It’s no secret the financial challenges millennials have faced thus far in adulthood. Saddled with significant student loan debt, lower wages and a much slower advancement in their careers as baby boomers retire later, buying a home tends to fall a bit lower on the list of priorities.
These challenges can mean getting creative when it comes to purchasing a home, so let’s take a look at some of the avenues millennials are taking to get it done.
1. Choosing Smaller Homes
Millennials have foregone the dream of a McMansion and have settled for smaller, more practical spaces. Considering a lower birth rate and waiting longer to get married, this makes sense in a few ways. They feel that 1,700 square feet is plenty, making finding affordable housing a bit easier. Minimalism is a priority, as is walkability, and oftentimes those go hand-in-hand with a small space.
2. Lower Down Payments
Considering those aforementioned financial challenges, it’s understandable that savings tend to be quite low for millennials. This means that a 20% down payment can be hard to come by, with 70% of millennials planning to put down less than that on their next home. In comparison, 50% of baby boomers plan to put down more than 20% on their next home.
In expensive areas, 20% is a large chunk of money, so many millennials are agreeing to private mortgage insurance that runs between .5% and 1.5% of the home’s value. They’re willing to pay more in the long run because they simply can’t pay upfront.
3. Assistance from Family
It’s not unusual for millennials to have to turn to their parents for financial assistance. This extends into help with buying a home as well. Around 30% of millennials anticipate some sort of financial help from family for purchasing a home this year. It comes as no surprise considering the percentage of millennials that receive some form of financial support for basic needs such as rent, food and cellphone bills.
4. Leaving the Big City
Urban areas tend to be more expensive, but they also tend to be where millennials work. However, the commute is a sacrifice they’re willing to make to purchase a home. Moving to the exurbs (the areas outside of wealthier suburbs) allows for larger homes at a lower price, providing more space for growing families and personal projects.
These areas may be inconvenient, but millennials are open to it just to become homeowners.
While millennials are forced to purchase homes much later in life than their parents did, they’re making it work with suburbs and exurbs. They’re flexible, committed and looking for a place to call a permanent home, so it’s easy to understand why they’re comfortable sacrificing a bit.
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If you’re a millennial looking to purchase a home, get in touch with me today. We’ll explore every available avenue to find the perfect fit for you!
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