Millennials rent. They rarely purchase a home because they are not making enough money to live and save for a down payment. This can be incredibly problematic for young people trying to build equity in their life — spending money on rent that could be adding to their home ownership.
Millennials as a group might be priced out of the housing market. But you as an individual don’t have to believe in that. While there are definite restrictions to you taking part in the largest form of American wealth building, there are ways to make the dream of home ownership a reality.
Flip It!
Flipping houses is great for someone stuck in the city life. If you can’t afford to live where you can buy, perhaps someone else can. One example would be a millennial trying to live in the Bay Area. Sacramento (an almost 2-hour commute from San Francisco) is often referred to as a “sleeper” community for the city, which means that while you may not be able to afford something in the city, or devote the commute time to living outside of the city, purchasing a house in the growing commuter community would be a fantastic flipping opportunity.
Foreclosed properties are also a fantastic opportunity when looking for lowering investment costs. There are definite challenges, as often these foreclosure properties require repairs and could potentially, depending on the state, require you to pay all the back taxes on the property. There are a variety of ways to increase the value of any home you buy, from basic livability to making the home energy efficient. Very basic improvements like new energy-efficient windows address increasing the “greenness” of your home and can bump up your asking value by thousands of dollars. Flipping houses is a great way to build wealth and dip your toes into the home-buying market.
Invest in Wealth-Building Properties
You may want to live in the home you buy and build equity at the same time. Duplexes or homes with mother-in-law apartments are a fantastic way to dip your toe in wealth-building properties. Rentals are not a method of building immense wealth fast, but they do offer a steady rate guaranteed return and can lower your mortgage cost.
Of course, buying a multi-family unit has its own slew of potential issues. Are you the sort of person who can invest time and money into being a landlord? Are you willing to have a cash back-up in case you lose a renter or have to make major repairs? Investing in a wealth-building property will definitely offset the cost of property investment, but it comes with its own set of pitfalls and requires a little more liquidity.
Just Buy It
Millennials aren’t buying houses at the rate of their predecessors. They have a variety of reasons for doing so, from spending more on rentals, to accruing debt early on, and flocking to city centers to find careers, there are a lot of reasons to not purchase a permanent residence. But there are a lot of myths that may be preventing you from moving forward with home ownership. You do need to save for a down payment and have a decent credit score, but you don’t have to be perfect.
Getting your credit score in order, saving for a down payment, and finding a home isn’t an unachievable dream. It’s something you can definitely do if you want to.
Millennials Are Already Buying Houses
It can be tough to buck the norms and take part in the great American dream, but as millennials have grown up, they’ve started buying homes. You aren’t bucking the trend; you’re joining your generation and making up for lost time.
Millennials didn’t buy very many homes when they were young like the generation before them, but millennials were also struck by the Great Recession and took big earning hits. That recession, and the wage drops during it, made home ownership very unaffordable. But as young folks begin to earn more and make up some of the wage gaps, they are moving from their parent’s basements into their dream houses. It’s scary to make a big investment, especially if you’ve experienced huge housing bubbles and recessions, but millennials have money and can make these sort of smart investments.
Millennials can and should start taking part in the housing market. If you are unsure about simply purchasing a home, dipping your toe into the market by flipping a home may be a good start. You can also offset your cost by purchasing an investment property like a duplex. Owning the place that you lay your head is a part of the American dream, now is your time to join in.
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