Many Millenials are struggling with that age old question; rent or buy? Today’s housing market is certainly very different than the market your parent’s generation experienced. Let’s examine some of the factors that may help you determine which option is best for you.
You’ve probably read several rather scathing articles or heard news that Millennial’s are being called the lazy “Generation Rent” because they prefer renting upscale apartments full of amenities. If not renting they live at home with their parents. The problem with these harsh criticisms is that they are framed out of context. What you do not read or hear about on the news is that Millennials are faced with possibly the most imposing housing market ever seen in the developed world.
Take a look at the CBRE study on this subject . They surveyed 13,000 Millennials in their 20s from various countries and found that 49% of Millennials live with their parents but are doing so out of financial need and not because they are “lazy”. Data shows that yes, more Millennials are living at home, but it’s not because they choose to do so.
What about those who aren’t living at home? The CBRE (The world’s largest real estate services and investment firm) found that 65% of Millennials living on their own are renting because they cannot afford to buy, with the biggest pain point being the down payment. Couple the rising cost of property with college debt along with stagnant wages and it’s easy to see why this generation has to rent instead of owning a home. Although “Generation Rent” is spending more time renting than past generations, 60% of Millennials surveyed still plan to buy in the future.
With this information, it’s no surprise the current median first-time buyer is age 33 — in the upper range of the millennial generation, which roughly spans ages 18 to 34. A generation ago, the median first-time home buyer was about three years younger. The rising age of first time homeowners really puts emphasizes on the issue facing Millennials who are challenged to save up enough money for a down payment as their wages have remained relatively static. In fact, the share of the U.S. population who own homes has slid to 63.4 percent, a 48-year low.
Now let’s re-examine the question of renting or buying a home. The simplest answer is sort of an obvious one. Only buy a home when you can afford to do so, otherwise keep renting. For a few though there is an alternative. Rent-to-Own homes are now becoming a more viable option for both buyers and sellers. As the market cools off sellers are becoming more open to the idea of rent-to-own agreements. And for those who will be financially ready to buy a home in a couple of years, a rent-to-own home can be the perfect choice – allowing you to live in the home now while investing in the property.
View a list of rent-to-own homes to see what opportunities are available in your area.