Millennials can actually afford to buy homes, but many choose to rent. According to a recent article by Consumer Affairs, the younger generation is slow to embrace home ownership. Two years ago, 35 percent of Millennials said they are renting to prepare to buy a home, but only 26 percent are saying that now, according to a Fannie Mae survey. The reason they want to rent is because renting is “more affordable.” But when you dig a little deeper, the reason many Millennials ages 20 to 35 prefer apartment rentals is because they can get the amenities and luxurious lifestyle they want at a more affordable price. Most can’t afford homes in the price range that gives them granite countertops, laminate hardwood floors, access to a gym, pool or other amenities in a master-planned or upscal e community.
Renting now and buying later
According to Consumer Affairs, real estate experts predict the rate of home ownership will continue to decline even though home prices rise. Millennials often choose apartment rentals that cost less than a mortgage so they have more spending money. But they can also put that extra money aside to purchase a home down the road. Many are waiting to have children, which is often the driving force behind home ownership. The average first-time homebuyer was 31 years old in 2013, but that age may rise with so many people burdened with student loan debt.
Focusing on other priorities
Renting instead of owning gives young people the chance to focus on building careers and paying off debt before taking on a mortgage. Home buyers with a 20-percent down payment can avoid the extra private mortgage insurance payment tacked onto the loan. Most property managers of apartment rentals take care of any property maintenance, which is extremely appealing to Millennials.
As the children of baby boomers, most Millennials grew up in an era of prosperity before the recession. They were accustomed to attending new construction schools, eating at new restaurants and living in new homes. Luxury apartment rentals don’t have to sell themselves to Millennials because they are already there. The question real estate experts ponder is how long will Millennials continue to rent? As long as they can find luxurious units, this younger group may become loyal lifelong renters.
Wood Partners is a national real estate company that provides a luxurious living experience for people on all budgets. For more information about our amazing communities, contact us.