The Young and The Waiting
Millennials are waiting longer than ever to purchase a home.
According to a new report from real estate company Zillow, millennials are waiting longer than ever to purchase a home. The findings suggest that young people are short on savings and struggling with debt (thank you, college) and unsettled careers.
The Zillow report found that the average first-time home buyer rents for six years before buying, an increase of 2.6 years from the 1970s. This person is typically 33 years old, three times older than the average first-time home buyer of a generation ago.
This delay is one reason why home ownership has dropped to 63 percent, an all-time low. Of course we should note that waiting to buy isn't always a bad thing. Holding off until you're more settled likely will lower the chance that you'll have to pay to move again in the near future.
When buyers decide to finally pull the trigger on a house, they end up paying more; relative to their income; than buyers did from previous generations. Zillow found that first-time buyers are now paying a median price of $140,238, almost 2.6 times their income. In the 1970s, a first home was just 1.7 times a young person's income.
The Zillow report shows just how uneven a young person's financial situation can be. "Once they start having kids, they begin looking for homes," Svenja Gudell, chief economist at Zillow, told NBC News. "We're also finding that; given how much rental rates are currently rising; a lot of folks are having a hard time saving for a down payment and qualifying for a mortgage."
Article written by Chris O'Shea for SavveyMoney®.