Study Finds Two-Thirds of Millennials Regret Buying Their Homes
Buying your first home is a rite of passage into adulthood. Yet, in a competitive real estate market, it’s common for buyers to rush into buying a home, possibly even enduring a bidding war, and end up with a home that doesn’t fit their budget or needs. This, of course, can lead to regrets. Millennials, in fact, according to a recent study by Bankrate, have the most regrets about buying a home. Bankrate, an independent financial comparison service, surveyed homeowners about homeownership regrets.
There are 2 Major Categories of Homeowner Regrets
Bankrate found that older buyers were less likely to have post-purchase regrets but also found that 64 percent of millennial homebuyers (between the ages of 25 and 40) had some regrets about buying. According to their study, the majority of homeowner regrets fell into two major categories: financial and physical. Many were unhappy with additional financial costs that were too high and others regretted choosing a place that didn’t suit their needs.
Extra Costs are Key Factors
Bankrate found that many new homebuyers didn’t feel prepared for unforeseen maintenance costs, and more than 20 percent of millennial respondents believed home-repair costs were too high. This number jumped up 6 percent among younger millennials (ages 25 to 31). In addition to maintenance costs, millennials also regretted locking in an interest rate that was too high, getting stuck with a high mortgage payment, or overpaying for a home.
Mortgage Rate and Sales Price
Millennials were the most likely to express in the survey that they didn’t get an acceptable mortgage rate or that they overpaid for the home. Bankrate found that 12 percent of millennials said rates were too high, and 13 percent believed that they agreed to a higher sale price than what it should have been. To avoid these regrets, homebuyers should shop around for the best rates instead of settling for the first offer you find, and also should be willing to walk away from a deal if an equitable sales price cannot be negotiated.
Overall Buyer’s Remorse
While cost was a major factor in millennial homeownership regrets, many survey respondents later found their new homes were just the wrong fit for their needs. Millennials were the most likely respondents to be unhappy with a house’s physical characteristics. According to the research data, 15 percent of respondents disliked their new property’s location and 30 percent found the house was too big or too small.
A Hyper-Competitive Market Leads to More Regrets
Thanks to competitive market conditions in many parts of the country, potential buyers have less time to mull over a decision and need to put in an offer. Some showings could last as quick as 15 minutes, and by the time you finish a walkthrough, there could be multiple offers. Less time to think about this monumental purchase could lead to buyer’s remorse before fully assessing if a home fits your needs and budget.
Bankrate recommends working with an agent to guide you through the home-buying process. They’ll help you focus on finding a home that you’ll be comfortable living in and help you assess neighborhood market conditions to get what’s most important on your wish list. It also helps to have a thorough understanding of the interest rate for which you’ll qualify and factor that into a realistic budget that also includes ongoing maintenance expenses.
Don’t Feel Pressure to Rush into Anything
It’s easy to succumb to pressure and put in an offer on the first home you see, but Bankrate advises not to rush into a deal because you’re frustrated. Even if you’re worried you haven’t yet secured a deal, or there are other offers, or you feel overwhelmed, take the time needed to make a solid decision. Before jumping into a situation or a home that you might come to regret, plan ahead and don’t let emotions cloud your judgment about what you want and what you can afford.