Millennials In The Housing Market
Millennials really don't differ all that much from older generations. The main thing is that many Millennials have so much debt at such a young age that it seems impossible to overcome. Add in that none of us seem to have any idea of how to buy a house, and some of us don't see why we should. With rising anxiety and depression rates, delayed marriage ages, and that infernal student debt, the entire process can be extraordinarily daunting.
This article can be interpreted for any first time home buyer. I think a lot of people in my generation have 'PTSD,' if you will, from watching our parents in the last recession, and a fairly normal distrust for institutions. My goal by the end of this is to simply and clearly explain what needs to happen if you want to buy a home, period.
Lots of people ask me "How is the market?" Usually the answer is "It's good." This isn't a false statement, but really the question people want to ask 90% of the time is "Is this a safe time for me to consider Buying?" If your basis for buying or not is based around whether or not it is "safe" then we need to sit down and have a discussion. Any time can be a good time to buy, depending on the situation.
Another thing that I get a lot of is about those Real Estate Investing videos that pop up all over Facebook. Those are fake. While Real Estate is the single largest wealth creator in the U.S., it takes time to build a portfolio and equity.
On to the meat and potatoes of the post. How does one deal with their student debt, paying rent, and all of the other bills life has to throw at you, and still save for a home? It is all about manageability and planning. I fully understand that having your own space is important and feels good, but at what cost? Remember you will need at LEAST 3% down to buy a home (yes 3% of the sales price i.e. 3% of $100,000 is $3,000) meaning that you need to be able to save that. It is pretty easy math but here goes, $1000 per month alone and saving minimal amounts vs. $500-600 per month with a roommate and banking the extra $500. In one year you will have about $6000 saved.
So why don't we do that? Here is part two, Credit. Just because you have a looming student debt doesn't disqualify you. What you have to do is get it to a manageable point. Picking up a theme? What I mean is that your credit needs to be at minimum a 580 for an FHA loan (620 for conventional.) so making regular payments is key so that you don't take a hit. This step and the previous step go hand in hand. Rent is the single largest expense you should have, getting that lowered is key, freeing up your ability to pay your debt and also save.
In our generation we see so much of the instant lifestyles. All over social media we have people rubbing in how "amazing" their lives are and how successful they may or may not be. This can be very disheartening, I know i have been there. One big thing that we all need to keep in mind is those are snapshots of the good times. and more often than not there is another side to the story we don't see. The point here is basically don't compare your chapter one to someone else's chapter 10. Don't go "flex" and spend exorbitant amounts on a new car or something else frivolous, there will be plenty of time for that.
My message to all Millennials in and out of the market, sacrificing now means security in the future. That means live the extra few years with roommates, cut your costs, and pay attention to where all of your money is going. I cannot stress this enough. If you're serious about your future seriously consider the things laid out here. If you have questions or concerns please feel free to reach out and ask. Real Estate professionals aren't going to charge you by the hour, many of us simply want to be economic drivers in our areas and build our communities and the people in them.
Keven Beach, Realtor®