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I am a millennial, so here is me personally with my personal opinion.
Years ago, you were able to stay put at your job. Meaning, once they hired you, you were pretty much set where you graduated high school and got college level jobs without going to college, and they kept you there for life unless the business closed, recent years with lay-offs and you were still there, etc (thats why people say they were at their job for 40 years!). You pretty much had it made so there was no need to go from job to job after 3-5 years because it was a better job - you already had that better job to start with. Thats what I kept hearing everyone say.
So, in recent years, thats all changed because they dont have those jobs anymore - they only usually keep you for 3-5 years, so everyone then has to move to be at their new job. Its unpredictable how long they would keep you.
So, thats why it made sense for baby boomers, etc to buy homes, while we have to rent. We can just literally pick up and go instead of trying to prolong something because you have to wait until your house is sold. By that time, the job may not be there for you because of how long its taking. Thats why it seems like everyone is renting.
Yes I know you could possibly be throwing away money because you cant get anything back once you leave the apartment (in this sense), but I think the other half of this is that no one can afford homes anymore. With an apartment, you just pay rent, thats it. With a house, you pay mortgage, taxes, etc. You also have maintenance that you need to be able to afford. Its all the outside maintenance, plus anything inside like furnace and plumbing. All of that you need to do yourself out of your own money if it should break or have problems. So thats why its a little better if you rent because the landlord has to do that out of their own pocket.
I can probably go into a lot of details, but this is the gist of everything.
To a degree, this is true, but it's also a matter of field and location.
I graduated with an economics degree from a regional state school here in northeast TN back in 2010. I wasn't expecting a Wall St. job, but thought I might break into a corporate finance department or something. I had an internship, was well known in my business school, etc. Not a sterling resume but better than average.
I couldn't even get a bank teller job. My first job out of school was at an IT support call center. I did that for four years before landing my first professional track IT role (after moving TN > IA, IA > TN, TN > IN). I had another position of increasing responsibility in Indiana, then moved back to my hometown for a lateral move. If something were to happen to this current job, then I don't know what I'd do - I'd be moving again probably. I've been wanting to buy a house, but I don't even want to rent due to the bad local economy.
When I lived in Indianapolis, I worked with a bunch of guys around my age who were born and raised in central Indiana, with a few from other parts of Indiana or Ohio. They mostly went to regional state schools similar to what I did - a few were Purdue engineering graduates. I don't think any of them lived outside of Indianapolis after college. You can buy a home there as an IT worker because even if you lose your job, the job market is healthy and there are plenty of jobs available - you won't have to move. In places like where I am, if you lose a good job, you're likely moving. This has to be slowing down home ownership levels.
When I attended the major state college in the early 70s, my in-state tuition was $25 per credit hour. My part-time job (semi-skilled--I'd had the job since 11th grade) paid me $2.50 an hour.
So 120 hours of part-time labor--6 weeks--paid for a full-load semester.
To some extent, there's a lot of blame to be spread around - colleges who raise tuition every year faster than inflation instead of looking at ways they could make things more affordable for students (it's pretty much a huge competition between colleges for who has the fanciest facilities etc.... instead of focusing on the core academic stuff), as well as all the jobs that require college education that maybe don't need it (putting people in unnecessary debt for low paying jobs)
1) You usually have to take out a mortgage. Say you put $500K down and take out a 30 year $300K mortgage. Over the years, at say, a 5% annual interest rate, you're gonna spend $1,296,582.714. And you're stuck with these payments more or less unless you manage to sell it or refinance, which both cost lots of time and $$$. Oh, and should you lose your house to a natural disaster? You're homeless and STILL on the hook for mortgage payments.
2) You're responsible for ALL maintenance. Renting, you just submit a service request online and rental management takes care of the rest. Owning, you not only have to pay everything out of pocket, you have to deal with finding and managing the people you hire.
3) Property taxes. This in many areas costs a similar amount as rent, and guess what -- all that money is down the drain, and you have to pay it for as long as you have the house. Miss one payment, and goodbye house and all the years you worked to own it. Oh yeah, and the tax bill is based on current market value, not what you paid. So if you're $500K house appreciates to $5,000,000 -- your tax bill will be 10× higher than you anticipated. Ouch.
