Many millennials aren’t buying homes, for a variety of different reasons. Let’s look at the primary reasons, as well as the reasons that millennials should considering buying a first home.
Millennials Have A High Amount Of Student Loan Debt
There’s no question that most young college graduates today are carrying more student loan debt than ever before. If you have outstanding student loans that are weighing you down (financially and emotionally), you might be tempted to wait to buy your first home until you can pay off some or all of them. But if you can qualify for a home loan today, and you can find a condo or house that might cost the same or less than your monthly rent, why not become a homeowner today?
Millennials Have High Car Payments
Many millennials have high car payments, which can prevent them from qualifying for a home loan. If you fall into this category, consider selling your car and downgrading to a less expensive model. As an example, getting rid of a $350 monthly car payment could mean that you’ll be able to qualify for $75,000 more house (based on a 4% interest loan, over a 30-year period).
Millennials Have Jobs and Careers That Are In Flux
Millennials are mobile, more mobile than any other generation. Buying a first home might seem like a heavy-duty, long-term commitment, but it doesn’t have to be. As a good rule of thumb, if you plan to stay in the Denver metro area for the next 2-3 years, then buying a home makes sense.
Millennials Have To Go Through A More Grueling Loan Approval Process
Millennials might feel as if they’re facing a more grueling loan approval process than ever before, but that’s not a bad thing, and it’s not necessarily true. Home loans have always been hard to get, and for good reason. As a homeowner, you’ll put 0%-20% down, and a mortgage company or lender will pick up the other 80%-100% of the tab. Because of the risks that lenders bear, there’s always been a gauntlet for homebuyers to go through, of proving income, proving assets, proving that they can handle credit. This has been true for decades, with the exception of the early 2000s, when “liar loans” were rampant, people were allowed and encouraged to buy houses they couldn’t afford, and mortgage fraud led to the Great Recession.
Moving back to tighter restrictions is a good thing. It may not seem like it when you’re in the midst of trying to get a loan for your first home, but there’s no point in buying a home if you can’t afford to keep it.
Millennials Saw The Impact Of The Housing Market Crash During The Great Recession
Rampant mortgage fraud in the early 2000s lead to artificially high prices in housing, although Denver was less susceptible to this than other parts of the country, such as southern Florida and southern California. Those artificially high housing prices led to buyer greed, mortgage broker fraud, and an eventual correction in the market. When the market corrected, housing prices declined in Denver and plummeted in other cities and states.
If you saw your parents, or someone else you know, lose their home to foreclosure and/or declare bankruptcy, it’s understandable that you’d be reluctant to jump into home ownership. But you shouldn’t let someone’s else negative experience prevent you from doing something positive! Yes, prices in Denver could go down again, but in recent years, they’ve been on a steady march upward.
Millennials Are Putting Off Getting Married
For centuries, marriage and home ownership often went hand in hand, and the theory is that as many millennials are putting off getting married, they’re similarly putting off buying a home. If you fall into this category, consider buying your first home while you’re single, rather than waiting. You can always sell the property later, when you merge households.
Millennials Are Living At Home With Their Parents
A higher percentage of millennials are living at home with their parents than at any other time in history. If you’re living at home now and loving it, great! But if you’re not comfortable staying with your parents, and you’d prefer a place of your own, you can use the time to get your finances in order so that you can qualify for a home loan.
In our experience as real estate agents, many millennials aren’t buying first homes because they don’t realize how easy it can be and/or they’re struggling to save for a down payment.
If you are interested in home ownership, give us a call. We can show you properties throughout the Denver area (condos, lofts, townhomes, duplexes, and house) that you can afford. And we can also put you in touch with mortgage brokers and lenders who have first time home buyers programs available, some of which include down payment grants and closing costs assistance.
If you’d like to explore the option of home ownership, give us a call at (303) 222-0027, or e-mail email@example.com.
Please note: In order to explore your options when considering buying your first home, contact us for a free consultation. As experienced real estate agents, we absolutely love working with first time home buyers. We can help you find homes in all price ranges throughout the Denver metro area.