a homebuying boom in 2020–2021, Illinois’s overall homeownership rate stayed around 66–68% during 2018–2023 – about two-thirds of households. In other words, rising prices and later, rising interest rates, kept many would-be buyers on the sidelines even as others rushed to purchase homes. Within this equilibrium, millennials transitioned in large numbers from renting to owning. By 2023, the median millennial was in their early 30s and a homeowner, though the journey was not easy. Compared to older generations, millennials have generally bought homes later in life, often delaying homeownership due to challenges like the Great Recession and student debt.
Millennials Lead Illinois Homebuying
In recent years, millennials have made up the largest share of homebuyers both nationally and in Illinois. Between mid-2022 and mid-2023, millennials surpassed baby boomers to once again claim the No.1 spot, accounting for 38% of U.S. home sales (versus 31% by boomers). Within this broad age group, “younger millennials” (around ages 25–33 in 2023) represented 17% of buyers and “older millennials” (34–43) another 21%.
In Illinois, millennial influence is even more pronounced: 62.5% of home purchase loans in 2023 were taken out by millennial buyers, one of the highest shares of any state. In the Chicago metro area, the trend is similar – millennials made up about 64% of buyers in 2023, indicating that nearly two-thirds of homes sold with a mortgage were bought by someone under 45.
Why are millennials such a dominant buyer group in Illinois? One reason is sheer demographics: by 2018–2023, the bulk of this generation had entered their late 20s to 40s, prime years for purchasing first homes or upgrading to larger ones. Another factor is Illinois’s relative affordability compared to coastal markets. A study found just over 42% of Chicago millennials owned homes in 2020, a few points higher than the national millennial homeownership rate (39.5%). This was attributed to Illinois’s slightly lower cost of living and home prices paired with decent incomes.
Urban vs. Rural: Where Are They Buying?
Illinois is a state of diverse landscapes – from the dense urban neighborhoods of Chicago, to suburban subdivisions, to small farming communities. Millennial homebuying is happening in all these settings, but there are notable urban-rural differences.
In the Chicago metropolitan area, millennials form an outsized portion of buyers, reflecting the area’s large young adult population and job opportunities. In the city of Chicago itself, a large share of purchases by millennials are condominiums in multi-unit buildings, along with some single-family homes in neighborhoods that are (relatively) affordable. Condos are popular in the city because they tend to be more affordable than single-family houses in the same area.
In contrast, suburban and downstate areas see millennials primarily buying single-family houses. Smaller cities like Peoria, Rockford, or Springfield, and rural towns throughout Illinois, generally have lower home prices and more detached houses available. This affordability can actually help younger buyers – in many Illinois small towns, a starter home might cost a fraction of what it would in Chicago, making homeownership attainable at a younger age. Indeed, the Midwest overall has the youngest homebuyers in the country, with a median buyer age around 39.
That said, rural parts of Illinois face a different challenge: out-migration of young adults. Many millennials from small towns move to bigger cities (Chicago or out of state) for college and jobs, meaning fewer remain to buy homes locally. Those who do stay in rural areas often have strong community ties or remote/work-from-home jobs.
The Pandemic’s Impact on Buying Patterns
Within metro areas, millennial buying patterns have shifted with lifestyle changes. Early in the period, many urban millennials sought homes close to work, often in or near the city center. But during 2020–2021, remote work became widespread, and a “zoom to bloom” effect occurred – young families left crowded city apartments and moved to outer suburbs or even rural areas in search of more space and greenery.
A Zillow survey in 2021 found that people who work from home at least once a week were nearly twice as likely to consider moving because of the freedom remote work provided. In Illinois, that meant some millennials relocated from high-priced city neighborhoods to far-suburban or exurban locales where their money bought more house (and a yard for the dog).
By late 2021, as offices began to reopen, some of those who left the city faced decisions about returning. But many have settled permanently into new areas, effectively redistributing millennial homeowners across the state.
What Types of Homes Are Millennials Buying?
One clear trend in Illinois is that millennial buyers strongly favor single-family homes, but they also purchase a significant share of condos and townhomes, especially in urban areas. Statewide in recent years, about 70–75% of homes sold were single-family houses, while roughly 25–30% were condos or townhouses.
