Millennials: Home-buying Needs to Be Near the Top of Your List
Thinking about renting? Think again. Although the apparent ease that comes with renting can be tempting, you really need to consider the benefits of owning a house. It’s More Than Location Finding a great place to live is swell, sure. But there’s more to smart real estate than where you’re located.
In fact, many Millennials are making the same critical error: They’re not buying homes. A recent CNBC article made the distinction between buying and renting more clear—and dispelled some common misconceptions. For one, buying versus renting isn’t quite as different as many Millennials believe. While rent payments seem to be the easier, more sensible road to many when they’re in their 20s and just starting out, realistically it’s a money pit. You’re always putting money in, but you’re only investing in your temporary comfort. Once you move from your location, you own no assets and have nothing to show for all your payments. Buying a home allows you to own an important asset later on. And since mortgages act as monthly payments, the process isn’t all that much different than renting—except for the fact that it’s infinitely more beneficial to your future, of course. While it’s a bigger commitment over a longer period of time, once you pay down your mortgage, your home is entirely yours, free and clear. And that’s an asset you have as financial leverage to start the next phase of your life. The American Dream
Owning a home is still part and parcel of the American Dream, as a recent Business Insider article detailed. Granted, things like housing prices, loan savings rates, and the burden of student loans are holding back Millennial investment in homes, resulting in the United States home ownership rate sitting at a record-tying low of only 62.9%.
However, Millennials still are eager to invest in home ownership… just not right now. According to the Business Insider piece, 91% of Millennials plan to buy a home, and 65.3% associate home ownership with the American Dream—a percentage greater than any found in previous generations.
An Escalator to Wealth All this said, home ownership may not be for everyone. After all, there are questions to ask: How much money do you make? Do you have enough saved for a down payment? Can you afford to be “anchored” to one area for a period of time?
Ultimately, only you know whether home ownership is the right path for you right now. But as David Bach quips in the CNBC article, the upward mobility can be incredible: “The average homeowner is 38 times wealthier than a renter,” Bach explains. “[Buying homes] is an escalator to wealth.”