4 Reasons Why Millennials Are Renting More, Backed By Research
Buying a home used to be a huge milestone that helped establish yourself as an adult. However, attitudes towards buying homes have changed drastically in recent years and there are fewer Americans purchasing houses. We have seen the biggest decline among millennials — but why? Let’s take a look at some of the main reasons millennials are opting to rent instead of buy their homes.
Affordability
According to Business Insider, millennials are currently facing housing prices 39% higher than buyers did in the 1980s. With median home values in areas like San Francisco and Manhattan at over $1 million, it’s no wonder so many millennials are holding off on purchasing homes. Not to mention the countless hidden costs that come with owning a home, such as an appraisal, closing costs, and constant maintenance. Renting a home is already hard enough for many, as rent rates have spiked 46% since the 1960s, so buying a property just doesn’t make sense financially for many.
Postponing Marriage and Children
Another factor causing millennials to choose to rent over buying is the fact they do not pursue getting married and having children with the immediacy of generations before them. We are seeing more and more millennials holding off on marriage to establish their careers and find out what they truly want in life. Currently, the average age for marriage in the United States is 27.8 years old for women and 29.8 years old for men. In 1970, the averages were 20.8 years old for women and 23.2 years old for men. There is less pressure to tie the knot, so this plays a factor in their decision to delay purchasing homes.
Different Lifestyles Than Previous Generations
Changes in the way millennials live their lives relative to previous generations have also caused homeownership to drop to record low levels. Whether they are traveling overseas to experience living in a new country or moving to another state for a job opportunity, millennials place a high value on freedom. The idea of staying at the same company for decades is long gone, as we are seeing many millennials move to new companies every few years. The ability to pick up and go after a lease expires is much more appealing than being constrained by a long-term mortgage. It has also been reported that for this generation, happiness is not as much focused on material possessions or career status. Millennials value experiences over everything else. They are more eager to invest in things like an excursion across Europe than a down payment on a house.
Crippling Student Debt
Millennials came of age during a time when the costs of attending higher education increased drastically. According to Forbes, the net price of tuition at a public, four-year college has risen 68% since the 1999–2000 academic school year. As of 2019, there is $497.6 billion in outstanding student loan debt for borrowers aged 25 to 34. This averages out to about $33,000 per person. Additionally, thanks to the Great Recession, many millennials entered the workforce while the economy was weak and there was a restricted labor market. These constraints have caused major financial decisions like purchasing a home to be pushed back.
Final Thoughts
With previous generations, owning a home was a cornerstone of becoming an adult. You would get married, purchase a house, and have kids at a young age. That’s just the way things were. But today, times are changing. Facing unfortunate economic circumstances and having different values than generations before them, we are seeing more millennials opt to rent instead of buy because of the flexible and more affordable lifestyle it offers.