4) You're stuck. If you bought a house and suddenly you have neighbors moving in who let aggressive dogs run around, are hoarders, or who are loud muffle-free motorcycle enthusiasts, you probably can't leave unless you sell the house, which will be hard if the selling market is bad in that area, and especially with neighbours like that.
5) You often have to abide by illogical rules, like having to keep a mowed lawn rather than using that space to grow fruits and veggies. Or having to have your house painted only neutral colors.
I don't even know where to begin with this.
1) Are you assuming on your first point a static rent payment? Rent inflation has been dramatic in recent years, especially in urban areas. If your rent started at $1,000 and then is raised 5% the next year, then your rent is $1,050. If it goes up 5% the next year, the rent is then $1,102.
You will almost always be out more over the medium to long term with rent inflation than the interest you pay on the mortgage. That's not even counting the mortgage interest deduction or any other tax advantages that an owner has vs. a renter.
Insurance is there for natural disasters. If your rental gets wiped out, your renter's insurance will cover your personal property, but you'll have to find a new place to rent at whatever the prevailing rent is.
2) Yes, you're likely going to be out more for maintenance owning than whatever it is "pro-rated" as a renter, but keep in mind that a landlord may or may not repair a rental property, especially if it isn't a critical violation. My AC in my last rental didn't function well - a 2BR apartment in Indiana of about 900 sq. ft faced nearly $200/month power bills in the summer due to the poor air conditioning, even with my frugal consumption otherwise.
Landlord said it was fine. As a renter, I had no way to refute this. I couldn't call my own service tech to come look at it. I couldn't make a decision to replace or repair it. If maintenance was done, it was often bargain basement, and a homeowner would often make or pay for superior repairs vs. what a landlord would provide.
It is not that cut and dry.
3) Many states have property tax increase caps. I live in an area where "back of the napkin" property tax amounts are around 0.5%-0.7% of the market value of the residence. Even in the highest property tax areas of the state in metro Nashville, rates probably don't exceed 1% of the market value of the house.
If you live in NJ/IL/NY, etc., yes, you're going to get destroyed in property taxes, but landlords just those pass those on to renters in competitive markets anyway.
4) A lot of this can be sniffed out with simple due diligence. Most neighborhoods are as they appear to be. If you live in an upscale suburban area or a well taken care of community, it's unlikely people who are going to junk up the property or cause problems will even be looking at these areas. Exceptions can happen.
5) If you don't look the rules of an HOA, don't move them. Again, due your diligence. Renters are going to have all sorts of impairments to their use of property.
I don't know if it has been mentioned in this thread, but the average age parents have their first child has been rising for decades. There could be a clear correlation between this and buying a house, as many people don't feel the need to purchase a house until they have a family. In 1970 the average age for a first time mother was 21; in 2014 it was 26 (CDC data). This is even more pronounced in urban areas.
This. I agree with a lot of the points in this thread, but I think most millennials are simply taking longer to get to the point of marriage and/or family than prior generations. When they do, their mindset will change and they will all of sudden start to think about putting down roots in their career and their home. I don't think millenials will end up being all that different than prior generations when it comes to homeownership - it's just taking them longer to get there.
Hmmm, as a millennial I can think of a laundry list of reasons.
I live in a big city, where desirable neighborhoods are incredibly expensive to buy in. I could move to the suburbs or some small town, but end up with my soul crushed from boredom and generic Americana. No thanks, I'll rent.
I'm a teacher, so therefor my salary isn't that great, especially in the very high COL of the Northeast Corridor. I could use my skills to switch to a higher paying job in corporate America, but be miserable and hate what I do. No thanks, I'll rent.
I love to travel, and one of the most rewarding experiences in my life has been seeing a lot of the world for only being 25. Since I'm a teacher I have summers off and the time to take extended trips. Extended trips to foreign places cost a lot of money, even though I sure as hell don't travel in luxury. I could work in the summer at another job and collect two paychecks for a down payment on a house, but then I wouldn't get to see the world. No thanks, I'll rent.
Owning a house means you are solely responsible for the maintenance and upkeep. That means mowing the lawn, updating the interiors, on and on and on. I did all that stuff as a kid growing up and hated it. When something goes wrong in my apartment, I call the landlord and it gets fixed within a day or two. No work needed. There is no need to maintain the lawn because when you live in the city in a building, there is no lawn! Would I ever go back to having to mow the lawn every week for 8 months a year? No thanks, I'll rent.
