You thought owning property and a home was a dream? Well you might want to carefully consider this. Millennial homeowners have a bad case of buyer’s remorse, according to a new survey.
Overall, about 44 percent of U.S. homeowners say they have regrets about their purchase. For Millennials this rises to nearly two-thirds, or 63 percent, according to homeowners surveyed by Bankrate.com in early 2019.
Realistically, already about 20% of Millennials are prevented from even thinking about buying a home due to student loan debt and the consequences of the great recession of 2008.
Young professionals have had to rethink their personal finance strategies of late. About four in 10 Millennials are already homeowners, according to a new survey of over 600 Millennials (age 21–34) by Bank of the West. Yet a majority of them have a strong case of buyer’s remorse.
Millennials need to balance savings with experiences, life with work, economic uncertainty with side hustles, like no generation before them. Consumerism 2.0 isn’t exactly well-positioned for the prosperity of young people in a more ruthless version of capitalism than ever before.
Some analysts believe some of the problem may be that millennials are much more likely to use social media in their home searches than any other generation. This can skew their ability to finding the right deal.
Millennials have been slow to enter the ranks of homeowners, thanks to the last recession and the housing crash that caused it. Many members of the group between GenX and Millennials have also had to bear the brunt of 2008, that means their participation in the labor force itself is skewed compared to other cohorts.
Student Loan Debt & Buyer’s Remorse
Meanwhile for GenZ, student loan debt is becoming a more significant burden for their personal finances, meaning home ownership will be a later average milestone or something they forgo entirely.
About one in five millennials say that student loan debt is holding them back from home ownership, according to the same survey commissioned by Bankrate.com.
Apparently young owners don’t factor in maintenance properly. Young buyers may have been renters previously, and not even considered maintenance since it was never a factor financially. Consumers should expect to set aside 1 percent of their home’s purchase price each year to keep in a savings account to cover these expenses. That’s a brutal factor for many young Millennial families that have become experts with ‘making do’.
In the U.S. around 42% of Millennials own a home (Source: Bank of the West 2018 Millennial Study), but not all are doing so happily. If almost two-thirds of millennial homeowners (ages 23–38) have buyer’s remorse over their home purchase, what does that say about Gen Z, who will carry an even greater student loan debt burden into their young and unpredictable careers? Home ownership could take a hit.
Despite all the regret, a full 79 percent of Americans still consider home ownership part of the “American Dream,” according to Bankrate. Increasingly Millennials are deciding to have a family later or not at all, which is impacting how we perceive aspirational leanings. Social mobility is down, personal debt is up for younger people today. That’s no great wonder with rising wealth inequality and wage growth stagnation when compared with inflation in the cost of living decade over decade.
Roughly four in 10 Millennials felt they made poor financial choices when it came to purchasing their home. For those that don’t own a home, cost is the largest barrier to being a homeowner. About half of respondents said they don’t have enough income, while 41 percent cannot afford a down payment and the closing costs involved in the purchase.
Is owning a home right for you? Think, think and think again. (CNBC and Bloomberg recently covered the results of the survey).
Gen Z are graduating with significant negative net wealth that will impact their relationship to the housing market in the future. Will they learn anything from their angst/regret ridden Millennial brethren? Don’t under-estimate on-going costs like home maintenance and all the costs that are part of the purchase process. Don’t assume you can afford it, when in reality you can’t.
In consumerism 2.0, the American Dream may need a radical reality check.