Why Millennials Are Not Buying Homes
The decision to buy a home is never an easy one given various reasons. One of the reasons is finding the right home at the right place and at a price that the home buyer can afford. Millennials are even more cautious and are moving at a much slower pace towards home ownership. These are some of the reasons why this generation is not buying homes.
According to Forbes, the millennials or those born between the early 1980' to early 2000's, are finding it hard to jump into the housing market given that it's getting harder for them to get a mortgage. As compared to the lending practices during their parents' younger years, the standards today are stricter particularly on the debt-to-income ratio. Today's millennials are burdened with students loans that affected their debt-to-income ratio. Also, many from this generation had a slow start in their career given that many experienced being jobless after graduation due to the tough job market. Millennials affected by this may have salaries that are not sufficient to cover mortgage payments.
The Forbes report also cited fierce housing competition as another reason why millennials are finding it difficult to enter the housing market. Nela Richardson, Chief Economist at Redfin, told Forbes that securing good mortgage might not be enough for millennials to buy a house. She added, "You can have a great credit score and a decent down payment, but if you're competing against an all-cash buyer in a competitive market, that may not be enough."
The two other reasons that the Forbes report enumerated are more rental housing options and the fact that millennials are starting their families later in life. On rental options, this generation reportedly has a larger variety of options to choose from, such as typical apartment units or single family homes. Meanwhile, having children of their own would also be another factor which would push millennials to finally buy their own homes. According to a Redfin report, this generation would more likely want to purchase a home in a good school district.
The Redfin report also showed that aside from a finding a home in a good school district, the millennials are looking for homes in safe and affordable neighborhoods to invest in. Other factors that this generation are looking at in buying their first home included access to public transportation and walkability.