There is a lot of talk in the news recently that Millennials do not want to buy houses anymore. The connotation is that the younger generation is simply not interested in investing in real estate. That is simply not true. Many people want to buy a house, they just feel as though they may never have the opportunity to do so. In fact, 79% of people polled said that they believed owning a house was still one of the biggest symbols of success. It is also an essential step in achieving the “American Dream”.
If Millennials are not buying houses anymore, it shouldn’t take a rocket scientist to figure out why. Many college graduates have so much student loan debt, it may as well be a mortgage payment. And without a huge windfall of money, it simply may not be realistic. If this is true that the next generation is buying fewer houses, what are the reasons, and is that ever going to change? Bankrate.com took various survey of Millennial homeowners and renters to see how they feel about their home purchase. And if they do not have a home, why are they choosing to rent instead of buy? By the end of this article, you will learn the #1 reason why people are not buying a house.
Many People Were Not Prepared to be Home Owners
Even for those who get to achieve the American Dream, that doesn’t mean everyone is totally happy with it. When they polled Millennial homeowners, 63% said that they actually have a lot of regrets about the house they chose. They gave a variety of reasons for feeling this way. Some felt that the house was too small, it was in the wrong location. But the biggest regret was being totally blind-sided to the idea of how much repairs would actually cost.
This should not be surprising, because TV shows on HGTV like Fixer Upper make it seem so easy. The Gaines family and their crew regularly take the worst house in a neighborhood and magically make it beautiful. Of course, the magic of television makes the process seems to go by very quickly, and home owners are easily able to afford everything in their budget. For anyone who was not raised watching their parents fix up a house, they may have no experience with a real-life fixer upper
On top of that, some new home owners may have rented all their lives, and maybe their parents did, as well. They are suddenly shocked that they no longer have the option to call up their landlord to fix something. Everything is on them. Sadly, a total of 44% of those same people who were polled said that they completely regret buying a house, and wish they stayed renters. At least more than half (56%) said they are still happy with the fact that they bought the house, even if they still have a lot of regrets.
So far in this article, there has been a lot of doom and gloom. People cannot afford to buy a house, and even when they can, they still have a lot of regrets. However, the issue may be in the fact that many people do not know how to go about buying a house, especially when they have a lot of debt. It truly is possible, as long as you improve your credit score, saving, and explore all of your options. You are probably more qualified to buy a house than you think!
First, you should improve your credit score. Consolidate your debt, pay off credit cards in full, and never miss a payment on anything. Create a monthly budget, and try to figure out what you can truly afford month-to-month. Once your credit score is in a good place, gather your income information, and apply for loans. If you are a first-time home buyer, check out FHA Loans, which allows you to get a mortgage with just a 3.5% down payment. You can also apply with a credit score as low as 500.
At the end of the day, it may just be better to wait to buy a home until you are married and read to have kids. According to Investopedia, only 60% of Millennials are living with a partner or married, compared to the 80% marriage rate back in the 1960’s. A house and all of the responsibilities it entails would be much easier to own with the help of a partner. Many Millennials who are still single or dating are choosing to live in their apartments until it is time to start a family.
The Number One Reason Why People Are Not Buying Houses….
The number one reason why people are not buying a house is a lack of cash flow. Basically, people are not making enough money to support the lifestyle of being a home owner. Getting the money for the down payment and mortgage is just the beginning. You will need to pay for utilities, taxes, furniture, and repairs. It costs a tremendous amount of money to keep up with a home. Many Millennials simply do not have the income necessary to tackle this responsibility.
Unfortunately, this probably will not change any time soon. Over ten years after the Great Recession, housing prices are beginning to rise again. The only issue is that wages have not improved much at all. And, according to some experts, they believe that the housing market may be due for another correction in the near future, which would bring prices down. However, the issue is a bit more complicated than that. Check out this video by Graham Stephen, where he explains the projected future of the real estate market.
In over 80% of the United States, the price of a mortgage has risen above the average salary. When Bankrate polled people, 51% of people say that they could not afford the monthly mortgage payment. Another 41% said that they could never save or borrow the amount that is necessary for a down-payment. Other reasons given were too much existing debt, a bad credit score, or the perception that house prices are ridiculously expensive. Many people say that the money simply was not worth the experience of becoming a home owner. One of the smallest groups (less than 20%) say that they simply did not want a house, and preferred to rent, because it eliminated their responsibility.