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Research is showing that the millennial generation is forgoing the once cherished tradition of purchasing a home. For many of us 'Baby Boomers' our greatest asset is the equity we have built up over the years by buying rather than renting. In my case several hundred thousand thousand dollars. If I had chosen to rent through the years and perhaps taken the easy route (no maintenance, freedom to move at will, etc) I probably would have payed about the same in rent as I did in mortgage.
I can see singles or childless opting for urban rentals and walk to work and bars but I can't really understand why families would choose to rent.
Lots of very smart folks on this CD forum so I would appreciate insight. Maybe things have changed and I am looking at things totally wrong.
I make about $28k each year as a grad student and a typical house around here is $300k or so. Let's see, I could:
A) Rob a bank
B) Quit school and move to Detroit and buy a house for $20k in cash from my savings, but be without a job
C) Sell illegal drugs for a long period of time to come up with the money
D) Buy a house for $30k 2 hours away and commute, but have no time left for school and after 3 years no car either because I would have burned through all the miles, and no job either because I failed school
E) Get a sugar mommy who makes 4x my salary, and then buy the house
F) Similar to D, except do all my work, get another job and commute, but then get so little sleep that I am going to die in a car accident on my two hour commute while getting 2 hours of sleep each night
Uh so where is your argument home equity out performs a mutual fund
I have never understood this argument. It's not like you can live for free somewhere and invest what would have gone into a mortgage into a mutual fund. You still have to pay rent PLUS whatever you would invest. Rents always go up while a locked-in 30 year mortgage does not. Yes a pure amount of money in a fund versus mortgage probably would do better, but the mortgage gives you a place to live.
Well maybe so ..... I just know that by paying mortgages over the years instead of rent (both probably being about the same) I will be leaving my 3 kids about a $100,000 each just in home equity when I pass.
unless the HOA wipes it all out.
If you have equity in an HOA-burdened housing you and your property just became targets for the management company and HOA attorney.
Single "millenial" here. I own a modest condo. I chose to purchase a home because I figured I'll be around this area for a while and even if I were to move away; I could rent this place out very earsily for much more than my mortgage is. That's a unique set of circumstances. Everyone has their own unique set of circumstances.
I am in the minority of single millenials in owning a home; but the majority of people my age who I know who are married and/or have kids....own a home.
I still can't fathom why boomers are so obsessive about what millenials do. The actions and trends of Boomers have been and continue to effect the future of millenials far more than the other way around
Welcome to life! This is just a thing that occurs with one generation to the next. My father's generation (Greatest/WWII), wondered why my generation (boomers) did or did not do certain things, like wore our hair long or wore raggedy jeans or listened to rock and roll, and lived with our girlfriends and boyfriends, and didn't want to join the military (I did).
Oh goodie, a boomer wondering why on earth millennials don't just go buy a house. It could be that we have massive student debt because the cost of education skyrocketed, we graduated in a horrible economy (thanks for that, boomers), the cost of living has increased, and we can't afford a 20% down payment.
Sorry, this is a pet peeve of mine--people who think millennials aren't buying things because we don't want to. Sure, some don't want to, but largely we just can't afford it. I pay the equivalent of a mortgage every month in student loans. We will buy homes (and cars, and whatever else economists want to complain we're not buying now) once we can get the money together. It's just going to be about a decade past the age when our parents bought homes because, as a generation, our economic situation is radically different than our parent's. Unless you'd like to give us some money from your pensions or social security (which we also won't have) for a down payment?
Edit: I thought some numbers might help, because I have realized in talking to the older generations that they don't really realize just how much more expensive our education was compared to their's. I dug up the old UNC tuition numbers. In 1985, the oldest number I could find, tuition and fees for an in-state student was $794. Plugging this in to the CPI inflation calculator says this is the equivalent to $1,797 in 2017 dollars. Today, tuition and fees for an in-state student at UNC is $8,834. That's just tuition and fees, not counting housing and books, etc.
Keep in mind, a lot of this nonsense is perpetuated by the media and bored internet writers. I understand where you're coming from and I believe a lot of us boomers get what you are dealing with. And, frankly, I have no concern with who does or doesn't buy a home. I have no kids, but several of my friends do, and they understand the issues.
And, BTW, I bought my first home (a small condo) 2.5 years ago at 56yo. I consider it a massive undertaking, but it's a good feeling. Not every one of my age rushed out and bought one either.
I suspect Social Security in some form, will be there for you. I was hearing years ago, I wouldn't see it, but I expect to start drawing within 10 years.
If you would put some of that expensive education to use and research first time home-buyer programs then you would learn that you don't necessarily need that 20% down payment. Further research will show you that rent payments are fast approaching the same amount or more per month than the average monthly mortgage due to historically low mortgage interest rates. The interest rate on my first home mortgage back in the early 80's was 12.5% when the average rates today are only 4%.
Boomers didn't waste their money buying the latest electronic gadgets and gizmos because they just had to have it, getting useless multiple tattoos and body piercings, or going out to eat several times a week...and I'm not suggesting that you personally are doing those things.
Life is not easy. But everyone makes their own choices that they alone are responsible for the resulting life successes or failures and trying to pin your situation on the generation before you is just a cop-out because research again will show you that every generation has had their share of crap to deal with. I grow tired of listening to millennials who think they have had it so bad when in fact, thanks in part to the boomer generation, they have it much better than we did.
And I grow tired seeing boomers (and gen x'rs) making the generalizations about millennials that you just made in your second paragraph, so I guess we're both disappointed.
I have never understood this argument. It's not like you can live for free somewhere and invest what would have gone into a mortgage into a mutual fund. You still have to pay rent PLUS whatever you would invest. Rents always go up while a locked-in 30 year mortgage does not. Yes a pure amount of money in a fund versus mortgage probably would do better, but the mortgage gives you a place to live.
Not true, there are more people living in tiny homes or trailers they just park somewhere.
Some of my favorite clients are millennials!
Millennial landlords who are buying multiple rentals.
It is a massive and erroneous oversimplification to say "A Home is not an investment." Take anything after that with a massive grain of salt.
Of course a home is an investment.
So are pork belly futures, and frozen OJ futures. A home is just a different type of investment. Almost NO one buys a house without looking at resale value/potential. No one wants to walk away empty-handed from such a massive investment.
Home owners court disaster when they over-leverage, cannot cover a short squeeze, and ruination comes due to poor decisions, or poor luck.
I have never understood this argument. It's not like you can live for free somewhere and invest what would have gone into a mortgage into a mutual fund. You still have to pay rent PLUS whatever you would invest. Rents always go up while a locked-in 30 year mortgage does not. Yes a pure amount of money in a fund versus mortgage probably would do better, but the mortgage gives you a place to live.
Don't forget the interest that you are paying on a mortgage - not all of your mortgage payment is going into equity. I just punched it into a calculator and over 30 years, I'm going to be paying about the same amount in interest as the cost of my loan.
There are also other cost factors you have to take into account - home maintenance, insurance, PMI (if you decide to go in for a house with a sub 20% downpayment), that 6% realtor fee when you sell the house, closing costs, property taxes....
If you are planning on living in a house under 5 years, there are a lot of risk factors that could affect whether you even break even on your house. Most millennial are not staying at jobs any longer than that thus far.
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