My Advice to Millennial Home Buyers
Millennials are smarter than their parents when buying homes. Here’s why.
The generation we refer to as millennials are 23–38 years old, are entering the prime income-earning years of their lives, and are quickly becoming the largest home-buying demographic in America.
This is a generation that has become accustomed to sensationalism and has grown numb to panic-inducing headlines and attention-seeking publications. They are used to seeing headlines blow the statistics out of proportion, or make them feel like it’s them vs the world. All this feeds into the stereotypes that we know and detest.
In the digital age, it’s a good idea to know what you’re up against, and where to get the facts straight, especially for those smart enough to invest time and money into homeownership. The good news is: the housing market isn’t nearly as bad as people are trying to make you believe, though it has changed quite a bit since the days mom and dad bought your childhood home.
My company, Paramount Bank, is determined to help first-time home buyers find their way through the maze of sensationalism and misleading headlines. What are the facts that will help you in your goal to invest in a home?
I want to use a few quotes from this article as an example of what you might see and read, and how it will influence your thinking in the wrong way.
“81% of homeowners between 18 and 34 years old have at least one regret about their home, compared with 65% of those 55 years and older.”
Without being hyperbolic (look at the stats from the older generation) almost everyone has regrets about buying their home. And those 55 and older are probably not living in their first home, while those 18–34 most likely are. If you asked those in the older bracket if they had regrets about their first home purchase, I guarantee that percentage would be higher.
It’s important to remember that regrets can range from not liking the kitchen tile to getting a bad deal on a home loan. One of those is a much bigger issue than the other, so don’t let this statistic shock you the wrong way. I’d be shocked if anyone thought their first home was perfect!
This is highlighted by a number hidden much later in the article:
“Only 8% of homeowners wish they were renting instead.”
“29% of younger homeowners regret rushing the process compared with 12% of older buyers.”
I’ve always said that buying is a better long term decision than renting. Remember: you don’t need to live in the home you purchase. Building a real estate portfolio is one of the most profitable investments you can make. You don’t realize how much you save in the long game by buying. 92% of homeowners have figured that out.
Rushing the process, on the other hand, can be more of a problem. This often means a home loan wasn’t negotiated to the best of the homeowners ability, or the home came with more issues than originally thought.
Still, I think this statistic is a good thing. For one, it means that 71% of younger homeowners didn’t rush the process. And just because 29% regret doing it the way they did, doesn’t mean they would undo it. The fact that millennials are being wiser with their time and money when making a huge decision, like purchasing a home, is a good thing to hear.
The last two quotes deal with the same thing, “big regrets.”
“The study finds 36% of homeowners resent dealing with unexpected repairs and maintenance.”
“Another big regret is the inability to relocate (27%) followed by too much yard work (25%).”
As we have with a few others, let’s look at the inverses here. 64% of homeowners do not resent dealing with unexpected repairs and maintenance, 73% say the inability to relocate isn’t a big deal, and 75% say that there isn’t too much yard work.
After all, who enjoys unexpected maintenance? Who loves doing yard work? All these statistics say to me is that the grass is greener when you don’t have to mow it yourself.
If you are thoughtful in your buying process, you shouldn’t be caught off guard by much.
Real estate is one of the safest, and most reliable ways to invest. Your home is an investment, not just a place to crash at night. Now, that’s not to say things aren’t different.
Housing costs have risen, and many of the millennials looking to buy first homes are carrying huge amounts of student debt. That’s a reality that we have to deal with. The cost of homes has increased more than other consumer goods, which makes first-time home buyers nervous to take on more debt.
So what’s the solution?
My advice: don’t fall for the comparison trap.
Many millennials are buying smaller homes, and the larger homes of yester-year are being sold at huge discounts because square footage matters less. Just look at the tiny home trend! Younger buyers are looking for what they need, with the budget they have, and when they can afford it. They aren’t as worried about the white picket fence, the curb appeal; they’re more concerned about the things that matter, and whether they can actually hold onto the home long-term.
In the end, if you are patient with your time, smart with your money, and treat a home like a long-term investment and not a tool to keep up with the Joneses, then you’ll be happier and better prepared for the future.
Thanks for reading!
Todd Jones | Captain US Army | President — Paramount Bank Direct