These are just some of the many reasons I can think of. I save money every month and since I work for the schools, have a solid savings plan and great health benefits that (partly) help make up for the lower salaries. I also don't intend to stay here for more then a few years before I go to live somewhere new. The ability to just pack up and move whenever you want is awesome. I also have no desire to have kids of my own (my school kids are enough), so leaving assets to someone else is a non-factor.
Us millennials are just different then the boomer generation, and thank god for it.
This. I agree with a lot of the points in this thread, but I think most millennials are simply taking longer to get to the point of marriage and/or family than prior generations. When they do, their mindset will change and they will all of sudden start to think about putting down roots in their career and their home. I don't think millenials will end up being all that different than prior generations when it comes to homeownership - it's just taking them longer to get there.
I do think some patterns will be fixed. I think Millennials will always be "shoppers" to a greater extent than Boomers. For instance, where Boomers may patronize a given insurance company and stick with it for life, Millennials will be more likely always to be shopping and switching.
I don't think the "get a job with a good company and stay there for life" will ever be as generally true for Millennials as it was for Boomers, so there will always be the effects of less expected stability in their lives. Will they want to buy a house? Yes. Will their level of home ownership rise to what it was for Boomers? Probably not. As well, mortgage qualifications are only going to tighten compared to what they had been for Boomers at the end of the 20th century.
Hmmm, as a millennial I can think of a laundry list of reasons.
I live in a big city, where desirable neighborhoods are incredibly expensive to buy in. I could move to the suburbs or some small town, but end up with my soul crushed from boredom and generic Americana. No thanks, I'll rent.
I'm a teacher, so therefor my salary isn't that great, especially in the very high COL of the Northeast Corridor. I could use my skills to switch to a higher paying job in corporate America, but be miserable and hate what I do. No thanks, I'll rent.
I love to travel, and one of the most rewarding experiences in my life has been seeing a lot of the world for only being 25. Since I'm a teacher I have summers off and the time to take extended trips. Extended trips to foreign places cost a lot of money, even though I sure as hell don't travel in luxury. I could work in the summer at another job and collect two paychecks for a down payment on a house, but then I wouldn't get to see the world. No thanks, I'll rent.
Owning a house means you are solely responsible for the maintenance and upkeep. That means mowing the lawn, updating the interiors, on and on and on. I did all that stuff as a kid growing up and hated it. When something goes wrong in my apartment, I call the landlord and it gets fixed within a day or two. No work needed. There is no need to maintain the lawn because when you live in the city in a building, there is no lawn! Would I ever go back to having to mow the lawn every week for 8 months a year? No thanks, I'll rent.
These are just some of the many reasons I can think of. I save money every month and since I work for the schools, have a solid savings plan and great health benefits that (partly) help make up for the lower salaries. I also don't intend to stay here for more then a few years before I go to live somewhere new. The ability to just pack up and move whenever you want is awesome. I also have no desire to have kids of my own (my school kids are enough), so leaving assets to someone else is a non-factor.
Us millennials are just different then the boomer generation, and thank god for it.
I'm also a millennial (age 34) and couldn't be more different than you. I took advantage of prices during the recession and bought my house at 26. I pretty much live the typical suburban lifestyle; a wife, two kids, a dog, a cat, two cars in the driveway and couldn't be happier!
Maintenance can be a pain sometimes. As far as that goes though, it feels much different working on your own property than doing it for your dad when you're a kid!
Still, different strokes for different folks, so whatever makes you happy!
OP, in China 70% of millennials are homeowners, with Mexico following in second place with distant 46%. In the U.S it's 35%, behind France but ahead of UK and Australia.
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.
Maybe they aren't buying homes because ... THEY CANT AFFORD THEM!!!!!!!!!!!! When your making $30,000 a year it's kind of hard to buy a $400,000 home with $10,000 a year property taxes.
Sorry, didn't read the whole topic. Not a millennial (born in the mid 70s). I don't know, I just like ownership. Always have, always will. I purchased my first condo at 21 years old. My expectations were pretty low, as was my budget. Glad I did it, because it turned a profit, that was used for the next house, and then the next house.
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