Homeownership has long been held as ideal in America.
In fact, 72% of those surveyed still consider homeownership as part of the American Dream (Trulia, 2019). For years, we’ve asked “why rent when you can own?” In most states, it costs less to pay a mortgage than to pay rent each month. For example, in Alabama, you’d pay, on average, $1000 a month to rent. It would cost you around $986 a month to own.
But- Millennials are turning that question on its head, instead asking, “why own when you can rent”? A research report by Urban Institute concluded people born between 1981 and 1997 were “less likely to be homeowners than Baby Boomers and Get Xers.”
“72% of those surveyed still consider homeownership as part of the American Dream.
Trulia found fewer 18-to-34 year olds now believe in the American Dream. It’s down nine points since 2015. This age group sees many obstacles to owning. The main one being they cannot save enough for a down payment. Only 15% of them would be able to save a 10% downpayment within a year’s time. Apartment List says with the current savings rates, 67% of millennials “will need more than two decades to save a 20% down payment.”
“Student loan debt is crushing many a wallet..”
Add to this all the other challenges they face: rising home prices, poor credit history, unstable jobs and student loan debt. Student loan debt is crushing many a wallet right now. What happens as a result? People delay life choices like buying a home and find other, more suitable and affordable living arrangements, according to the National Association of Realtors (NAR). Here’s what its Research Department found in 2017.
- 28% Rent with roommates
- 20% Own a home
- 16% Rent Solo
- 15% Live with friends/family rent-free
- 15% Live with friends/family and pay rent
- 6% Other
Still, people aged 28-to-37 made up 28% of homebuyers in 2017. That is the highest out of all age groups. Gen Xers were close behind at 26%.
Millennials are buying. They want to buy. But, they need financial education and affordable solutions to housing to bridge the gap.
Did you know?
- The U.S. Department of Housing and Urban Development sponsors Housing Counseling Agencies throughout the United States. The counselors can provide advice on buying a home and credit issues.
- An FHA loan can reduce a downpayment to 5%.
- There are several programs that can offer downpayment assistance, yet many people do not know they exist.
- Education debt can be “overcounted.” According to NAR, “Fannie Mae and Freddie Mac have revised their treatment of this debt such that if a student is taking advantage of an income-based repayment program, only that amount of debt is included in the debt-to-income calculation.”