Published July 17, 2023
Millennials and homeownership, why waiting may be a good thing.
Due to hurdles such as the pandemic, low available inventory and high mortgage interest rates, millennials are not widely viewed as being a generation of homeowners. However, a 2022 study is revealing results that show this is a general misconception proving to be inaccurate. 52% of millennials between the ages of 27 and 42 years old have in fact bought home. This means that actually more than half of millennials are home buyers.
The differentiating factor between this and older generations looks like it's primarily the time in life in which they make this big move. Because of job market, and cultural social expectations around success requiring higher education, millennials are investing in college and career before home buying. This results in student debt becoming a factor in whether or not millennials believe they can afford a mortgage payment let alone a down payment on a home.
Typically, a federal borrower owes a minimum of $37,000 In student loan debt. So this is a big hurdle when you think about saving, and factoring paying down this large initial debt. Because of substantial student debt, millennials are making the move to settle down and have families and buy homes later in life than older generations did. Because millennials are fiscally responsible in considering saving substantially before buying, the step that previous generations took in buying what was referred to as a starter home, is cut out of the process. By the time millennials are ready to make the move of purchasing a home, they are looking to buy their forever home, and they are financially prepared to make the purchase in a way that is very stable. This might result in positive things, like cutting down on some possible volatility in the housing market down the road.
In your forever home, simple stuff like new paint will increase your home value. You can boost value further with bigger investments like a new deck. This is relevant when we talk about millennials waiting to buy until they’re really set up to afford it. If you are buying at a time when you are able to increase the value and equity of your home, you are building something that can be passed on to the next generation. We are talking about generational wealth, which has been lying dormant for years. Generational wealth is positive for a stable economy and also aids in closing the racial economic disparity gap.
Further reflecting this point, surveys find that 73% of non home owning millennials firmly plan to purchase a home down the road.
Millennials making the move to buy when they have substantiated careers with legit incomes may lead to major economic positives for the future, stability is nothing to to shake a stick at when it comes to financial and family planning. The trend of waiting longer to buy could pan out well in decades to come.
Remember folks of any generation interested in taking the home buying plunge, Monday team agents are ready to make it happen with you!
