So, are millennials buying homes or are they sitting on the sidelines? It really depends on what study was performed, what newspaper you read, and what part of North America you’re residing in. One article suggests that millennials are delaying purchasing a home longer than their older counterparts, while another article purports millennials are boosting the real estate market.
The homeownership rate in the United States recently hit a 25-year low. Consumers are wary of purchasing a home and carrying all of the responsibilities that usually come with being a homeowner. In addition to that, it could just simply be too expensive for the average family, particularly if they’re of the millennial generation. You know, cash-strapped and deeply in debt.
Due to the many factors that can dissuade a person from buying a home, the rental market is a hot one. Vacancy rates are low, monthly rents are high, and current renters don’t seem be leaving anytime soon (why would they?) For millennials that are fortunate enough to grab an apartment, perhaps you should stay put.
If you have considered buying a home for quite some time, then here’s a bit of advice: it may be better to just rent instead of taking on all the stress and money that come with owning property.
Here are four reasons as to why it’s better to rent than it is to buy a home, at least in today’s market:
1. Many Perks and Fewer Troubles
There are many apartment buildings, especially in recent years, that offer various luxury amenities. Everything from swimming pools to physical fitness centers, and outdoor tennis courts to storage units, rental buildings offer many benefits. Moreover, whenever something happens in your unit, like a broken faucet, a faulty stove or rusty balconies, the building owners will immediately repair it. All of this stuff is included in the rent.
Meanwhile, when owning a home, there are fewer perks and many troubles.
2. Renting Provides More Flexibility
Are you tired of your community? You can move. Do you have a job offer in a different town? You can move. Did you just get married and now you want to relocate? You can move. When you’re a renter, you have so much flexibility and freedom. However, when you own a home, it can be an impossible, stressful and costly endeavor to sell your property if any of the aforementioned comes to fruition.
Being a renter, essentially, makes you portable.
3. Too Many Costs Before, During and After Buying
You just found a great apartment that requires the first and last month’s rent. That’s it. It doesn’t require a lawyer to review a contract. It doesn’t need a real estate agent. It doesn’t have to get approval from a financial institution. On the other hand, you just found a great house, but it requires a $25,000 down payment, a lawyer to draw up contracts, a real estate agent to connect the homeowner with the homebuyer, and so much more. With this comes a wide spectrum of costs before, during and after the process.
How many millennials have this kind of money on hand and easily accessible?
4. Housing is an Illiquid Asset
Indeed, you constantly hear of people living paycheck to paycheck. It’s common to think that these people are poor or middle class, but they’re affluent as well, according to a recent SunTrust survey. One factor to all of this is that they have more illiquid assets than liquid assets.
In other words, if an emergency happens, they’re pretty much broke because they don’t have enough cash or tangible assets on hand. Housing is an illiquid asset, which means that if an unforeseen event transpires, then you’re in deep trouble. It takes a lot of time, energy and resources to extract money from your home.
The housing bubble, McMansions and the economy have prevented millennials from entering the housing market. Although owning a home can be a worthwhile investment at times, millennials may be better off just renting considering that their lifestyles are far different than their Generation X or Baby Boomer counterparts. Millennials don’t want to be shackled to a home, and an apartment permits millennials to be free. In the meantime, just buy mutual funds, accumulate gold, and save money.