Rents are rapidly rising, jumping 14 percent since 2010 — yet many young adults are continuing to delay home ownership and rent instead.
While managing debts and saving for a down payment continue to prove big barriers to some, some housing analysts say that the main reason Millennials aren’t buying is that they just don’t feel any urgency to.
“Millennials are getting married later in life than previous generations, and a sense of urgency to purchase comes with stability, marriage, and growing families,” Joan Kamens, a real estate sales associate with Coldwell Banker Hearthside in Newton, Pa., told CNBC.
Responding to buyer concerns: “Why Not Rent? I Can’t Afford to Buy!”
30 percent of Millennials consider buying a home important but not a priority, according to a recent Goldman Sachs study.
Neeta Mulgaokar, a real estate sales associate with Mirador in New York, says that she often hears her clients say: “Why would I buy when it’s so expensive? I could use that money for something else like travel or starting a business.” Also, she notes that many Millennials may be reluctant about the home buying process. “Many Millennials have been burned or felt trapped by contracts (cell phones, cable, even student loans) and are shying away from long-term commitment,” Mulgaokar notes.
So could anything get this generation moving more toward home ownership? Kamens believes they will, eventually. Once they’re more established in their careers and family and when “education for children becomes a factor, they may settle with less for the convenience of quick travel time to the workplace,” Kamens says.
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But the longer they wait and remain renters, they may face more obstacles getting into home ownership down the road. The gap between rental costs and household income is widening to unsustainable levels across the country, according to a study released last month by the National Association of REALTORS®.
“Current renters seeking relief and looking to buy are facing the same dilemma: Home prices are rising much faster than their incomes,” Lawrence Yun, NAR’s chief economist, had noted about the study. “With rents taking up a larger chunk of household incomes, it’s difficult for first-time buyers – especially in high-cost areas – to save for an adequate down payment.”
Source: “Millennials Put Off Home Buying, Despite Rising Rent,” CNBC (April 14, 2015) and “Why Renters May Be in Trouble,” REALTOR® Magazine Daily News (March 17, 2015)