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Millennials Reticent to Buy Homes, Finding Rent to be Better Financially


A recent analysis by online residential real estate site Trulia encourages people in their 20s and 30s to take the plunge into home ownership, citing in its “Rent vs. Buy Report” that purchasing a home is now 23 percent less expensive than renting. That figure holds true across the country. Assuming a buyer age 24-to-34 can plunk down a 10 percent down payment, and combined with an interest rate that hasn’t been lower since 2012 and soaring rents in urban areas, Trulia calculated it’s actually 36 percent cheaper to buy than rent.

It would seem a solid argument. But millennials don’t seem to be buying it – or those houses.

For a very long time, owning a home was an important ideal and a rite of passage in American culture. And to be sure, there can be plenty of benefits, including the fact that mortgage interest payments are tax deductible. Plus, monthly payments go toward helping the buyer – rather than a landlord – acquire and maintain an asset.

But people in their 20s and 30s today came of age at arguably the worst time in history for the national real estate market, save for The Great Depression. For the majority of Americans, a home will be their single greatest financial asset – but it can also be their single greatest downfall, if they aren’t careful. Both our Miami foreclosure lawyers and millennials are well aware of the risks.

Trulia suggests the younger generation put their financial well-being on the line and stretch themselves thin – to the point of sacrificing on groceries and other necessities – in order to purchase a home because now is the time to do so. But this scenario assumes:

  • Incomes will rise
  • Personal financial outlooks will improve

For many people, this is simply not the case. A report from the Economic Policy Institute notes wages have been stagnant for American workers basically for the last 40 years, and that has been despite gains in both productivity and economic health.

The U.S. Census Bureau reported that in 2014, nearly 50 million Americans – or about 15 percent of the population – were living in poverty. That same year, the median income in the country was $53,700, and this was unchanged from the previous year. However, real income is lower than it was before the recession or even prior to the economic downturn of 2001, and low-and-middle income households have suffered the most.

Recent surveys have shown 1 in 5 millennial parents is living in poverty, the result of higher costs of having children, reduced wages, increased unemployment and high debt (most of it from college). But too many in the older generations cast a critical eye, blaming millennials for their own situation, arguing they are lazy, irresponsible and waste too much time on the Internet.

And this may be somewhat behind Trulia’s idea that millennials can simply “hunker down” for a while to buy a house. If only they are disciplined enough, they too can achieve the American dream. Or so goes the theory.

But the big question new homebuyers need to ask is whether their financial situation is indeed stable. Are they likely to receive a raise or promotion in the next few years? How much is their college debt burden holding them back? How stable is their marriage? (This matters because it can impact whether a couple is forced to sell a home at a bad time in the market).

All of this is not to say millennials shouldn’t buy a home. But they aren’t being irresponsible in being hesitant or holding off for a while.

If you’re battling debt collection in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday at 5 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.

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