For a long time, industry observers worried that millennials might never get around to buying homes. After all, they were living at home much longer than previous generations, earning less, and taking on much more student debt.

Those worries proved to be mostly overblown; millennials now make up the largest individual cohort of home buyers, coming in at 37%. After an initial delay, millennials are finally buying homes. But as a new study from Clever Real Estate shows, the kinds of homes they’re buying, and the way they’re buying them, are radically different from previous generations. Let’s unpack some of the study’s findings, and see how millennial home buyers differ from their predecessors.

Millennials Don’t Feel Great About Buying a Home

Millennials are buying homes, but they feel pretty bad about it. Nearly half, or 45%, of millennials surveyed said that the thought of buying a home made them feel “stressed and anxious.” This is a striking contrast with older generations; only 25% of Baby Boomers felt the same way about buying a home, and only about a third, or 34%, of Gen Xers were similarly stressed about buying a home.

It gets worse. Unlike, say, the nagging anxiety that you forgot to turn off the stove when you left the house this morning, millennials’ anxiety about home buying is very much grounded in reality.

A full quarter of millennials who plan to buy a home in the next year have less than $1,000 in the bank; another 25% of millennial buyers have more than $10,000 in debt, but are targeting homes that cost more than $200,000.

How are they going to buy these homes with that little cash, and that much debt? For starters, 70% of millennials are planning on putting less than 20% down on their home purchase. And 27% of millennial buyers are planning on borrowing their down payment from friends or family, with an average loan of $10,000. Buying homes with no cash reserves, with a tiny, borrowed down payment, while carrying massive debt? It’s no wonder millennial buyers are so stressed out.

Millennials Are Eyeing Smaller Homes

There’s been a trend towards smaller living spaces for the past decade, with many people opting to live in homes that are literally tiny. But even among buyers of conventional homes, the spaces that millennials are looking at are significantly smaller than previous generations.

The average millennial home is about 1,700 square feet. For comparison, the average home that a Baby Boomer is downsizing to is 2,000 square feet, and the average American apartment is about 900 feet. So the average millennial home is smaller than two apartments, and significantly smaller than the average Boomer retirement nest. This doesn’t always work out for them: buying too small is one of the most common regrets of millennial homeowners.

There’s an obvious underlying reason that millennials are interested in smaller homes: the more square footage, the higher the price. Small homes are cheaper, and millennials love cheap.

Millennials Are Drawn to Low Prices

Millennial buyers are looking at much cheaper homes than their Gen X and Baby Boomer counterparts. While the median U.S. list price is $310,000, Gen Xers and Boomers are looking at homes priced around $240,000.

Millennials, on the other hand, are looking at homes at a much lower price point of $210,000. Furthermore, 25% of millennials are targeting ultra-cheap homes that cost less than $100,000. The fact that this percentage of super frugal home shoppers grew 8% since last year suggests that millennial bargain hunting is a response to an unaffordable and unaccommodating market.

But Millennials Do Resemble Previous Generations in Some Ways

When millennials were queried about their motivation for buying a house, their top response was the desire to start a family. This closely tracks the responses of Gen Xers and Baby Boomers, and is distinctly at odds with the popular image of millennials only being concerned with nightlife, coffee shops, and dog parks.

Much like their traditional predecessors, millennials singled out safe neighborhoods and high-quality schools as top considerations for the location of their next home purchase; 44% chose a low-crime neighborhood as the most important quality in a location, and 19% chose good schools. Again, these are strikingly conventional concerns, especially for a generation considered to be staunchly anti-tradition.

Millennials Are Giving the Suburbs a Look

In keeping with millennials’ secret adherence to tradition covered in the previous section, they’re also more open to living in the suburbs than any generation since the Baby Boomers. Look at the Dallas, Texas market as an example; millennials are largely eschewing Dallas proper to buy in Garland, a suburb twenty miles from the urban core.

Of course, millennials aren’t necessarily flocking to the suburbs because they love strip malls and subdivisions. There are simple economic reasons; consider that in Dallas, the median list price is $379,000, while in millennial-heavy Garland, it’s a comparatively inexpensive $224,250. The last decade saw huge migrations of affluent, educated buyers back from the suburbs and exurbs to city centers; consequently, real estate values in urban cores went through the roof. The millennial drift to suburbs is just a reaction to this phenomenon: cash-poor, strapped with debt, and in search of bargains, they’re just going where the houses are cheapest. Of course, it probably doesn’t hurt that crime is low, and the schools are pretty good.

Millennials Are Flexible Buyers, Maybe to a Fault

Baby Boomers, flush with cash as they ease into their golden years, are picky buyers, and Gen Xers, in the prime of their earning power, can afford to be pretty selective. Millennials, cash-poor and navigating a turbulent economy, basically have to take what they can get. To their credit, they understand this.

Only 3% of Boomers would pay more for a home near a waste management facility, and only 5% would live near a highway; but when you ask millennials the same question, nearly a quarter of them would gladly live in these dicey locations. The same trend applies to questions of financing. If interest rates spiked above 6%, Baby Boomers would mostly walk away from the table, with only 17% of Boomers willing to consider buying at that rate. On the other hand, nearly half of millennial buyers would gladly sign a mortgage that came with a 6% interest rate.

Unfortunately, it’s not entirely clear if this represents millennial enthusiasm or ignorance. An earlier study on millennial financial literacy found that well over half of millennials couldn’t even define “interest.”

Millennials and Their Deal Breakers

Millennials may badly want to buy a house, but they won’t buy any house. When asked about issues that would derail a potential home purchase, 57% of millennials cited mold as a deal breaker, 55% singled out a pest infestation, and 52% said they’d pass on a home with foundation problems. So they do have some standards.

Interestingly, these are the top deal breakers of Generation X and the Baby Boomers; the main difference is that millennials object to them at much lower rates than older generations. For example, 74% of Baby Boomers said a moldy house was a no-no, a nearly 20% increase over millennials. If you’re selling a shabby, as-is property, the younger the buyer, the better your chances of offloading that subpar property.

The Costs of Being a Millennial Home Buyer

Millennials are stressed and anxious. They have a ton of debt, and so little money in the bank that many of them are planning on borrowing their down payment. Economic necessity has forced them to consider smaller homes than previous generations, in less pleasant locations, and many millennial homeowners regret their purchase. Taken as a whole, this paints a dismal picture of millennial home buyers, and one that the numbers support.

Consider that in 2019, 84% of millennials considered home ownership to be an important part of the American dream. In 2020, that number plummeted to 70%. Being a millennial home buyer is tough, and it’s taking a toll. What happens if the entire generation gives up on the idea of owning a home?

Dr. Francesca Ortegren, Ph.D. is a Research Associate at Clever Real Estate where she focuses on helping people understand complex data, real estate, finances, business, and the economy by researching various topics, analyzing data, and reporting useful insights for general consumption.