Owning a home has long been the American Dream -- but new data from home services company Porch tells us that for younger adults, it may seem unattainable. In a recent survey, nearly 17% of millennials and more than 12% of Gen Zers said they don't think they'll ever own a home. Here's why.
1. They can't afford to
More than 73% of younger workers cite not being able to afford a home as a reason not to own one. And when we think about the many costs associated with homeownership, that makes sense. Not only does owning require you to come up with a substantial down payment, but it also means grappling with property taxes, costly insurance, maintenance, and repairs, many of which can be unpredictable.
2. It's too much responsibility
A home isn't something you can neglect. If you do, you risk major problems that can be prohibitively expensive to fix. And even if you have the money to outsource some of your maintenance, you'll still have to take more of an active role in the process than you would for a rental unit. As such, almost 45% of younger workers claim they're not looking to take on the responsibility involved in owning a home.
3. They don't want to settle in a single location
Nearly 34% of younger adults don't want to own a home for one key reason: They don't want to be tied to a specific neighborhood, city, or even state. Given that many millennials and Gen Zers aren't yet married with children, it stands to reason that they'd want to keep their options open. And since there are closing costs associated with getting a mortgage, it can take a few years of living in your home to recoup them -- which is why buying a home often isn't a smart move if you're not ready to put down roots.
4. They're just not interested
For about 33% of younger workers, the idea of owning a home just doesn't appeal. Given the work and financial commitment involved, that's understandable -- especially if you’re busy focusing on your career.
5. They think they're better off financially with renting
When you rent a home, you're responsible for a single ongoing monthly payment plus an up-front security deposit for the duration of your lease. That's it. As such, renting can be a far more predictable setup from a financial perspective, which no doubt appeals to the roughly 25% of younger Americans who feel it's a better choice from a money-related standpoint. Renting may also be more desirable for those on a limited budget -- a category many younger workers with piles of student debt fall into.
That said, it’s worth noting that rental costs, as a percentage of income, have been increasing in recent years, and will likely continue to trend upward. Mortgage rates, meanwhile, are at a historic low, and when you lock in a fixed mortgage, you get to keep that rate for the length of your repayment period, whether it’s 15 or 30 years. Throw in the fact that long-term lease agreements are hard to come by, and renters risk an uptick in costs on an annual basis -- so while younger adults might think they’re better off financially renting, that may not prove accurate with some solid number-crunching.
Will you ever own a home?
Remember, despite these reasons cited by younger workers who think they'll never become homeowners, there's lots to be gained by buying a place of your own. Not only can you build equity in a home and eventually sell it at a profit, but you can also monetize your property by finding tenants and collecting ongoing rental income.
Owning a home also offers some tax benefits, and if you have a family, it can be a smart thing to do logistically. This way, you can settle into a specific school system without having to worry about uprooting your kids once your lease comes to an end.
Of course, if you're younger, you may not be financially ready to own a home, and that's okay. But try to resist writing off the possibility completely. You never know when your financial circumstances or family circumstances will change, and once that happens, you may find that becoming a homeowner is something that actually suits your lifestyle and budget quite well.
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