The millennials’ way of thinking is different from the generations that preceded them. The generations before them had a more traditional approach to things, whereas millennials are more open to exploring many things. The environment in which they grew up is the major contributor to the difference in mindset. The previous generations were expected to stick to the norm, e.g., graduate, get a job, get married, buy a house, have kids, etc., whereas millennials did not have the same norm or at least were not that pressured to stick to it.
Homebuying is one of the significant differences between millennials and the previous generations. There are points in homebuying among millennials that were not present in the earlier generations. Here are some pointers on how millennials are changing the homebuying dynamics:
Mortgages Are More Expensive Today
In the year 2017, the median price for a home in the U.S. was around $199,200 as compared to 1940 ($2,938), 1980 ($47,200), and 2000 ($119,600). Houses in big cities such as New York and San Francisco are much more expensive. If you are a millennial who wants to own a home, looking for the best mortgage rates is a priority because it’s hard to sustain your current lifestyle if a huge chunk of your income goes to ridiculously high mortgage rates. It would be best if you were wise when it comes to your finances.
They Prefer to Live in the City
Millennials prefer to live in the city rather than in the suburbs. This means that they prefer renting apartments where it’s close to work, or they are influenced by social media. This prompts the landlords in the city to raise the monthly rent. Moreover, millennials prefer to live in the metropolitan area because it’s home to different opportunities, and it’s challenging to take advantage of these if you live far from the city.
They Are More Focused on Their Career
Millennials are putting off marriage to excel in their careers. Some are establishing small businesses on top of their regular work to achieve financial security or stability. Building a family will not help them achieve these goals. However, it doesn’t mean that they don’t want to have a family—some of them do, but they want to have it when they are at least confident in their financial state.
And how does this relate to homebuying? Basically, when you put off marriage for your career, the priority to buy a home is the last on your list. You don’t need to think of getting a bigger space for the entire family because you only have to look out for yourself. You are fine with living in a smaller space because you will not worry about kids knocking off and breaking things.
They Are Still Paying Their Student Debt
Student loans in 2021 have reached a staggering amount of $1.73 trillion. This makes it difficult for millennials to buy a home because a portion of their income goes to paying off their student loans. It’s even more difficult if you are earning a minimum wage. Lastly, student loans take ten years or more to be paid.
They Are Less Pressured
The world today is different from decades ago because things have changed for the better and the worse. If you compare millennials and the previous generations, you will realize that the earlier generations have a more practical approach to life. Millennials are freer to achieve their aspirations today because they don’t have the same pressure as their predecessors did. The shifts in priorities have affected their decisions, especially in homebuying. This is not entirely bad as it can encourage different homebuying processes in the future.
Change is good because it will cause a ripple effect in the homebuying process, so they can better accommodate said change. It will become more flexible and streamlined to accommodate people with different preferences. While millennials prefer to rent nowadays, it doesn’t mean they will stay that way because, to be honest, there is no equity in renting. You religiously pay your rent without owning the property in return. And this is not a wise investment in the long run.
Eventually, owning a house of your own will sound appealing because of the stability it brings. Mortgage rates are not forever, and once these are paid off, all you need to worry about is paying for the utilities, for the kids, and other domestic expenses. Millennials might not work up an interest in homebuying anytime soon, but it will definitely happen in the future as they become financially secure.