According to the latest Zillow® Housing Confidence Index (ZHCI), among people 18-34 years old, 65 percent said homeownership and the American Dream go hand-in-hand. That’s more than any other generation. This age group represents Millennials, or those born between 1982 and 2004.
The survey results come at a time when rising rents and stagnant incomes are making it tough for many Americans to buy homes. Millennials are renting longer than past generations as they put off major life decisions, but Zillow’s survey shows millennials value homeownership more than their parents and grandparents and low interest rates are in their favor.
While the number of millennial renters continues to climb in urban areas, the generation is choosing elsewhere when making the move to buy. This decision is boosted by price, limited inventory and the need for space.
The 2016 National Association of REALTORS® Home Buyer and Seller Generational Trends study revealed that more millennials are purchasing single-family houses outside of urban areas than ever before. In fact, millennials represented 35 percent of all buyers compared to 26 percent from Generation X, and 9 percent from the Silent Generation.
From witnessing the plight of their parents to navigating a barren employment landscape, most millennials experienced the effects of the economic downturn in one form or another. As a result, they’re cognizant of the importance of monetary well-being, yet unsure how to best manage their finances.
In reality, there are many routes to take on the path to a secure financial future. For Millennials planning to become homeowners, the first step is to establish a savings plan and to get up to date with their finances. Here are 3 tips for Millennials looking to prepare their finances for home- buying.
- Set goals. Currently, just over half of millennials have set financial goals. If you haven’t yet defined your goals, take time to create money milestones that align with your future plans. Ask yourself where you want to be at this time next year. If you’ve already set goals, now is a good time to review your plan, assess how you're doing and make updates if needed.
- Review your 401(k). Approximately three-quarters of millennials expect to work past age 65 because Social Security won't take care of their needs. This finding stresses the importance of a strong 401(k). Are you contributing to your employer's plan? Can you afford to contribute more? Spending even a few minutes analyzing your retirement savings can pay off big down the road.
- Meet with a financial professional. About one in three millennials say a lack of planning is their greatest obstacle to achieving financial security. The best way to make sure you're making the most of your money is to create a plan with a financial professional.
Regardless of where you are on your financial journey, completing even one small task today can have a big impact on your financial futures.
We all can remember when we bought our first home. It was exciting yet at the same time a little scary for some. Buying and financing a home is no small decision but once the purchase was made and we moved in we looked back and realized it wasn’t all that bad after all. In fact, it was easy, especially how mortgage loans are approved today using automated underwriting systems.
With some basic education about how the home loan process works and how building equity over time helps secure their financial future, buying vs. renting is an easier choice. Especially when they see how their mortgage payments are similar to what they’re paying for rent.