5 Challenges Millennials Face When Buying a Home
WalletGyde has partnered up with long time realtor, Hope Stafford at Keller Williams DTC to help you explore the beautiful growing city of Denver and help you weigh your options before you move!
Buying a home is a worthy goal, and one that I, along with most millennials, strive to achieve. That being said, there are several obstacles to investing in real estate to overcome.
Here are 5 of the biggest struggle facing future home buyers.
- Student Debt
- Unrealistic Expectations
- Low Inventory
- Lack of Savings
- Commitment Phobia and Indecision
1) STUDENT DEBT
Unemployment is very low currently and most college graduates can quickly become employed. However, we are not seeing wages equivalent to the rise in the cost of living. This makes it very hard to not only pay off the debts, but then in addition, try to save for buying a home.
2) UNREALISTIC EXPECTATIONS
I call this the HGTV generation. Today, you are inundated with images of amazing open floor plan, custom designed houses on T.V. and this is setting up millennials for disappointment when they see what a starter home in the $300,000 range looks like in Denver. Most of these homes were built before 1980, when compartmentalization was in, so unless they have been renovated, your kitchen is not going to be open to your living room. You also will not find quartz counters and faux wood tile either. This means you have to have more money saved to do any renovations you want.
3) LOW INVENTORY FOR BUYING
Going along with the above point of settling for less, is that there is just less to go around too. Denver has approximately one month worth of inventory, and a balanced market would have approximately six months’ worth. Millennials make up about 30% of the home buyers in Denver, and most are looking in the starting home $300,000-$400,000 price range. There is much more demand for homes than there is inventory…unless you can afford above 1.5 million and then the whole market is different. This means that if what you want in the price point of what you can afford doesn’t exist, you may have to change your expectations.
4) LACK OF SAVINGS TO BUY
Many millennials are having a very hard time saving for a down payment and thus making unwise decisions when it comes time to buy. A NBC News report stated that 20% of millennials who want to purchase a home are dipping into their 401K to use for a down payment. I am all for buying a home, of course, but using your retirement money to do it is short sighted. Give up the daily Starbucks and avocado toast instead (and maybe pay off a few other things) and learn how to save money.
5) COMMITMENT PHOBIA AND INDECISION
Online dating has had an influence on home shopping for the millennial generation. The swipe left culture has influenced multiple aspects of peoples lives including buying a home. There is a level of indecision among millennials akin to thinking the grass is greener on the other side, or if you swipe left, there is always another potential match. This makes it hard when making a decision on buying a home in a market like Denver, where there is so little inventory that there may not be another perfect match if you swipe left. The best way to make money, in my opinion, is to purchase a house. So my advice is lower your standards, make the investment in a starter home (much like a relationship you can always upgrade later) and swipe right.
Comment down below any questions and thoughts!