Millenials: We Don't Want to Be First Time Home Buyers
A recent article from the Huffington Post blames the "Millennial Generation" for the sagging housing market. While it's easy to blame younger generations for all kinds of problems, is this really the case? Do renters who refuse to become first time home buyers really hold the responsibility for the real estate market staying "down?"
The article takes a look at how unemployment is going down and the economy is picking up, but the housing market continues to struggle. This in turn keeps the economy from improving even further, the author goes on to say. This is when the article takes a look at what the culprit might be. Here's an excerpt:
Now young people graduating from college are entering an improving job market. But don't expect these millennials starting their careers to give the housing market a boost by buying their first home.
Burdened by a $1 trillion in student loan debt and wary of taking on a new loan with a home mortgage, millennials are choosing to rent or move back in with their parents. From 2009 through 2011, just 9 percent of 29-34-year-olds were approved for a first-time mortgage, according to a report from the New York Federal Reserve. Pierre Lapointe, a financial strategist, says student-loan debt is turning into “a significant drag on the housing market.”
The Pew Research Center found among those 25 to 34 year-olds who have taken shelter with their parents, 80 percent are just fine with the arrangement. Meaning, they aren't in a rush to get to a point where they do jump into the housing market.
The effects can be felt throughout the economy, not just in the housing market.
So what are we to do? Are renters overtaking first time home buyers as the new population norm?
Buying is certainly not always the answer. Sometimes we need to rent. Maybe it's a credit or income issue. Maybe we're planning to only be in a job for a year or 2 then move. Whatever the case, sometimes renting is the right choice in the short term. However, when looking at long term numbers, the benefits of buying a house tend to outweigh the pros of renting.
When we look at the big picture beyond a choice of rent vs buy, it shows a more important national problem. Fewer homeowners means fewer property-tax-payers. This means less income for state governments, which takes us right back into a cycle of budget and service cuts. Renting can have a negative effect on neighborhoods because of this.
If you'd like to learn more about the home buying process to decide whether it's for you, download our free eBook. "The Essential Guide to Buying Your First Home" covers the process of becoming a first time home buyer so you can get yourself ready. Of you're a college student planning your next step of where to live and how, consider buying that home. You may be surprised at your options.
(rent sign: Flickr user Joel Telling)