Millennials—people between the ages of 25 and 40—are a force in the overall housing market, but may be even more so among veterans. Millennials accounted for 50% of all Veterans Affairs–backed purchase loans in 2020, according to data from Veterans United.
Veterans United data shows these are the top five hot spots where millennial military veterans purchased homes last year:
- Washington, D.C.
- Virginia Beach, Va.
- San Diego
- Colorado Springs, Colo.
What’s behind the places they’re increasingly targeting for homeownership? “Veterans are buying homes in higher-priced areas of the country,” notes The Ascent, a Motley Fool publication, in comparing where non-military millennial civilians purchased homes last year compared to millennial vets.
They’re turning to VA loans to buy in these areas. VA loans require no down payment. As home prices rise, that frees up buyers to save enough to cover 1% to 5% in closing costs.
Also, millennial vets may be purchasing in higher-priced areas as they take advantage of historically low interest rates. VA loans have offered the lowest average interest rate on the market for at least six years, Chris Birk, vice president of mortgage insight & director of education at Veterans United Home Loans, told The Ascent. VA loans have had a higher closing rate than conventional loans over the past six years as well, Birk adds.
It’s not just millennial vets who are buying either. 2020 marked the biggest year in lending history at the U.S. Department of Veterans Affairs as VA loan volume nearly doubled from 2019 to 2020, according to Veterans United Home Loans. 2020 also marked the first time that the VA issued more than 1 million loans in one year.
Fifty-eight percent of 1,000 vets surveyed say they plan to buy a home within the next five years, according to The 2021 Veteran Homebuyer Report, produced by Veterans United Home Loans.
The overall U.S. homeownership rate is about 63.4%, but the homeownership rate for veterans is about 80%.