Why Millennials Aren’t Buying Homes

    Data shows that homeownership among millennials is down, but that doesn’t mean they aren’t interested in buying a home.

    In the last two decades, homeownership in the U.S. has declined across the board and especially so for young Americans. The rate of homeownership under the age of 35 has declined 9.8 percent since 1996.

    So where is young America living?

    Many of them are still renting, and a lot more of them (32.1 percent) are moving back home. For the first time on record, 18-to-34 year-olds are more likely to live with their parents than any other living arrangement.

    However, that doesn’t mean they aren’t interested in owning a home.

    The Fanny Mae Housing Survey reported 90 percent of young renters (age 18-39) say they are likely to buy a home at some point. A different survey from Rent.com said nearly 80% of young renters don’t plan to buy a home anytime soon.

    So, millennials want to buy a home at some point, just not anytime soon. There is plenty of speculation as to why, ranging from their jaded attitude toward the housing market after witnessing the crash in 2008 to the idea that millennials prefer city life to the suburbs.

    The reality is that two-thirds of millennials have yet to hit the median-age (31) for first-time homebuyers. They aren’t old enough, or wealthy enough in today’s economy to be making major, long-term purchases like a home.

    Add in the fact that they are starting families and settling down later than previous generations. The average age a woman gives birth to her first child climbed to 26.3 in 2014 or nearly two years older than it was in 1994. That’s one major example of that says millennials have yet to reach the point in life when owning a home makes sense.

    Millennials are Strapped for Cash

    Most of all, millennials are strapped for cash. While they should be saving, more than 70% of recent college graduates are repaying student loans.  The average 2016 college graduate owes $37,172 in student loan debt, making it difficult to save up for the gold-standard 20% down payment lenders.

    How to Save a Down Payment

    The good news is that there are ways to save money for a down payment.

    Living with a roommate is one way to save money. Splitting the cost of rent, utilities and housing supplies with two, three or even four people saves thousands of dollars a year. The more roommates you have, the less it costs to live.

    You also could get a second job and devote the paycheck strictly to the down payment account. If you are among the millennials living in a big city, take advantage of public transportation, walk or ride a bicycle to work. Give up your automobile and save thousands more on car payments, insurance and gas.

    Then put all those savings into a bank account and don’t touch it! When you have enough money for a down payment, start looking for a home, but be aware that you also must make sure your monthly mortgage payment is less than 30% of your monthly income.

    Owning Still Cheaper Than Renting

    The fact remains that it is cheaper to own a home than it is to rent an apartment or house.

    A study done by Trulia found that it is 23 percent cheaper for millennials to own, rather than rent nationwide. The median rent for an apartment in the U.S. jumped from $841 in 2001 to $1,341 in 2015. That’s a 59.4% jump and experts say rental rates will continue to rise at an annual rate of 4%.

    The benefits of owning a home make an even better argument against renting. A mortgage payment is building equity in an asset you own, whereas a rental payment is going into your landlord’s pocket. Interest paid on your first and second mortgage is tax deductible, meaning even more money back in your pocket.

    Of course if you are on the move, changing cities every other year, it would make sense to rent. That’s always been an issue for young people. The data indicates millennials understand this and are choosing to delay buying a home until later in life when things are more stable.

    In debt? We can help!

    • Amount
    • Type
    • Contact

    How much do you owe?

    What can we help you with today?

    Related Articles

    JPMorgan Fined for Illegal Lending Practices

    JPMorgan Accepts $13 Billion Fine For Lending Practices

    JPMorgan Chase Bank agreed to pay a $13 billion fine to the U.S. government for its role in the disastrous mortgage lending practices that landed more than 15 million American homeowners underwater. The announcement was made by Eric Schneiderman, the ...

    Continue Reading
    FDA finances nursing home mortgages

    FHA Steps in to Help Nursing Homes by Backing Mortgages

    Attempts by nursing home operators to stay relevant and profitable in the constantly changing world of health care, received a boost from the Federal Housing Administration (FHA) last year. The FHA stepped up to insure 458 mortgage loans worth roughly $3 ...

    Continue Reading
    New mortgage rules protect consumers

    New Rules Protect Consumers from Overzealous Mortgage Lenders

    A new federal regulation puts the onus on lenders to take meaningful steps to ensure a person can afford a home loan, before they actually give them one. The “ability-to-repay” rule was issued by the Consumer Financial Protection Bureau (CFPB) to help ...

    Continue Reading
    Bank of America settlement

    Bank of America to Pay $10B to Fannie Mae to Settle Claims

    The first week of 2013 has not been a happy new year for some of the nation’s largest banks, particularly Bank of America. On Monday, Bank of America agreed to pay $10 billion to Fannie Mae to clear up claims made on troubled mortgages, mainly associated ...

    Continue Reading
    Fix-and-flip houses

    FHA Extends Program that Allows Quick ‘Flips’ of Properties

    As the nation continues to wrestle with high unemployment rates and a recuperating real estate market, the Federal Housing Administration (FHA) decided to continue one of its popular programs. The FHA extended its temporary waiver allowing loans on quick ...

    Continue Reading
    Housing market

    Housing Market Expected to Rebound in 2013

    With just a few weeks remaining until the end of the year, millions of Americans are seeking ways to make 2013 better, especially from a financial perspective. From making new real estate investments, refinancing mortgages, entering into reverse mortgages or ...

    Continue Reading
    FHFA

    Obama Eyeing New Leader for Federal Housing Finance Agency

    Facing increased scrutiny from housing advocates and community groups, President Barack Obama is being asked once again to sidestep political protocol to replace Ed DeMarco, the acting head of the Federal Housing Finance Agency (FHFA). Obama is being asked ...

    Continue Reading
    Housing market rebounds

    Foreclosures on Hold for Holidays as Housing Market Slowly Recovers

    With an improving economy and programs aimed at helping homeowners stay current with their mortgages, housing-market analysts say that 2012 will prove to be a turnaround year for homeowners and the country. In addition, mortgage giants Freddie Mac and Fannie ...

    Continue Reading
    Get Help Now

    Overwhelmed with debt? You have options for lower monthly payments!

    x