It’s a new year, which means several families are positioning themselves to buy a new home. But as they are getting ready for the big shift, a group of Americans seem to be happy staying at home.
A growing number of Millennials are looking to share their space with their parents, a brother or sister, or a roommate instead of buying a home. Although this isn’t the first time we’ve seen this type of behavior within a generation, this trend is higher than ever for Millennials.
So, I ask, “Why are Millennials hesitant to move out?” Here are a few things to consider…
Waiting to get married and start a family
Gone are the days of marrying right out of college. Millennials aren’t interested in settling down right away. Yes, they may have a few lengthy relationships from time to time, but most people in this group are waiting until their late twenties or early thirties to tie the knot. Without a spouse or a family, there isn’t a really big need to buy a house right away. Instead, they are concentrated on learning more about themselves in order to make a better connection with that special someone.
Higher student loan payments
Many Millennials see higher education as an asset for a promising future. So, in return, they spent (or are spending) more time in school and raking up more student loan debt. Even though the Department of Education has worked with student loan borrowers to negotiation payments, the average student loan debt is $37, 172 with a monthly payment of about $351. (https://studentloanhero.com/student-loan-debt-statistics/)
Now this might seem like a small amount, but compare that to an estimated income of $51,100 a year before taxes with growing expenses. Not to mention the fact that Millennials are leaving college with a net worth of -$33,000. (https://time.com/money/4375215/student-debt-millennial-net-worth/)
Without the help of a parent or a significant other, it would be hard for a Millennial to save up for a reasonable down payment.
Putting their focus elsewhere
Single, student-loan-debt-laden Millennials aren’t interested in jumping into the workforce to “work for the man.” They are looking to do more freelance style careers that give them the freedom to work less and make just enough money so they can travel and enjoy life. Their priorities are more flexible rather than concrete.
Housing economics made buying a home hard
Millennials may seem like a “commitment phobic” bunch, but they’re not. They see a home as a responsibility and not something to jump into lightly. During the housing market downturn of 2008, the average age of a Millennial was 24 years old. These recent college graduates were stepping into one of the worst economic situations in several decades. It was impossible for almost anyone to qualify for a home, let alone a young, barely-experienced Millennial.
It took the housing market several years to start rebounding which delayed the purchasing power of this group. Now that things have smoothed out, we may see an increase in Millennial home purchasing.
How long should they wait to buy a home?
If you’re a Millennial, this list may come off as a few good reasons for not buying a home. But don’t worry. You still have plenty of time to buy. Creating a plan today is the best way for you to get into a home. Start by learning as much as you can about interest rates, mortgage payments, and first-time-home-buying programs.
And when you’re ready, please give me a call. I’d love to help you understand how to make home-buying a goal for the future.
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