Property ownership numbers among millennials are abysmal. This includes everything from buying property to invest in, to buying homes to live in. Many
Property ownership numbers among millennials are abysmal. This includes everything from buying property to invest in, to buying homes to live in. Many research publications have found that millennials are less likely to buy property, with their investment in homes 8% lower than that of the previous generation. But why is this so?
Battling the World
Millennials have grown up in a world that seems to do everything to stop them in their tracks. One good example is poor job security and wage stagnation. In many developed countries, wages are still hovering around what they were ten years ago. This is despite the fact that everything else is increasing in value, including property. When you have a situation where millennials are being paid the same as people were paid ten years ago, and property prices keep increasing, the result is a generation that is finding it harder to get on the property ladder.
High rents are also playing a huge factor because they are making it harder for millennials to have any money left over to invest in property. Because of this, many millennials keep renting, even sharing some apartments, because the cost of rent is becoming untenable. That said, research has found that millennials prefer to live in big cities which usually have higher rent than smaller cities. This may be because of their proximity to high paying jobs or the city’s ability to provide them with the lifestyle they crave.
Changing Lifestyles and Priorities
A prime market for real estate companies is new families. These are mainly newlywed couples that are looking for a home to make their own and start a life. Another prime market is young families who are raising their first child and would like somewhere safe, peaceful and spacious to do so and that would be adequate should they decide to have more kids.
Millennials are slowly drifting away from these two notions. First of all, millennials are marrying later in life and in some cases, not marrying at all. In the 1960s, the average age of marriage was 21 but now, it is closer to 30. This means millennials are taking longer to put down roots if they ever do at all. This is hitting the real estate hard as one of their primary customers is out of the equation.
Millennials are also opting not to have children. Couples with children are much more likely to own a home, with the chances of doing so increasing by up to 6% for couples that have children. Without children, millennials do not see the need for a lavish home.
Millennials have a lot of challenges plaguing them, but the one that causes the most headaches is debt – student debt to be precise. Millennials are carrying huge student debts and because of the worsening job market and stagnating wages, they are finding it harder to pay off these loans. This is a prime recipe for defaulting on loans and because of this, many millennials have a bad credit score.
A credit score is one of the first things lenders and financial institutions look at when deciding whether or not to give you a mortgage or a property loan. If you have student debts that have you have been struggling to pay, the sad fact is that you will have a hard time getting a mortgage or a property loan. If you are struggling with either of these and need loans for bad credit scores, you should read this article. It is from New Horizons and explains what you should do to fix a bad credit score.
New Horizons is a fully authorised and regulated credit broker who works with market-leading lenders to help you find the best loan for your situations. The good news is that over 90% of all applications are approved, there are no fees for finding the right lender and, best of all, you can get the money in as little as 15 minutes after you are approved.
The Fear of Another Recession
The world has largely recovered from the 2008 crash, but millennials have not. This crash widened the wealth gap between millennials and previous generations, meaning that millennials carry more debt in many different ways. For example, a typical millennial might have student, credit and car debts. All these things prevent them from getting a loan or mortgage.
Psychologically, millennials are still feeling the effects of the last great depression. Young people are scared of losing their jobs, scared of the stock market and the feeling of financial insecurity which are all things that are driving them to see owning a home or property as less than ideal.
Millennials also remember how the people who took subprime mortgages just before the depression lost their homes while the banks that gave them the mortgages were fine. No one wants to go through that again.
Millennials get almost all their information online. When researching properties, they are likely to come across myths like you need to put down 20% of the home value to have a home. This myth is persistent and it is everywhere and because it is repeated often enough, many millennials believe it. And because they do not have the 20% deposit at hand, they shy away from even thinking about buying property.
Although some financial institutions will need you to put down a certain sum, and it is usually encouraged, it is not necessary. This is because it can be hard to do so, and if real estate companies enforced it, they would chase prospective homeowners away. However, if you live in an area with affordable housing options, putting down such a sum is encouraged as it makes paying off the remaining sum a lot easier.
They Have a Different View of Property
Previous generations, Gen X and Baby Boomers, viewed property ownership as a status symbol and long-term investment. Millennials view getting a home or buying property as a rite of passage. The property itself is not too important to them; what they are looking for is independence and space they can call their own.
Because of this, they are very picky about the properties they buy, if they buy at all. A millennial will not put any payment down towards a house until they know it is just right for them and this leads to situations where a millennial takes longer to buy a property or opts out of buying one altogether.
Renting Vs Buying
Many millennials have resigned to the fact that they might never be able to own a home or a property. Because of this, many of them opt to rent a home hoping they can be able to buy one sometime in the future. The result of this is fewer millennial homeowners.
Millennials are on track to become the first generation that is worse off than the one that came before them. Many of the factors that make it so come up when you look at why millennials might not become homeowners – things like the psychological effect of the last recession which led to the ballooning of student, card and credit card debt, to changing lifestyles that the prevailing market cannot provide. Even with their hesitation to get on the property ladder, and with everything standing in their way, millennials have shown they are excited about owning property if things t