Though they’ve seen their parents lose equity, today’s 20-somethings have home-buying on their minds.
A just-released study of millennials by Western Union found that nearly half expect to buy a home within the next five years—and 10% of them think they’ll be homeowners within the next 12 months.
But they likely won’t have as much to spend as did prior generations. Cash flow will be all-important to millennials, who will have to sync their homeownership expectations with the financial realities of lingering student debt and earnings depressed by the slow recovery.
It’s likely that millennials will take a different route to homeownership. Emerging paths include:
Strategic renting. ’Rent’ is no longer a four-letter word; in fact, as millennials gun for career advancement to get their earnings on track, they are likely to forgo homeownership in exchange for the flexibility of being able to relocate for a great job. There’s also little shame associated with living in parents’ basements to save up for a down payment. Owning a house is fading as a milestone of adulthood.
Househunting as hobby. Without societal or peer pressure to buy, millennials will take their time to find houses that match their values and practical considerations. Access to public transit; green or energy-efficient features; and modest square footage are likely to be hallmarks.
Homeownership as process. With budgets constrained by long-term debt, millennials may well spell a DIY renaissance. Cost-conscious millennials are already sending shivers down the spines of auto execs and wedding industry providers. If these trends are predictors, they might view homeownership as the biggest DIY project ever.
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