Millennials these days are combing the rental listings instead of figuring out what kind of loan they need to buy a house, and they’re doing it on purpose! While it may seem so hipster-like to not buy a home and rent a freakishly artsy loft downtown, there are more clouded reasons to why they aren’t living the American Dream like their parents before.
A housing survey reported 90 percent of millennial renters want to buy a home at some point, but that point is not anytime soon. Much speculation and conversation have been focused on this generation and why they’re not buying, with theories ranging from jaded attitudes witnessing the housing crash in 2008, to preferring city life.
For those still wondering or under a rock, the millennial generation has been defined by a couple different cohorts, but we’ll keep the definition as people aged 24 to 34 years old.
Money in the millennial age
In most scenarios, millennial homebuyers are also first-time homebuyers, with the median age being 31. The biggest struggle for them currently is the housing market. The market consists of soaring home prices, and the supply of these homes are somewhat limited. The single-income families of the 50s are long gone, and two-income families are the norm, but unfortunately, the wage growth is much slower paced than home prices. Unlike their parents, millennials bear the idea that they’re being priced out of an economy to even afford to purchase; millennials are money smart and want a home within their budget, but what they can get within their budget, is just not ideal.
Millennials are also being outbid by a mature market. While they may have the money, the market is extremely competitive — where cash buyers are the standard — and outbidding is commonly $20,000 over the asking price. In addition to being outbid, the seller is receiving 10 other offers just like that! Being the first in line just doesn’t cut it anymore!
We can’t talk about millennials and money and not mention student debt! 70 percent are paying back student loans, making it increasingly difficult to save for a 20 percent down payment; the gold standard in the industry! According to the Federal Reserve, there are $1.4 trillion in outstanding student loans, again, making it difficult to take on a mortgage loan.
Where is their money going?
There is something to be said for a generation whose spending habits are focused on social issues, like sustainable agriculture practices and the local movement, but they are also spending their money more freely. With the invention of avocado toast, Uber, and the latest and greatest electronic gadgets, their spending habits are more liberal than generations past.
The late-blooming generation
Millennials are late-bloomers compared to other generations when it comes to marriage, kids, and homeownership. In delaying these things, they’re focusing on better careers and making better money. They have yet to get to a point where buying a home makes sense.
What millennials desire, when it comes to home buying, is they don’t necessarily want a starter home — they want a home they can live in forever — which comes with a much greater investment.
Make renting fun
On a positive note, since millennials are delaying certain life choices until later, now is the time to gather up all your buddies and rent that super artsy downtown loft! Fetch new roommates and save your money for your future home!
You will need apartment listings!
The apartment hunt isn’t as “adulting” as buying a home, but you want to find the perfect one! Contact Apartment Locator online today for current and frequently updated listings in your area!
