With the housing market in a constant state of volatility, real estate is a tricky industry to navigate. Particularly, of Millennials ages 18 to 34, only 13.2% are homeowners, and a whopping 32% of them still live with their parents. The decline in homeownership rates among this age group is likely attributed to entering into marriage and parenthood later than historically recorded for this demographic.
Another contributing factor to the record-low number is the unemployment rate. More than 8% of Millenials are unemployed. Collectively, Millenials face $1 trillion in student loan debt. Although buying a home is smarter in the long run, renting is the only feasible option for most future home buying Millenials. In fact, renting offers other amenities that appeal to younger generations such as complimentary gym access, modern amenities and pools.
The clearest benefit of renting stems from the flexibility of leaving for no particular reason. Especially with Millenials placing careers as their number one priority, a single-family home in a specific geographic location can be more than limiting. According to the U.S. Bureau of Labor Statistics, Millennials tend to shift between jobs three times more than older generations and only remain with one employer for three years on average.
Future homebuyers are also considering home maintenance to be problematic in their home buying decisions. Between yard work, standard maintenance, unanticipated repairs and damages, the extra cost that could go towards student debt is suddenly gone. Renters need not worry about maintenance being detrimental to their budgets.
However, for Millenials in good financial standing, there are unequivocal benefits to home buying now. Interest rates are currently at rock bottom and likely to increase later this year into 2016.
If you have a steady job and six months of savings in your account with extra money for a down payment, the smartest financial decision you can currently make is to become a homeowner. Average real estate prices for properties are well below their shocking values from 2007, making it the perfect time to strike. The more rents increase, the more money you lose out on in investing in your future. And isn’t that what Millenials should be planning for?
Though it varies person to person, it’s essential for Millenials to assess their unique situations and weigh the pros and cons of home buying now versus later. If, for example, relocation for a job seems likely in the next six months, it’s better to hold off. On the other hand, if there is gainful employment and a longstanding commitment, home buying while prices and interest rates are low is an action worth taking.