The detached house with a yard remains a popular choice – it offers space, privacy, and typically better long-term appreciation. Many millennials, particularly those starting families, aspire to own a single-family home where they can spread out and perhaps work from a home office or let children play outside. This preference was reinforced during the pandemic: in 2020–2021, there was a noticeable shift toward larger homes as remote work led buyers to prioritize space over commute distance.
At the same time, condominiums and townhomes have an important place in the millennial homebuying story. These attached housing types are especially popular among younger buyers and those in urban areas. In Chicago, condos make up a large share of total sales due to the city’s many multi-unit buildings. For millennials who want to own but face budget constraints, a condo or townhouse can be an attractive alternative to a single-family house.
Beyond Traditional Housing: Creative Choices
Some millennials in Illinois have been creative in their choices, especially when it comes to investment opportunities or accommodating family needs. A small but notable number are buying multi-unit buildings (duplexes or three-flats) to live in one unit and rent out the others – a strategy known as “house hacking” that can help offset the mortgage.
Others have embraced multigenerational housing, purchasing homes that can accommodate extended family under one roof. By 2022, a record 14–17% of homebuyers were buying multi-generational homes nationwide, often to bring aging parents to live with them or to let adult siblings/relatives share housing costs.
Lastly, it’s interesting to note that many millennials value quality over sheer size when choosing a home. Surveys by the National Association of Home Builders found that over half (52%) of millennial homebuyers would prefer a smaller house with high-quality amenities and upgrades over a larger house with fewer amenities. In fact, millennials on average actually desire quite a bit of space (around 2,400 square feet ideally, more than other generations), but if forced to compromise due to budget, they’ll sacrifice some square footage in exchange for a nicer kitchen, smart home features, or a better location.
Upsizing, Downsizing, and Second Homes
As millennials progress through different life stages, their housing needs change. A key trend of 2018–2023 is millennials upsizing – moving from smaller dwellings into larger ones. Many older millennials (now in their late 30s and early 40s) spent the earlier part of the decade in starter homes or condos and then “traded up” to larger houses as their families grew or incomes rose.
During the 2020–2021 boom, a wave of Illinois homeowners (including many millennials) sold their houses and bought bigger ones, taking advantage of low borrowing costs to make the jump. With mortgage rates around 3% and newfound savings (sometimes from pandemic stimulus or simply reduced spending), these buyers could suddenly afford more house.
On the flip side, downsizing – moving to a smaller home – has not been very common for millennials yet. Downsizing is typically associated with empty-nesters and retirees (older generations). Millennials, however, are mostly in the “upsizing” phase of life rather than downsizing. Few millennials have owned a “large” home long enough to decide it’s too much space.
A noteworthy development during the pandemic years was the rise in millennials buying second homes or vacation properties. According to Vacasa, a vacation rental platform, millennials accounted for 40% of vacation-home buyers by 2021, making them the largest generation in that market (up from just 31% in 2019). The idea was that if a millennial could not yet afford a home in their expensive city or didn’t want to settle down, they might invest in a more affordable vacation area – perhaps a cottage in Michigan or a ski condo – use it part-time, and rent it on Airbnb the rest of the time.
Staying Put or Moving Away?
Do Illinois millennials tend to stay in one place or are they frequently on the move? The answer is a bit of both: many millennials have strong ties that keep them local, but significant numbers have also relocated for jobs, affordability, or quality of life – sometimes leaving Illinois altogether.
One of the biggest influences on relocation during 2018–2023 was the rise of remote work. When remote or hybrid work became common, a lot of younger adults re-evaluated where they wanted to live. As mentioned, remote workers were far more likely to consider moving during the pandemic.
It’s important to acknowledge that Illinois has experienced population decline in the past decade, and millennials are part of that story. High taxes, a challenging fiscal situation, and colder weather have been cited among reasons people leave the state. From 2010 through 2020, Illinois saw more people moving out than moving in most years.
Notably, Illinois has lost a significant number of young, high-earning millennial residents to other states. In just the tax years 2021–2022, Illinois had a net loss of over 3,000 millennial households earning $200k+ (6,857 wealthy millennial households moved out vs. 3,694 moving in). This was the third highest loss in the nation, behind only California and New York. So while plenty of millennials are buying homes in Illinois, there is also a “brain drain” of affluent or highly educated millennials moving elsewhere.
From Renting to Owning
One of the most important trends of 2018–2023 is the flow of millennials transitioning from renting to owning. This generation was once dubbed “Generation Rent” because they had relatively low homeownership rates in their 20s, but that began to change as they hit their 30s.
