Millennials are finally starting to purchase real estate in record numbers. However, many millennial homebuyers are sitting on the sidelines, as they aren’t ready to purchase real estate just yet.
There are a multitude of factors behind this current trend. First, most millennials haven’t reached the prime age to purchase real estate. Second, many don’t have the money required for a down payment on a mortgage. Lastly, millennials aren’t sure where they want to plant roots!
However, millennials who have their heart set on owning real estate should realize that there are government programs that can help them purchase their first home.
Millennials (born between the years of 1981-1996) interested in purchasing real estate should follow through with action now, if possible.
Since real estate values are going up across the country, mortgage interest rates are still historically low, and sellers have more competition amongst each other, the ability to capitalize on a deal now is apparent.
The entire real estate market will change as more millennials purchase their first home.
Taking advantage of the market now, before buyer demand increases, is likely to be a profitable decision.
Challenges That Millennials Are Facing
Unfortunately, millennials are experiencing a wide range of challenges that make it difficult to purchase real estate at this time.
Since many millennials have a lot of debt, and most don’t have high-paying jobs, they assume homeownership is a pipe-dream.
In fact, the greater majority of Americans, 62%, don’t even have $1,000 saved up. How can these individuals expect to ever have enough money to secure a mortgage?
Rental rates rise continue to rise nationwide. Individuals who are already living paycheck-to-paycheck have to pay more to stay in the same place.
In addition, the cost of food, utilities, and other expenses are all going up, while wages remain stagnant. The current economic landscape has pushed homeownership rates to about 63%, the lowest ever recorded.
Since many people have simply given up on the dream of homeownership, those who have the opportunity to capitalize on real estate now should take advantage of the market, while it points in their favor.
Why Aren’t Millennials Buying Real Estate?
Another reason why most millennials aren’t purchasing real estate is because they haven’t reached 31 years old, the golden age associated with capitalizing on homeownership.
Since this age has historically been associated with homeownership, waiting for a couple years for more millennials to mature is likely to increase homeownership rates nationwide.
This means that a whole host of buyers may jump on the real estate market all at once. This could push property values up even more, making it harder to secure a mortgage.
Individuals who are thinking about homeownership now should do so before a rush of buyers hit the market in a couple years.
Why Do Most Millennials Prefer Renting Versus Buying Real Estate?
Truthfully, most millennials don’t prefer to rent property, but are stuck in this downward spiral that they may never get out of unless they are able to secure better employment opportunities.
Overall, the number of millennials who wish to secure a home is around 91%, but the overall reality looks bleak. Since individuals who are under-employed/unemployed are paying high rents, they aren’t able to save for a down payment on a property.
What Programs Are Available To Help Millennials Purchase Real Estate?
Millennial homebuyers don’t have to wait until they have 20% saved up for a down payment. There are plenty of plans that allow them to capitalize on down payments as low as 3% to 5%.
However, as many as 73% of millennials are unaware of these programs. The good news is millennials who realize they can take advantage of certain programs may be able to capitalize on homeownership now and get out of their rental days sooner, rather than later.
Overall, there are a number of homebuyer assistance programs that are offered through the state, county, and city government. In addition, homebuyers can take advantage of tax credits, grants, and home equity loans.
HUD, HFA, And FHA Programs
The typical homebuyer programs that are offered include, HUD, HFA, and the FHA. Many of these programs vary from state to state! It’s important that interested participants understand the details pertinent to their local area.
Of particular interest is an FHA loan, as it can reduce closing costs. It is relatively easy to qualify for, and allows for a down payment as low as 3.5%.
When compared to the typical 20% down payment, which may be next to impossible for most millennial homebuyers, 3.5% makes the dream of homeownership far closer to reality.
The Advantages Of Purchasing Real Estate Now Instead Of Renting
As stated before, there are a number of advantages associated with purchasing real estate now. For example: low mortgage interest rates, steadily increasing property values, and low buyer competition overall.
Anyone who has the down payment and can qualify for a loan should consider purchasing real estate now. These motivated millennials will likely be able to capitalize on low mortgage interest rates, whereas future buyers may not.
In other words, current buyers will end up paying less over the course of their mortgage. Ideally, current buyers will watch as their property values accelerate over the coming years.
Millennials – Stop Renting And Start Owning
Millennial homebuyers who want to purchase real estate now should consider homebuyer assistance programs that reduce the down payment significantly.
Most millennials are not aware of these government assistance programs. They continue to pay increasing rental rates year after year, when they could be building equity in their own real estate.
Instead of waiting for the real estate market to change over the next couple of years, as more millennial homebuyers pursue the dream of homeownership, individuals who capitalize on their market now should be able to take advantage of all the positive attributes of homeownership.