While it's true that more Millennials are renting homes than buying them, the American Dream is far from over. According to real estate professionals, members of this generation are often more interested in becoming homeowners than statistics show. So, what's keeping them from putting down a deposit?
It turns out that many Millennial home buyers report feeling confusion when trying to navigate the somewhat complex world of home buying. With such a large purchase, which requires so many considerations, may potential homeowners find that there's plenty of questions left unanswered - such as how to know when to buy, or what, or where?
While there's truly no right or wrong answers to these surprisingly personal questions, there are five important things that any potential home buyer should consider prior to taking the plunge.
The first thing any potential homeowner needs to know before buying a home is what sort of budget they can put towards the purchase. That means working out everything from the down payment you're able to make, to the monthly home expenses, property taxes, and mortgage payments you're comfortable covering. Your financial situation will greatly influence the type and location of any property you'll look at, so it's worth it to sit down with a mortgage banker or financial advisor to get some personalized feedback on your unique financial situation.
In the end, your monthly outlay may not be so different from renting, but if you're a savvy home buyer, you are likely to see your investment appreciate over time.
Understanding the Online Market
The world wide web (www) is central to the lives of most Millennials, but when you begin looking at homes, it's important to remember that the internet isn't gospel. While it is a great source for pictures and floor plans, online listings are just marketing tools geared toward luring you in.
An experienced real estate agent is really the most knowledgeable source for homebuyers, as he or she will know the most about of the local market, local trends and potential valuation for the future. They will also help you unravel the human side of purchasing a home because no matter how many algorithms you put in between you and a property, buying a new home is a surprisingly emotional experience.
A Five-Year Plan
Not every home is for life. Instead, it's recommended that home buyers consider purchasing with a five-year window in mind. A lot can change in your life in five years - you might get married, have children or get relocated for work - which might push you to sell your home and search for a new one better suited to your new circumstances.
The five-year period is also the minimum recommended making a profit on your purchase. While some properties do appreciate significantly after just a year or two, flipping houses requires a lot more skill and dedication than the average homeowner is looking to put in. Plan for five years, then let life happen.
When to Jump
The biggest question in home buying is often when to pull the trigger. Should you purchase a starter home, or wait until you can afford something bigger? Sometimes when you wait, you might miss the market completely. On the other hand, saving up to have a larger budget might get you closer to your dream property, than if you purchased just any home in the meantime.
Unfortunately, there's no simple answer to this question. Go over your goals; talk with your partner; meet with a financial planner or do some soul searching. It's up to you sort out your priorities and goals surrounding the when to buy question.
It can't be stressed enough: a trusted real estate professional is your best resource in the home buying journey. Real estate agents are experts in their fields and will make navigating the transaction infinitely easier. Plus, their services are already paid for - it's included in the listing price, and the seller pays both agents at the closing - so you might as well use them!
The excitement coming from home ownership is worth more than a simple equation. Though this milestone choice must make financial sense, there is definitely an emotional factor that comes from owning a home, that's hard to put a price on. It isn't called "The American Dream" for nothing.