In the survey, almost a third of respondents said they’d need to relocate to another city to have the ability to pay for a place. The same number didn’t believe that they can continue to eat healthy while saving for a down payment, while a quarter said they would have to delay having kids to cut down expenses.
Is a home a good investment?
In July, the median cost of homes in the U.S. had reached $269,600, up 4 percent from one year ago. New home sales, meanwhile, dropped to some nine-month low. Due to high costs and restricted supply, many prospective homeowners are trying to find homes that fit their savings.
While purchasing will save you money on the lease, studies have shown that, if your priority is building wealth, investing in stocks and bonds may get a higher overall return, even as you continue to make rent payments. The average annualized total return for its S&P 500 index within the past 90 decades, by contrast, is 9.8 percent.
Still, other recent research indicates that 80 percent of millennials do need to houses. The cost only restricts them. In the ValueInsured survey, 64 percent of respondents predicted that, if they did buy a home, they would likely feel buyer’s remorse. That is a fair expectation considering a Bank of the West poll discovered that 70% of millennial buyers do harbor regrets, often because they feel that they overspent to a down payment. “The way you build financial security is through a property,” he says, “and it begins by buying your very first home.”
However, experts are still debating regarding private real estate investment.
Kevin O’Leary, an investor on ABC’s”Shark Tank” and a personal finance writer, weighs the difference. He recommends buying a home just as soon as you’re settling into a household and want stability. “When you form a family, and you are considering having, let us say, two kids, that’s the time to begin thinking about a home,” O’Leary tells CNBC Make It,”as you know for about five-to-seven years you are going to be raising your kids, and you need a safe place for them.”
“Conventional knowledge assumed millennials were purchasing houses later because they chose to get married and have children afterward,” explained Joe Melendez, CEO and creator of ValueInsured. “New research now indicates homeownership may be the cause, not the result, of delayed family formation.”
“A single-family home isn’t an investment,” CFP Eric Roberge informs CNBC Make It. “It may obtain money as time passes, but if you’re looking to invest, buying a single family house and then living in that residence is not the place to get it done.”
Based on an Urban Institute report, approximately 45 percent of Baby Boomers and Gen Xers owned houses when they were between the ages of 25 and 34, compared to just 37% of millennials. Approximately half merely can’t afford a deposit, the report found. That’s mostly because, compared to past generations, millennials are burdened with more student debt and higher rents, which keep them from having the ability to save.
Just 48 percent of millennials (age 21-36) believe that buying a home is a fantastic investment, according to the latest ValueInsured Modern Homebuyer Survey. That is a record low, according to the report, and also a sharp contrast to this prior high of 77 percent only a couple of decades ago. The majority of the respondents said they consider home prices are too large. The vast majority, 85 percent, said they anticipate a down payment to cost more than half of the entire worth of their assets.