It’s the American dream for most of us. We all hope to one day own our own home and settle down in a nice community. And while the housing market constantly fluctuates, we’re currently in a good place. Except, millennials aren’t too keen on buying houses at the moment. They’re still a bit scared from the Great Recession.
Currently, there are millions of young adults out there today who watched their parents endure the unthinkable. They watched as their parents struggled to keep up-to-date on their house payments. Massive foreclosures were happening left and right. It wasn’t too uncommon to see entire blocks with FOR SALE signs in front of every house.
The tumultuous time set millennials at unease when it came time for them to graduate and start settling down. Right now, only 1-in-3 millennials own a home. That is down around 9 percentage points from the previous generations. While this age group is both afraid and unable to afford a house, many do make the jump.
While owning a home is the ultimate dream, a large majority of millennials struggle with it. As many as 63% of them have buyer’s remorse and wish they hadn’t bought a home. This is according to a survey of 1,500 homeowners conducted by Bankrate. A lot of it has to do with unspoken expectations.
Millennials and Home Ownership
Homeownership regrets seem to be a millennial thing. Only 35% of baby boomers had any regrets. We recently put out an article where both generations admit that homeownership is definitely harder today. But the number problem millennials have today? It’s the regular cost of maintaining their home. It would seem as if they had no idea how expensive it would be.
Experts say this underestimating the true cost of homeownership is a common mistake people have. Not to mention, it can be a fairly costly mistake. Buying a home doesn’t just require a large down payment. You’d need a good nest egg saved up on top of that for repairs, insurance, property taxes, and so many other things.
“You need to know that you can truly afford to both buy and own a home and to get the full picture, you need to do more than simply compare your current rent payment with the potential mortgage payment,” said Daryl Fairweather, chief economist at real estate site Redfin.
“Do a full check of all finances,” Fairweather says. “A lot of hidden fees come with owning a home that you might not consider immediately.” That includes the insurance, property taxes and closing costs — which can be2 to 5 percent of the home price.”
Home-Buying Advice
The best piece of advice of any new homeowner is to consider that upkeep and repairs can be expensive. You should save at least 3% of your home’s purchase price each year just for annual maintenance. That means if you bought a $200,000 home, then you can spend upward of $2,000 per year extra. That’s just for regular repairs.
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That’s a problem for millennials who are notoriously strapped for cash. “When paying for things like mortgages and student loans, [Millennials] don’t have much money to save for the hidden costs of owning a home,” Fairweather says. The best thing you can do is begin your journey with a starter home and move your way up.
Don’t try for the dream home on your first try. It’s guaranteed you probably won’t be able to make it. There’s no problem with renting or buying a smaller home at first and growing with your family. At the end of the day, houses can be money-pits, no matter how shiny and new they are. Be 100% prepared from the outset and don’t strap your budget.
For more home buying advice and resources, we encourage you to visit Redfin at this link: https://www.redfin.com/how-much-house-can-i-afford
