Currently, about 39 percent of the white millennials own a home (millennials aged 18 to 34). On the other hand, only 14 percent of the black millennials who own a home and this is according to the urban institute. There are a lot of reasons that contribute to this lower number of homeownership such as personal preferences as well as the economic disadvantage in recent times. These rates are actually lower than those of our parents as well as our grandparents. In the past, the very first thing that one wanted to own was a home. But the millennials are not in a hurry to purchase homes or so it would seem. Probably one of the reasons why the homeownership rate is so low is because of the delayed marriages. When a person is married it increases the likelihood of owning a home by about 18 percent. In the 6os people got married in their early twenties but nowadays many people get into their first marriage close to 30 years.
The fact that only a smaller percentage of the millennials owns homes does not mean that they do not want to own home. According to the bank of America, 72 percent of the millennials born between 1978 and 1995 will prefer to own a home as a top priority even more than getting married and having children. This proves that the millennials are more than willing to own homes but something is stopping them. What is that is stopping millennials from achieving their dreams of owning a home? Is it online loans? Or is it the delayed marriages? Well, to start with, there are some youths afraid of owning properties purely because of psychological reasons, most of them grew in a generation where there were a lot of evictions and foreclosures so why would they not be afraid of owning a property? But most of the reasons why the millennials are not owning homes are just material. Some of the obstacles that make the millennials unable to buy homes include:
Millennials spend a lot of money on rent.
Being real, a lot of young people prefers living in the cities compared to living in rural areas. In the urban centers, both the property value and the rent are generally higher. According to the bank of America, over 90 percent of the first-time home buyers would prefer buying homes in their preferred location and as we have seen most youths would rather stay in the urban centers and in urban centers houses are more expensive making it harder for them to own a home. The millennials continue to stay in the urban centers where the rent is up and according to the bank of America, nearly 30 percent of the millennials spend about 30 percent of their salaries on rent. Spending such huge sums of money to pay rent simply mean that the millennials are rent-burdened. The rent-burdened household usually has higher eviction rates compared to houses where people spend lesser proportions to pay rent. It is very common to find a lot of rent-burdened individuals living in places like New York or San Francisco where the rent they pay outweighs the wages they normally get.
If they have to spend huge sums of money just to pay rent it means saving up enough money to buy a home might be close to impossible. They cannot even be able to afford to pay the down payment and they just keep on hoping that one day they will save up enough money to buy a home. Coming across financial hardships right at the beginning of your house project could be nerve-racking, particularly if you have concerns that it's going to jeopardize your entire venture. Bugis Credit can easily assist you in getting assembling your project started whilst keeping it on the right course all through each of the various stages. Make sure you submit an application for your loan ahead of time so you are sure that it is in position for the time frame which the building contractors are going to be starting at your location.
The huge burden of the student loan debt.
According to the bank of America, 10 percent of the people they polled said that they had to put off buying a home so that they could deal with the huge burden of the student loan debt first. 10 percent might seem like a relatively small number but it may be more considering the fact that the bank of America only polled about 2000 people. When you include student loan with other expenses, rising property value, and stagnating wages it can be a very heavy burden for our millennials to carry and still be able to purchase a home. The average amount of money that most youths own the government is about 33 thousand dollars and the overall amount owned as student loan is about 1.5 trillion dollars. As you can see the numbers are not very encouraging and the burden of the student loan may prevent the youths from purchasing homes even though they really want to. A study by the National Association of Realtors revealed that the student loan debt burden may delay homeownership for even more than 7 years. The student loan prevents the youths from saving up enough money for down payment or makes it difficult for them to be able to afford a mortgage. Even the millennials with higher income careers feel like they have to delay their homeownership because they feel like they are not financially secure to pay a down payment or to buy a home.
Having said that, it seems like there is no winning for the millennials because according to a study carried out in 2018, most of the indebted graduates take at least four more years before they can put their first home payment as compared to those who did not take student loan back in college. And those who did not complete their college studies tend to take even more time before they can make their first down payment.
The threat of another recession.
Since 2008, our economy has drastically improved but that does not mean the young people have changed with it. The great recession really widened the gap between the millennials and preceding generations. The millennials take credit card loans, student loan, car loan which prevents them from taking a mortgage. The millennials are still feeling the effect of the great recession and it might just be another reason why owning a home for them is very difficult.