Are Millennials Buying Homes? Millennials now have the largest share of new mortgages by dollar volume, but most of them have regrets about buying a home.
Are Millennials buying homes? It looks like the answer is yes: Millennials are finally becoming homeowners.
Millennials now account for the largest share of new mortgages by dollar volume – outranking both Gen Xers and Baby Boomers, according to a recent report by Realtor.
It’s a relief for realtors everywhere, as there’s been continued concern about Millennials delaying milestones like partnering up, getting married, and buying a home and ongoing debate about whether it’s just generational differences or massive amounts of student loan debt keeping them from becoming homeowners.
But it’s not all good news. A recent Bankrate survey found Millennials are the generation most likely to have regrets about their home purchase.
Millennial Homeowners Have Buyer’s Remorse
Over 40 percent of Americans expressed remorse over their home purchase. More than 60 percent of Millennials have regrets about their home purchase, nearly double that of Baby Boomers. Roughly 25 percent of Millennial homeowners identified unexpected maintenance or hidden costs as their biggest pain point.
Failing to factor in maintenance expenses and other costs associated with homeownership was the most common home buying regret across all generations. “Buyer’s remorse can easily be avoided with adequate research and planning,” said Bankrate analyst, Deborah Kearns. “Repairs and maintenance costs are something all homeowners face. 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. Budgeting early on can prevent dipping into emergency savings or going into debt to handle these added expenses.”
In her book, 100 Questions Every First-Time Home Buyer Should Ask (4th Ed.), author and ThinkGlink.com publisher Ilyce Glink includes a checklist of expenses (maintenance and otherwise) that homeowners should expect to pay at some point during their tenure in the property.
Millennials Make Lower Downpayments
The latest generational propensity report from Realtor found Millennials make lower downpayments than other generational cohorts, and take on larger mortgages overall than Baby Boomers, further adding to their debt load.
“Taking on a larger mortgage payment than you can comfortably handle is a recipe for disaster,” said Kearns. “Spend a few minutes using a mortgage calculator to determine what you can afford, and shop around with at least three different lenders to ensure you’re getting the best rates and terms. The up-front legwork could potentially save you thousands of dollars over the life of the loan. This is likely the largest financial transaction of your life so you want to be confident about your investment.”
“You might also want to look at less expensive properties, so that you need to borrow less to complete your purchase,” Glink adds.
Student Loans Delay Millennial Homeownership
Millennials were more than three times as likely as other generations to say that student loan debt is holding them back from homeownership. Another Bankrate survey found nearly 25 percent of Millennials have delayed buying a house specifically because of their student loan debt.
“There’s a huge toll being taken on individuals and the U.S. economy from the growing burden of student loan debt,” said Bankrate’s Senior Economic Analyst Mark Hamrick. “For the huge slice of the American population with debt, it is necessary to juggle competing goals including saving for emergencies and retirement as well as major life decisions.”