
Why Millennials Aren’t Buying Homes
Millennials are lagging behind previous generations when it comes to home ownership. Not only are they buying less homes than Baby Boomers and Generation X, they are buying homes later in life as well.
Millennials often have a bad reputation in the eyes of their elders — they are criticized for being spoiled and for being financially irresponsible; however, millennials are actually more cautious than their parents’ generation when it comes to spending money.
There are several factors explaining why millenials are not buying as many homes.
1. Housing is less affordable for millenials than it was for previous generations.
The housing market today has become increasingly expensive. While home prices continue to go up, salaries and wages are not keeping up. Very few millennials can afford to put down the standard 20% down payment for their homes.
Millennials tend to enjoy living in big cities such as San Francisco and Los Angeles, where the real estate market is notoriously expensive. Rather than buying property in these locations, they spend longer periods of time renting. Spending so much money on rent makes it difficult to save up for a down payment.
In addition, those of the older generations are staying put rather than downsizing or upsizing their homes. This means that the much-needed inventory is not clearing up.
2. Millenials have more student debt.
Millenials as a whole are more educated than older generations. With the rising costs of college, millenials are also racking in more student debt.
Upon graduation, students are left to pay off the huge amounts of money that they borrowed to fund their tuition. Constantly paying off student loans makes it harder to save up for a down payment, and owing a substantial amount of money makes it harder to qualify for loans.
3. Millenials are settling down later.
Buying a house is usually a symbol of settling down; however, millennials are more likely to remain single during their 20’s in order to focus on themselves and to develop their own professional career. They are constantly moving from city to city and do not feel the need to settle in one place, so there is no urgency for them to buy a home.
Compared to previous generations, millenials are getting married and starting families later in their life. In the past, the average age for first marriages was around 20 years old; now, that number has changed and become closer to 30 years old. Millenials are choosing to settle down later, meaning they are not worried about buying homes until later.