In a healthy housing market, first-time buyers usually make up around 40% of home sales. These first-time buyers are predominantly millennials (given the age bracket). However, in the late 2010s and early 2020s, first-timers faced enormous hurdles. By 2022, the share of first-time buyers had plummeted to only 26% of home sales – the lowest level in decades. In 2023 it slipped even further to around 24%.
This means less than one-quarter of buyers were newcomers, a sharp drop from the typical 40%. The primary reason for this decline was affordability challenges: surging home prices and intense competition (including bidding wars and cash offers from investors) made it very hard for renters to break into the market.
Another factor was that by 2022, the typical first-time buyer was older than ever – around 36 to 38 years old. A decade prior, first-time buyers were often in their early 30s, so this jump to the high-30s as a median age is significant. It reflects how long it took millennials to save for a down payment and feel secure enough to buy. Many younger millennials simply delayed buying and continued renting into their 30s.
Financial Challenges and Solutions
To assist the transition from renting to owning, various programs and trends have emerged. The Illinois Housing Development Authority (IHDA) offers down payment assistance loans (often around $7,500 to $10,000) to first-time buyers, which has helped some millennials overcome the initial cost hurdle. In fact, about 1 in 10 first-time buyers in Illinois have utilized IHDA assistance in recent years to help them close the deal.
Additionally, low down payment mortgage options have been crucial. Many Illinois millennials have used FHA loans, which allow as little as 3.5% down, or conventional 3% down programs for first-time buyers. These loans make ownership possible without requiring decades of savings. During 2018–2023, the median down payment for first-time buyers nationally was often around just 6%–7% of the purchase price, far below the traditional 20%.
Another notable aspect is that many millennials get help from family for their down payment. In 2023, about 33% of younger millennials received a gift or loan from relatives or friends to assist with the down payment. This aligns with a Redfin finding that over a third of millennials planning to buy expected family help. Family assistance can be a game-changer – turning years more of renting into an immediate purchase.
Mortgages and Financing Habits
How are Illinois millennials financing their home purchases? The vast majority of millennial homebuyers take out mortgages to buy homes – very few can pay all cash. Millennials are typically high-leverage borrowers, meaning they borrow a large percentage of the home price. In 2022, the median loan-to-value (LTV) ratio for 25–34 year-old homebuyers was 87%, and for 35–44 year-olds it was 80%. An 87% LTV implies only a 13% down payment on average, and 80% LTV implies 20% down.
The types of mortgages millennials use often include FHA (Federal Housing Administration) loans, VA loans for veterans, and conventional loans, some through special first-time buyer programs. An FHA loan is popular for its low down payment requirement and more lenient credit standards – a boon for younger buyers who haven’t had time to build high credit scores or save a big nest egg.
Millennials’ mortgage choices are also heavily shaped by external economic conditions. For example, the interest rate environment did a 180-degree turn during this period. In 2018–2021, rates were historically low (even under 3% at times in 2020–21). Many millennial buyers locked in 30-year rates around 3%, giving them cheap financing and manageable payments relative to the loan size.
By 2022–2023, mortgage rates spiked above 6%–7%, a two-decade high. This reduced millennials’ buying power and made monthly payments hundreds of dollars more expensive on the same loan amount.
Older vs. Younger Millennials: Differences Within the Generation
The millennial generation spans a wide age range – the oldest millennials were about 42 in 2023, while the youngest were mid-20s. This means not all millennials are alike in their housing journey. There are clear differences between younger millennials (in their 20s to early 30s) and older millennials (mid-30s to 40-ish) when it comes to homebuying in Illinois.
Younger Millennials (approx. ages 25–34) – This subgroup is largely in the first-time buyer stage. The majority of younger millennials buying homes are doing so for the first time (in recent data, 71% of younger millennial homebuyers were first-timers). Among younger millennial buyers, there is a higher rate of unmarried couples purchasing homes together (13%) than in any other generation. This indicates how millennials have broadened the idea of what a homebuying household looks like – it’s not just married couples, but also partners, friends, or significant others pooling resources.
Older Millennials (approx. ages 35–44) – This subgroup is moving into the “trade-up” or even second-time seller stage. Many older millennials bought their first homes years ago (in the 2010s) and by 2018–2023 they were selling those and buying new homes. Only 36% of older millennial homebuyers were first-timers, which means the majority (nearly two-thirds) had owned a home before. About 66% of older millennial buyers are married couples, a much higher marriage rate than the younger group. Many older millennials either have children or are planning for them, so they often seek larger houses with more bedrooms and good school districts.
