There is a lot of information about there about the “fact” that millennials are not buying homes. But is this true? Is it a myth? Or is it somewhere in between? At Berkshire Hathaway HomeServices we are proud to help people of all ages buy homes – including millennials. Whether you fall into that category or are just curious about how they are affecting the market, today we will cover some of the myths and facts about millennial home buying.
Millennials aren’t getting mortgages because they do not have the qualifications
On a case by case basis this may true – certainly there are people in every age bracket and every generation who do not qualify for mortgages. However, the data points to something else entirely going on: Millennials not trusting banks.
They have grown up in a time during which lending institutions have been in the news for being involved in harmful practices and housing crises. Some millennials look at this information and take it into consideration when deciding if they should continue renting or gamble by trusting a financial institution. The truth of course is that there are many trustworthy mortgage financial services out there.
Millennials have bad credit
False. Once again, this may be true on a case by case basis but overall it is not a notable factor in how many millennials buy homes. The truth is that after 2008, many creditors tightened up their requirements for giving credit. As a result, people who were just coming of the age to get a credit card found it difficult to do so. As these requirements have loosened, millennials have had a chance to build up strong credit.
Millennials cannot afford a down payment
It’s true that a 20% down payment – plus closing costs – is beyond the grasp of many people, including many millennials, but it is also true that there are many first-time homebuying programs that offer an opportunity to buy a home with just 2% down. There are even some programs that give grants to cover the cost of down payments.
Another interesting factor in this equation is the increasing cost of rental deposits. In popular markets, landlords are starting to require two or even three months in advance. This can be much more than it costs a millennial to put a down payment on a property.
Student loans prevent millennials from buying a home
It is true that today’s college graduates are coming out with much more debt than previous generations. It is also true that this debt exists whether they are buying homes or renting them. With the cost of home ownership becoming lower than the cost of renting in many markets, student debt is not necessarily holding millennials back.