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Renter Nation: 6 Reasons A Millennial Home Buying Boom Is A Myth


This was heralded as another big year of millennials dominating the home buying space. That seems to be yet another myth that just isn’t going to happen. At least for now.

The National Association of Realtors among others hyped up the millennial home buying boom a lot. Yet, the data shows it isn’t happening and isn’t likely to for a while. It was a great sales pitch to get Realtors to spend a lot on advertising services, but millennials themselves don’t seem to be buying it. Instead, the vast majority are still choosing to rent. Find out why and what it means for your money below.

Six Reasons the Millennial Home Buying Boom is a Myth (for Now)

1. They Don’t Have the Down Payment

The Mortgage Reports says it will take the average millennial home buyer 20 years to save up a 20% down payment. Most have zero dollars set aside for home buying. Only 10% may have $10,000 saved. That isn’t going to go far in most metros today. It might not even be enough to get into a great rental. As homes get more expensive, and real estate traditionally goes up in value faster than inflation, it will take even longer to save a down payment.

2. They Can’t Afford it

Even for those who have a down payment, it has become increasingly hard to get a home loan. Many won’t qualify due to debt to income ratios. Especially those with student debt. They are certainly having a hard time finding something they can afford that they actually want to live in, where they want to live.

Coverage by CNBC shows that the millennial homeownership rate is still around a paltry 30%. Less than half that of older generations. Among those who have bought, 63% regret it. Primarily because they overlooked the true cost of ownership and the work involved in maintaining the property. Others complain they bought a home which was too small or not in an ideal neighborhood.

3. Lending is Tightening Up

This is only going to get harder from here on out. Interest rates have stayed low. Yet, the FHA, who is the primary provider of first time home buyer loans has announced that it is tightening underwriting and toughening up on credit scores and debt to income ratios after years of making too many subprime type loans.

4. Economic Growth is Slowing

The yield curve inverted as we moved into Q2 2019, and some believe this foretells that we are moving into a recession. That may mean layoffs. Even if we escape a recession, a slowing economy may cause companies to rethink their workforce needs. In an effort to seek higher productivity, many will be using machines to lower high labor costs.

5. They Don’t Want to be Tied Down

Millennials are increasingly embracing longer-term travel, still have many career moves to make and are still figuring life out. Most aren’t ready to commit to a home for 30 years.

6. More are Choosing to Rent

Data from RentCafe and Inman shows a higher percentage of millennials are renting. Interestingly, that is dwarfed by a 43% rise in seniors choosing to rent. That competition is going to make renting more competitive and expensive. Good news for landlords. Less so if you are in the market to lease something.

Your Money

If you are a millennial, you want to control housing costs and not be held ransom by the market.  Yet, homeownership may not be a smart option right now. Still, you don’t want to miss out on investment gains and the safety of real estate versus stocks, the tax savings, or be priced out for good. The solution is simple. You can invest in real estate instead. It’s a way to benefit from this new renter nation. If you are a millennial you know what your peers want and need in rentals. By investing in multifamily property, you are able to help them, while their rent goes towards augmenting your income and building your wealth. You can even use those funds to put towards your dream home. Even if you are not a millennial, these trends clearly point to where some of the best real estate investment opportunities are now.

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