There’s been a plethora of talk regarding home buying and interest rates in the past year. However, one key question seems to pop up in real estate pros’ and novices’ minds. This question is a resounding “Why are Millennials not buying homes?”
Classifying Millennials and Gen-Zers
With so many different generation classifications, determining whom we’re talking about can be confusing. Those classified as Millennials are between 25 and 40 years old and were born in the 1980s to early 1990s. The following generation is referred to as Gen Z, standing for Zoomers. Gen Zers were born in the late 1990s to early 2010s.
Both generations lived through the technology booms and are savvy with tech and social skills. They’re eco-conscious and devoted to specialized careers and are more likely to indulge in entrepreneurship than other generations before them.
Homeownership is Still an American Dream for Many
Recent surveys by Bankrate have revealed that a whopping 65% of Millennials and a close 59% of Gen Zers still identify homeownership as a top pillar of success as an American adult. However, a lack of personal funds is causing many Gen Xers and Millennials to constantly put off the thought of homeownership and focus on finding rent-controlled lodging for the foreseeable future.
When specifically asked, “Why are Millennials not buying homes?”, each generation gave its unique response. Most Millennials surveyed attributed their inability to afford a house to skyrocketing home prices in recent years. Gen Zers, on the other hand, revealed that their income wasn’t high enough yet to invest in a home.
The Housing Market May Be to Blame
There’s no debate that the housing market has soared in the last two years at record-breaking rates. Since the start of the COVID-19 pandemic, typical housing prices have seen an increase of around 34%. Coupled with repressed wages following the Great Recession of 2008 and significant student loan debts, Millennials and Gen Zers are finding the possibility of homeownership far beyond their financial reach.
The True Struggles Holding These Generations Back from Homeownership
With college debt looming over many people for decades, it’s no surprise that affording a mortgage and student loan debt is no easy feat. Both generations surveyed touched on some of the most common issues that are restricting their ability to purchase a home. These college-educated generations invested a great deal of money in educational costs.
The constant rising of home prices also plays a significant role in the inability of Gen Xers and Millennials to take the plunge towards homeownership. Apart from the high purchase price, many individuals cannot save enough money to cover the rising down payment and closing costs associated with purchasing a new home.
However, many are looking to turn the question “Why are Millennials not buying homes?” into “Why are Millennials buying homes?”. Some crafty fixes that can help those struggling financially to afford a home include relocating to a different state, moving to a less desirable neighborhood, and investing in a fixer-upper.