Baby Boomers are getting older and Millennials are entering the housing market for the first time. However, CNBC Reported that millions of Millennials are holding off longer and longer to purchase a home. While older generations saved vastly before being able to purchase a home as quickly as possible, CNBC reports research from the Urban Institute (policy research group) that found a quite a few reasons why Millennials are holding off.
Here are some of the reasons why:
Millennials are getting married later than older generations. Most are not getting married until their late 20’s and early 30’s. Marriage impacts a persons decision to purchase a home by 18 percent. Another reason Millennials are holding off is due to personal preference. A good number of Millennials feel they would rather rent than purchase, or they feel they are simply not ready to buy, and would rather wait until they can plant roots. This also comes about from having to move around more frequently and Millennials jumping around from job-to-job more rapidly in order to increase both experience and wealth. Lastly, a major reason has to do with economic disadvantages. Millennials, in general, simply do not have the financial means to buy homes as young in life as did Baby Boomers and Generation Xer’s.
The bottom line is, 53 percent of Millennials claimed that they can’t afford the down payment on a home. This means that every year they cannot afford to purchase a home, they are missing out on the opportunity to accrue wealth as home prices appreciate. They are also renting for longer in locations where home values are higher, only making it more difficult to save for the down payment on a home.
Lastly, the rising cost of student debt is the largest factor for Millennials to lose out on the opportunity of home ownership. Over the next decade, it will be interesting to see how these factors play out as Baby Boomers and Generation Xer’s retire and dwindle.
Full detailed article from CNBC can be found here.
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