The news is a bit conflicted when it comes to millennials and homeownership. One report says millennials prefer to rent, and can’t afford to buy homes even if they want to. The next day, you’ll see a statistic that millennials make up nearly 40% of homebuyers and are the fastest growing segment.
So which is true? The answer is both, and that’s a big reason it’s so confusing. About 1 in 3 millennials own a home by age 35, less than previous generations. But millennials are also the largest generation in the US as of 2019. When you’re talking about more than 70 million people,
Maybe the more important question is why are some millennials buying homes while others are happy to rent for life? Let’s look at some of the big factors at play.
Why millennials buy houses
The reasons to own a home haven’t changed that much. When you own your own home, you have more control over your living environment. Want to tear out a wall between two rooms to give yourself a nice big immersive gaming space? That’s a choice you’re allowed to make.
This can be beneficial even from a maintenance perspective. As a renter, you rely on the landlord to make repairs and maintain the property, but it’s on their schedule and to their standards. Homeowners foot the bill for their own repairs, true, but they also have more control over when and how those repairs are made, and by whom.
Stability is another big motivation toward homeownership. Rent prices can fluctuate even if you stay in the same place for many years, and it’s rare to sign leases for longer than a year. If the landlord decides to raise prices or sell their property, you can find yourself forced to pack up and find a new place to live. Changes in property tax values and home insurance rates can alter your monthly payment as a homeowner, but the mortgage and interest payments are fixed, and that home is yours until you decide to sell it.
Why millennials would rather rent
There is a portion of this generation that rents out of necessity, either because they can’t afford to save for a down payment or because they’d become “house poor” and unable to keep up with maintenance expenses. For others, though, renting is a choice—and that’s the biggest change in how this generation views its living environment.
More millennials than any other generation describe themselves as digital nomads. They’re not tied down to any one location by their work, and they don’t want a home tying them down, either.
Even for those in more traditional jobs, renting provides more flexibility. If you want to try out a new neighborhood in your city, you have that freedom. Those who prefer urban living can find apartments in cities where buying a home is prohibitively expensive. In some areas, buying a home means being further from restaurants, bars, and entertainment. It’s often as much a choice of convenience and lifestyle as it is a financial decision.
The bottom line
Predicting home buying trends is tricky in stable times, and there’s no telling how the current economic shifts will affect the housing market. While new home sales usually drop during a recession, a drop in mortgage rates and property value could make home ownership a viable option for more twenty- and thirty-somethings.
Based on the trends, it seems likely millennials will continue to make up more and more of the housing market as time moves forward. How that will affect the real estate market moving forward is something that’s yet to be seen.
This article brought to you by Karl Kennedy - Author of ProjectorTop.com
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