A Costly Mistake for Millennials

Shockingly enough, a good portion of millennials claim they would rather rent than buy a home. This could end up costing them over $700,000 during their lifetime.

Six out of ten millennials say they’d rather rent than buy. One in four claim they are very likely to buy a home in the next five years. This survey was conducted with a sample size of 1,300 millennials by EliteDaily.com. This anti-buying a home trend is quite evident because their statistics show, one if four own a home, and back in the 70’s and 80’s it was one in three. This isn’t the best news for the real-estate industry.

There are plenty of reasons for this trend. One happens to be that they feel they cannot afford to buy a home. Millennials also are starting their families later in life. This generation also doesn’t like to feel they are trapped in one place. Whatever reasons they have, it will cost them in the long run. Most markets are still a better deal to buy than rent (monthly), even when you factor in all the insurance and tax costs.

When you have a plan to buy a house you plan on owning an asset as well. The median home in America is $190,000, and historic annual home price appreciation is roughly 3%. Depending on the price of the home you buy, and you do the math, carry the 2, your home could very well be worth much more than when you bought it after a decade or two. Rent can also appreciate over the course of a few decades! This being said, some millennials are likely to rent now and buy later, but waiting too long has its costs too.

Interest rates and home prices will likely rise in the future. If this is the occasion, and if you do the entire math correctly, you wouldn’t come out positive on your investment a year after the mortgage was paid off. There are also reasons to rent, like more flexibility, no mortgage payments, and very little maintenance.

 

Be smart though, if you cannot afford it, don’t buy it!

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