Why Every Millennial Should (Re) Consider Buying a Home
Considering the purchase of a home is something every Millennial should consider and quite possibly reconsider. For every argument against, there are better reasons why every Millennial should be buying a home now, for the same reasons as previous generations did.
Millennials have begun to show some enthusiasm when it comes to doing just that. So why is there so much handwringing about this major decision when it comes to this group? Several reasons come to mind: In the post Great Recession, buying a home is often considered a financial risk and secondly, this sort of outsized purchase can be prohibitive. Both of these stem from watching their parents struggle with the financial obligation of their homes.
Millennials, described as any adult between ages 18 and 33, represent the most coveted marketplace in terms of consumer goods and services. This ‘generation’ has grown up with great expectations and, in many cases, buying a home was not one of them. Experts have attempted to figure out why this group differs from previous generations, all of whom saw the purchase of a home as a signal of their financial maturity. Some things stand out.
While renting in the biggest cities may prove to be the best decision for the youngest in this group, giving them added job flexibility; older Millennials may have fallen into a rent trap. Rent traps are designed to give tenants numerous things homeowners do not have. While chief among those things is the aforementioned flexibility to move from job to job without the cumbersome attachment of a house, it also provides them with the convenience of being closer to a vibrant social scene and the feeling of living without the costs of keeping a property maintained.
In truth, each of those reasons comes with a cost that few actually calculate. To prove my point, look for the same sized apartment or house farther away from the center of the city or your job and then compare rental costs. Granted, a millennial might argue that they might need to pay a transportation premium but most of America works that cost into their budget as a matter of course. This is not a pure apple to apple comparison, but if the argument is amenities lower costs, it is as good as it can get.
The Ownership Myth
While the sting of the housing crisis may have hit someone in their family, the majority of the people who did suffer made poor financial choices. And while it is true that those poor choices had a negative impact on their neighbors as well, unless you were trying to sell your home, chances are you are doing okay almost a decade later. The argument that owning costs more than renting may be based more on myth than truth in light of the rising costs of rental properties and the relative stability of home prices by comparison.
One of the most significant changes in the post-downturn market was the rapid increase in rents. Consider the homeowner with a fixed mortgage, a stable arrangement with the lender that can last up to thirty years. If you had a fixed mortgage, you would be still paying the same payment as you did before the financial issues occurred.
While available units for rent have become scarcer and decidedly more expensive, homes are being built and sellers are looking to move on, providing potential buyers with a decent inventory from which to choose. Home prices have become more stable as well; making homeownership more fairly valued than it has been in several decades. Interest rates have remained at historic lows, and even if there is some increase in the rates over the next year, they will still be far below what they were twenty years ago.
False Claims and Reality
Renters can claim that they have more disposable income, are able to channel more money into retirement accounts and savings, and are free of the expenses often associated with homeownership. Statistics do not support this claim for most Millennials. Homeowners have received the same pay increases as their renting cohorts, have the same savings and retirement account opportunities and although they do spend money on their home, this expense tends to have real return.
How can we assist you today?
On behalf of The Jones Group @ Sunriver Realty
Nola Horton-Jones, Principal Broker/Realtor | ABR, C-RIS, e-PRO, GREEN, RSPS, CCIM Candidate
Bryce Jones, Broker/Realtor | ABR, CRS, e-PRO, GREEN, GRI, RSPS, SFR
Karen Marcy, Broker/Realtor
The Jones Group @ Sunriver Realty | 57057 Beaver Drive | Sunriver, OR 97707
Mobile: 541-420-3725 | Mobile: 541-420-4018 | Mobile: 503-327-9611 | Fax: 541-593-5123
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