Seeing as how everyone is looking for stability in their life, turning down the chance to own a home is not something that people often tend to do. However, the circumstances are such that regardless of how much millennials would like to purchase their own home, they are just not in a situation to do so.
So, what is it that is keeping millennials from becoming homeowners? Is it just their state of mind, as they prefer renting? Are they encountering financial obstacles? Read on to learn more about this topic.
Student Debts Are Looming over Their HeadsOne of the most common reasons why millennials have to postpone purchasing a home or altogether give up on it is the fact that they are dealing with the massive burden that is student loan debt. In the U.S., the collective student debt was around $1.5 trillion in 2018 and an average person had to pay back over $32,000.
Furthermore, plenty of millennials have to struggle with minimum wages and they barely make ends meet. In addition to making a living, they also have to pay off their loans. With that in mind, it’s not hard to understand why it might be difficult for individuals to save enough money for a down payment and opt for a home loan.
Renting Offers Them More FreedomAccording to a survey conducted in Australia, one in five millennials believes they’ll keep renting forever. These results suggest that Generation Y cares less about homeownership than experiences. Nowadays, young people are more interested in traveling and seeing the world instead of saving enough money for a deposit. Plus, renting provides them with the opportunity to move around as they please.
On the other hand, it does not come as a surprise that younger people prefer living in cities. However, rents are higher and properties are more expensive in these busy locations. While millennials find it easier to rent spaces, they are also in danger of burdening themselves with rent. This means that their rent is too high for their income and they cannot save enough for a future down payment. Of course, if they intend to rent for the rest of their life, this is no problem.
Delaying Getting Married and Having Kids Delay HomeownershipAnother factor that influences a millennial’s decision to purchase a home is their relationship status. Getting married and having kids are huge motivators for getting their own place but seeing as how millennials are postponing marriage and children, their need to buy a house is also postponed. They either choose to live with their parents or rent a space with their significant other until they start their own family.
Both men and women are deciding to get married at a later age and they have their first child later in life than previous generations. This is further increased among women that have finished college and live in urban areas. What is more, some individuals do not plan on getting married ever, which also affects their decision of buying a house.
Costs of Homeownership Are Too HighAnother reason why millennials prefer renting to buying is that they find the costs of homeownership too high. They realize that purchasing a house is not all there is to be. Being digitally savvy as they are, it’s easy for them to do plenty of research when it comes to all the expenses of house maintenance. Generally speaking, they consider various taxes and insurances to be too steep, in addition to paying for all the repairs and updates a home needs on a regular basis and keeping up with loan payments.
When they choose to rent, most of these issues are not their problem. All they have to do is call the landlord to have the problem fixed, whether it’s a broken light fixture or a faulty AC unit.
Lack of Starter Homes Is an IssueThere is another issue young people encounter when looking to buy a home – shortage of starter homes. Regardless of how much they are willing to purchase a house, there simply aren’t enough options that millennials can afford. Homes that they can comfortably pay for are usually located in rural areas which, as we said earlier, is not something this generation prefers. This ends with them either being unsatisfied with the purchase or overstretching their budget and facing financial problems.
As a result of this, a lot of individuals decide to rent for longer until they have enough money. Furthermore, when they do decide to buy, they choose to skip these starter homes and opt for something nicer and more expensive.
While there are individuals who prefer renting, contrary to popular belief, millennials are not against homeownership. However, they do find themselves facing many obstacles when trying to achieve this life goal. From dealing with student loan debts to simply not finding a place that suits them in their preferred location, Generation Y will have to wait a bit before making this huge decision.