It’s no secret that times have truly changed when it comes to buying your first home. Young people are feeling the brunt of that change the most, with home ownership rates among millennials lagging around 8% behind Baby Boomers and Gen Xers. Acquiring their first property a few years later than their parents may not seem like much of an issue for this health-conscious, tech-savvy new generation of adults, but research is now pointing to the importance of home-ownership in not only building long-term wealth, but also generational wealth. For these reasons, more young adults are now trying their hand at getting on the property ladder, but are facing a number of disheartening barriers.
What’s so hard?
As times change, so do social norms along with the priorities, preferences and characteristics of the next generation. Relative to their counterparts, millennials are more likely to go to college, less likely to get married in their twenties, and tend to show a preference towards living in high-cost urban cities. These lifestyle choices are all huge contributing factors to the difficulty presented in acquiring a first home, but they’re not alone, as overwhelming external factors also play a significant role. Increasing education fees have led to unprecedented rates of student debt, creating a challenge for young prospective buyers in regards to securing a mortgage. What’s more, record high costs of renting have made it more difficult to save for a down payment. This, coupled with a lack of supply of affordable housing, has created a lousy recipe for success.
How to overcome
There’s no quick fix to these barriers, but securing a property is achievable if you set your expectations right and are willing to make a few sacrifices. As of August 2018, the average price for a house in America was around $279,500, with the typical deposit for a mortgage hovering around 20%. With this in mind, the average value for a down payment will be around the $55,900 mark, although of course this will vary widely by location. Depending on where you would like to buy, do your research to determine the price that homes typically go for and the amount you will need for a deposit. When it comes to saving for that deposit, make the time to look into different saving accounts, and commit to whichever will generate you the highest interest. If you’re willing to take more risk for more reward, you could also consider investing your savings in peer-to-peer lending or other crowdfunding platforms. However you choose to go about it, with a little bit of elbow grease you could be well on your way to owning your first home.
Although challenging, home ownership can become a reality for the new wave of young adults. If you stay positive and exercise patience, home ownership can become a reality.