Posted: May 6th, 2019
Over the decades, there has been a certain order to things. In the 50s and 60s, individuals would get married, buy a home and have kids. Over the years, the process of living life has changed. Today’s younger population in the US are no longer worried about getting married, buying a home and having children, or at least not in that order. Millennials are moving away from buying homes and are renting instead. But why? In most instances, it is much cheaper to buy a home than rent.
Rising Home Prices
The younger generation has several reasons as to why they choose to rent instead of purchase a new home. For starters, rising home prices have been a problem. Millennials are not willing to pay a high price for a new home. Home costs can be quite high depending on your location in the US, so instead of paying an outrageous amount for their dream home, they rent.
Many younger people also like to live in bustling cities. In these areas, the only option is to rent an apartment or condo. Purchasing such a property would cost millions, if the option is even available.
Housing Crash Fears
Another issue is fears of a housing crash. In 2007-2008, there was a huge market crash that resulted in adjustable mortgage interest rate increases and home prices then dropped. Borrowers defaulted on loans and the entire process was a mess.
While this was a few years ago, the younger generation remembers what their parents or grandparents went through. They do not want to see the same fate. So, instead of buying they focus on renting their home.
Student Debt
Another major factor contributing to renting instead of buying a home with the younger generation is student debt. There are larger amounts of student debt today which leaves young people without a way to save for a substantial down payment for a home. A down payment is essential with many mortgage loans and without extra funds to save for a down payment, individuals are stuck renting instead. Student debt can be debilitating, causing graduates to be unable to gain any ground once employed after college due to the massive amount of money owed. Renting has a greater appeal as there is less consequence if something happens financially when compared to actually owning a home. With renting, you can move on to a new home if the payment becomes too much to bare. With a home mortgage, you are stuck and that can be scary to the younger generation.
Starter Homes are Disappearing
One way to start on the path to home ownership is to purchase a starter home. However, for millennials, this is becoming difficult. The cheaper starter homes are becoming harder to find. There are less available which has led to an issue within the market. Millennials are finding it harder than ever to locate starter homes that are affordable. Now more than ever, is the right time for millennials to review their home options. More money than ever before is being spent on renting a home when an investment could be made within a property. Without the proper knowledge of the home buying experience, many millennials are finding out that they are wasting thousands of dollars every year. By learning more about a mortgage and finding the right home, millennials can spend less or invest their money in something that can have a positive return.
Many 30-somethings are finding they spent tens of thousands of dollars on renting when they could have been investing in a property. Looking back, it can be easy to see how much was wasted, while at the time, renting seemed like the best decision.
At TradaR Real Estate Solutions, help can be provided in understanding more about the mortgage process in Central Florida. Learn how much home you can afford and if the option is a better solution than renting.