Buying a house used to be a rite of passage, a personal and financial milestone that helped establish someone as an adult. Not anymore. Attitudes about buying a home have shifted in recent years. These days, far fewer Americans are opting to buy home. Millennials represent the biggest drop off. And many of those who do buy homes often wind up regretting it. There are many reasons for this shift, but home ownership is no longer as alluring as it used to be.
Millennials Say They Regret Buying
In recent years, millennials have shown a clear preference toward leasing a home. The U.S. Census Bureau estimates that about 65 percent of Americans under the age of 35 currently rent. That is eight percentage points higher than it was for Gen Xers when they were under the age of 35, a demonstrable shift in residency trends between the two generations. There are a number of explanations for this shift – rising home prices, high student debt, and a preference for cities, to name a few. But even among those millennials who do own a home, more than 60 percent say they regret the decision to buy, according to a recent survey conducted by personal finance advisor Bankrate. They cite a number of reasons for this buyer’s remorse, including affordability, location, and inconvenience.
Affordability is the Main Factor
Affordability is the main reason why millennials regret buying a home. According to a recent CNBC article , hidden costs associated with owning a home are a major cause for concern among millennial home buyers. These unexpected costs could come early, with closing costs or other unanticipated maintenance, or later and more persistently in the form of constant upkeep and repairs. In a recent Rent.com survey, four out of 10 renters listed affordability as their primary reason to rent. This is not just the case with millennials; in fact, 78 percent of all Americans now say that renting is cheaper than owning. In this Freddie Mac survey, three-fourths of Americans say renting is their most affordable housing option, and over half of all renters say they don’t have plans to buy. This illustrates just how much viewpoints on renting versus buying have changed in recent years.
Location, Location, Location
Location also plays a major role as to why millennials often regret buying. As CNBC points out, 10 percent of those polled by Bankrate say their biggest regret is the location of their home. Whereas renting may allow them to be in their preferred neighborhood, the cost of buying in these ideal locations is often just too high. On the flip side, renting often comes with the benefits of being in close proximity to work, good schools, and green spaces. This is true for both single-family and multi-family rental units.
Renting Allows Millennials to Live in High-Quality Homes
The home itself is also a factor. About 18 percent of millennials say that they bought a home that is too small for their needs, and about two-thirds say they compromised on some aspect of the house itself. Whereas buying often narrows their home options, leasing may allow residents to be in a high-quality home that meets their standards.
Convenience and Ease Also Matter
The convenience and ease of renting is also a driving force as to why many young Americans prefer to rent. According to Rent.com , millennials view home maintenance as an unnecessary hassle, with 10 percent of them citing this being the main reason they rent. Renting a home allows them the ease and simplicity of calling a landlord to address any issues that may arise. For people with busy lifestyles, this is a necessary convenience. Millennials are increasingly seeking to live in the home they want in the neighborhood they desire at an affordable cost. In the view of many, the negative aspects of owning a home often outweigh the good. What was once a rite of passage has become more of a burden to many. As more Americans come to recognize the benefits of renting a home, Invitation Homes is here to provide them with high-quality, affordable, worry-free housing options.