Comparing 2018–2023 with 2008–2017
The housing experiences of millennials in 2018–2023 contrast sharply with the previous decade (2008–2017). In many ways, the late 2010s and early 2020s were a period of catch-up and new challenges for millennial homebuyers, compared to the aftermath of the housing crash that defined 2008–2012 and the slow recovery that followed.
Millennial Buyer Presence: Perhaps the biggest difference is the sheer presence of millennials in the market. In 2008–2012, most millennials were in their early 20s or younger, so they made up a small fraction of homebuyers. The market then was dominated by Gen X and Baby Boomers. Fast forward to 2018–2023: millennials became the largest homebuying generation. One measure of this shift is homeownership rates. In 2010, the homeownership rate for under-35 households was around 39% (and it actually fell to about 34% by 2016), whereas by 2022 the homeownership rate for millennials (mid-20s to early 40s) had risen to about 51.5%.
Housing Market Conditions: The market itself was very different between the two periods. 2008–2012 was a buyer’s market in many places – home prices were falling or flat, foreclosures were flooding the market, and interest rates were lowered to stimulate borrowing. In contrast, 2018–2021 became a seller’s market – home prices in Illinois (and nationwide) rose year after year, and then sharply during the pandemic boom. Illinois home values increased roughly 67% from 2012 to 2022, lifting many millennial homeowners’ equity but also making it harder for those yet to buy.
Economic Factors: The economic backdrop for millennials changed dramatically between the two periods. The 2008 crash hit millennials just as many were starting their careers. This led some millennials to delay buying homes because they either moved back home or were very cautious about big financial commitments. By the time we get to 2018–2023, the economy (pre-COVID) was in a long expansion. This enabled more millennials to afford homes and gave them confidence.
Behavioral Changes: The mindset of millennials also evolved. In 2008–2012, some narratives suggested millennials were disinterested in owning homes – preferring to rent in cities, being “urban nomads,” etc. By 2018–2023, that notion was largely dispelled: millennials do want to own homes, and as they aged into their 30s, they have been buying in large numbers (when feasible). The difference is they did it later.
Generational Wealth Shift: From 2008–2017, millennials were largely building careers and paying down debt, not yet benefiting from home equity. In 2018–2023, a transition happened: older millennials who bought early in the 2010s suddenly saw big equity gains by 2021. By 2023, millennials as a whole reportedly outspent Boomers on homes and became the largest generation in total real estate market share.
In Illinois specifically, the 2008–2017 decade was one of stagnation and recovery. By contrast, 2018–2023 was a period of expansion and new highs for home prices in Illinois. By 2023, the median Illinois home price was at a record high (around $280k+ statewide, higher in Chicago).
References
- After fallback, millennials surge to make up the largest share of homebuyers – Chicago Agent Magazine
- Apartment List’s 2023 Millennial Homeownership Report – Apartment List
- Chicago has higher millennial homeownership rate than national average – Chicago Agent Magazine Trends
- For Millennials, the Vacation House Is the New Starter Home – Money
- Gen Z and Millennial Home Buying Hotspots: Where Young Buyers Are Putting Down Roots – National Association of Realtors
- Gen Zers and Young Millennials Took Out 40% of U.S. Mortgages in 2023 – Redfin
- Home Buyers and Sellers Generational Trends – National Association of Realtors
- Millennial Buyers Prefer Better, Not Bigger Homes – Window + Door
- Millennial Home-Buying and Homeownership Statistics – The Motley Fool
- Millennials Selling Homes They Bought in Pandemic After Realizing Mistake – Newsweek
- Nepo-Homebuyers: More Than One-Third of Gen Z and Millennial Respondents Expect Family Help with Down Payment – Redfin
- Redfin Reports Out-of-Town Moves Have Fallen 6% From a Year Ago – BusinessWire
- Redfin Survey: 1 in 5 Millennial Respondents Believe They’ll Never Own a Home – Redfin
- Remote work will fuel housing demand for years to come – Zillow Group
- Wealthy millennials are leaving Illinois faster than almost any state – Journal Courier
- Where Are Millennials Buying Homes in the U.S.? [2024 Edition] – Construction Coverage
