Since the early days of the 20th century, buying a home has been a quintessential part of the American dream. With times changing and housing prices skyrocketing, this dream may be changing.
Studies show that millennials are deciding that it is not just the inflated price of housing that is causing them not to buy homes, but also the large commitment of doing so. Buying a home implies a sense of permanence and settling down, which many are choosing not to do.
Millennials are said to not be as interested in the idea of owning a home and staying stagnant as the times are in a current state that seems tumultuous at best.
One of the main issues with buying homes is “value homeownership,” says Sarbjit Nahal, head of thematic investing at Bank of American Merrill Lynch. The supposed number of new households formed from January 2014 to December 2018 is expected to get to 8.3 million, and reach a spending limit amount of 16.5 million by the end of 2019.
Nahal stated that “Millennials demand for homes has stagnated due to cyclical economic factors, like high unemployment rates, lack of wage growth and available credit. As such, millennials have deferred getting married and forming families, which has delayed, not derailed, homeownership. Stronger economic growth can address some of this pent-up demand.”
Nahal further stated that “Rising rents and a possible increase in interest rates later this year may drive millennial to buy. U.S. rents have increased 15 percent in the past five years vs. only an 11 percent rise in the income of renters.”
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On the other side of the argument, many millennials are supposedly “more confident than ever” given the increased power of their money as well as the increasing use of technology to aid them in a decision.
Paul Phillip Hermann, co-founder and managing director of Lamudi stated that “thanks to growing economic empowerment, younger generations are looking to property for a safe financial investment, although many wish to keep their options open by first renting.”