This week’s article is a guest post about homeownership for millennials from Jessica Vitullo, a freelance copywriter for Circl, a Toronto-based startup that aims to change the rental property experience for all parties involved. In this article, she talks about what millennials should anticipate as they enter the real estate market.
Buying a home is a huge undertaking for anyone. It’s likely the biggest investment someone will make in his or her lifetime. But for millennials today, the generation is faced with the rent versus buy dilemma for so many reasons.Today’s millennial generation may be the first to rely more on their parents than ever before. The notion that generations will accomplish more than the previous generation may not ring true for those trying to enter today’s real estate market. It’s no fault of millennials – there are extenuating circumstances affecting today’s generation of 18 to 24-year-olds. Today’s jobs lie in service and part-time employment, and wages for full-time jobs haven’t increased enough to keep up with the rising rates of today’s homes and condos – especially in metropolitan cities. Millennials are also faced with incredible amounts of school debt. Salaries are going toward paying down debt instead of being invested in a property. Will millennials ever afford home ownership, or will it become a distant memory for the dreamers?
To Rent or to Buy? What Millennials Want
Recent news about millennials spending their hard-earned money on avocado toast has actually sparked a debate about an unrealistic generation that doesn’t know what the want. The truth is millennials do want to buy, but are unmotivated to do so in such a bleak market. Furthermore, there is a lot of pressure to make a purchase at the right time that millennials decide to save up more money before taking the plunge.
Getting into the real estate market at the right time is difficult when prices continue to rise, and waiting for them to decrease puts house hunters at risk for losing the property in the first place. That’s why more people are turning to real estate properties as an investment and sharing the space with renters.
Investing and Renting is an Option
Most millennials are opting to buy condos because they are much more affordable than stand-alone homes. Having said that, a young couple may quickly grow out of the home if they decide to have kids. A condo is not a permanent solution, but it’s an option to consider in the near future.
Home ownership doesn’t have to be a dream for millennials if they are willing to become a landlord on their own property. Renting is still a popular choice among a large demographic, and basement rental apartments are on the rise as a result. Millennials can wisely invest in a rental property for them to live in and transform the basement into a rental property. Having renters in the basement will help pay the mortgage, and allow someone’s home ownership dreams to come to reality.
While it might not seem ideal for first-time homebuyers, today’s incomes cannot support the rising prices of homes, and financial aid is necessary in order to achieve the ‘unattainable’ it seems.
There Isn’t Enough Room to Support The Single-Family Home
At the end of the day, any form of real estate investment is a good investment for the most part. It’s an investment that will generate larger amounts in returns, and you’re building equity in a property at the same time.
That’s why it’s not a bad thing if millennials are investing in condos instead of a more traditional dwelling. In fact, metropolitan and suburban areas are growing by the year; soon there won’t be enough real estate to build single-family homes. Condos and townhomes are going to be the norm in the future.
Renting is a more affordable option for many people, not just millennials, and it doesn’t have to be a bad thing. The cost of renting is much less than having a mortgage, property taxes and maintenance costs. Renters should save the money they would be spending on home ownership in order to build financial stability. When home ownership becomes a more realistic opportunity, then the renting millennials will have a good chance at it.
The Future is Bright, But it Will Take Time
When it comes to millennials becoming property owners one day, the answer is it’s possible, but it will take time to get there. While the average price of a home or condo is going to vary by city, the common problem among millennials is affordability. Incomes aren’t increasing as fast. What millennials should do is be realistic about their goals. A 3,000 to 4,000 square foot home as a starter home is not realistic, but could happen one day through years of hard work. The key point to remember is millennials have to start somewhere, and that starting point might begin in a condo or townhouse first.
Millennials’ real estate goals aren’t realistic if they are reasonable with their expectations. With a little bit of planning and advice from the professionals, it won’t be long before home ownership is in reach. However, the type of dwelling and location will be a result of the market’s influx, and how much the younger generation can afford within reason.