Young Homeowners - Breaking the Myth That Millennials Just Want to Rent
Renters Warehouse Blog
When you think of a Millennial -what comes to mind?
You probably envision a hipster -Starbucks in hand, ordering an artisan sandwich while lamenting the fact that they can't afford to buy a home. At least that's the view that Australian millionaire and property mogul Tim Gurner subscribes to. "When I was trying to buy my first home, I wasn't buying smashed avocado for $19 and four coffees at $4 each," Gurner said, during a recent interview on Australia's 60 Minutes.
But despite the bad rap and sweeping generalizations that Gen Y'ers are often subjected to, it's unfair to paint them all with the same brush. As it turns out -the rumor that Millennials are flat out apathetic towards homeownership -might not even be all that true. Millennials, it seems, are just as interested in homeownership as previous generations were -with 91 percent claiming that would like to be homeowners one day.
And it's not just wishful thinking. Currently -the 36-years-and-younger crowd forms the largest share of home buyers, coming in at 34 percent.
Millennials are working hard to make their homeownership dreams a reality -despite their penchant for avocado toast.
The Other Side of the Story
But what about the delay in homeownership?
As it turns out, the average first-time homebuyer's age hasn't changed all that much over the past 40 years, writes Maureen Hughes, a listing specialist. In 2015, the median age was 31 years -compared to 30 in 1970-1974, according to the National Association of Realtors and Zillow. The fact is that most Millennials -nearly two-thirds, haven't yet reached the median home buying age of 31, and 22 percent are still under 25.
While mounting student loan debt -the average student loan balance is $37,173 per student, and difficulties saving for a down payment have certainly kept many Millennials from entering the housing market sooner, there are many who are managing the make the leap nonetheless. Some Gen Y'ers are even seeking out investment properties, and snatching up duplexes -hoping to rent out one side, while residing in the other rent-free.
While many of the younger generation may be leery to commit to a 30-year mortgage, this doesn't mean that they've given up on the idea of homeownership altogether. A growing number of Millennials are planning, saving, and working towards their goal of homeownership, and eventually, they're seeing their hard work pay off.
Don't Believe the Hype! Millennials Are Optimistic About Homeownership
Millennials are growing up -and for many, that means settling down and buying a home of their own. For a number of those in this generation, though, that home isn't just about a white picket fence -it also represents an investment.
- Millennials have a cautious, yet positive view of homeownership
Despite coming of age in the Great Recession, most Millennials retain a positive view of homeownership. That enthusiasm though, is tempered by a healthy dose of realism. Hesitant to purchase more house than they can afford, many are postponing homeownership until they're in a better position to afford the mortgage.
- Millennials are planning and saving
Avocados anyone? Despite common assumptions are money-management, Millennials are proving that they know how to save. A study by the Pew Research Center indicates that Millennials are paying off debt faster than other generations. Many are saving up and working towards their goal of homeownership.
- Millennials view real estate as an ideal investment
Real estate's income-producing potential hasn't been lost on many Millennials. Some 85 percent of Gen Y'ers believe that real estate is a good investment. Some especially enterprising Millennials -known in hot markets as "flipsters" have been buying up properties to fix up and sell. Others are "house hacking" that is, buying duplexes -living in one side, and renting the other unit out. Some are renting out spare rooms via Airbnb. Increasingly, this generation is viewing real estate not only as a place to live, but also as an investment, and an opportunity to generate additional income. Take Jay, from Oregon, who purchased a four-plex for $152,000 at the age of 21. He lives in one of the units, collects rent, and applies this towards his mortgage, all while watching his home appreciate in value. When he refinanced, his four-plex had appraised for $235,000.
What's It All Mean?
Despite the odds that are stacked against them, this generation hasn't given up on homeownership. An estimated twenty million new Millennial households are expected to form by 2025.
Just because Millennials aren't diving headfirst into mortgages that they can't afford, or willing to jump into an uncertain housing market, doesn't mean that they've given up on the idea of homeownership. Instead, you're more likely to find Millennials saving, planning, and preparing to make their homeownership dreams a reality. Even if that means renting for a few years, and working a day job and a couple of side gigs to save up for a down payment, or using creative financing to get on the housing ladder.
Whether or not the collective Millennial Generation will earn the reputation as successful investors, one thing is certain: many in this generation are taking the first steps toward homeownership. Many are already there. Avocado toast be damned!
Calling all Millennials? Are you planning to buy in the near future? Share your thoughts with us!
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