Why do millennials rent homes rather than buy them? Buying a house at a young age is a great idea, but there are reasons why millennial home ownership is low.
Millennials everywhere agree on one thing in particular: the economy just isn't what it was when their parents and grandparents were young and ready to start their lives.
One of the biggest manifestations of this change in economic conditions is a downturn in young adults purchasing their own homes. Compared to previous generations, millennials own far fewer homes, opting instead in most cases to pay rent.
But maybe it's time to reverse the trend. Millennials should be buying more houses. It's time to stop renting. Here's why young people should consider owning a home.
Renting Is Worse for Your Finances
If you are currently renting a home or apartment, you are probably spending far more per month on housing than your home-owning counterparts. Think about it — the average rent for a 2BR home in the state of Texas is $1,049 as of July 2018.
And while your mortgage payment when owning a home greatly depends on how much home you buy and how long you intend to make those payments, they can be structured in ways that accommodate your financial situation.
Another aspect of renting is the fact that you are not truly getting anything out of paying it in the long run. When paying each month on a mortgage, you are actually working toward something with an end goal. At the end of a mortgage, the home is yours. Rent, on the other hand, is just renting.
The extra money you spend each month on overpriced rent is simply getting you nowhere financially. Think about all the money moves you could be making instead. Even if you were to move to a cheaper rental home or apartment (something you should absolutely consider regardless), the money you spend could still be utilized more efficiently elsewhere.
Your Debt Isn't as Scary as You Think
A major reason why many millennials refuse to consider owning a home is the looming shadow of the mountain of college debt. It seems inescapable, and a sure nail in the coffin of prospective home ownership.
But in reality, your college debt is both manageable personally and forgivable in the eyes of lenders. You aren't the only one out there who understands what it means to have college debt. Lenders know the difficulty student loans have become for the 44 million Americans who are currently paying them off.
That's why banks and other mortgage lenders are actually comfortable providing home loans to people with student debt. If they refused to accept people with student debt as customers, they would quickly run themselves out of business! In fact, many of those lenders may even offer debt consolidation and refinancing options to make your student debt payments more manageable.
You Can Borrow Against Your Home
Have you ever been in a position where you needed cash fast, but you didn't have any readily accessible? A home can provide the money you need when you draw on the equity.
Taking out a home equity loan can be simple and allows you to access high levels of cash to pay for unexpected car repairs or tax bills or to finance home improvements. Turning your investment into a piggy bank is one of the smartest reasons to buy a house.
Millennials and Home Ownership: Small Houses Are Worth Owning, Too
Many millennials don't pursue home ownership because they think they don't have enough money. They associate home ownership with big, lavish houses that cost a half-million dollars and often much more. These young people assume they lack the funds to invest, but the truth is that you are better off buying a small starter home as your first purchase.
With a small home, you make a more modest investment and also treat the new house like training wheels for a bike. The property is worth a little less than your "dream home," and you can learn from the experience.
You'll figure out what to do when your refrigerator springs a leak in the middle of the night or the toilet won't stop running. You become more comfortable dealing with uncertainty. You take those lessons and apply them to owning a much bigger house as you get older. When you understand the potential pitfalls of home ownership, you also understand how to deal with them.
Plus, you don't need a huge house to start. Something small offers just the right amount of space and the right financial rewards.
Is Owning a House Worth It? Yes
So think about it. Do you want to live your best life, in a home that you can call your own, working toward a better financial future?
Stop renting as soon as possible. Find a home in which you can see yourself comfortably living your life, and consider the prospects of becoming a homeowner. It'll be better for you both in the short run, and in the long run when you have something to call your own.
If you need help paying for closing costs or a down payment, consider taking out a personal loan from Atlas Credit. You can borrow up to $1,400 and you can repay the loan over five to 12 months. Visit one of our locations across Texas or Oklahoma to apply, or fill out our application online.