As reported by the Generation Progress, which is the country’s progressive support and action system for the younger generation, a data from the Bureau of Labor Statistics presented a favorable view of the Gen Y employment market, particularly the ones from 25 to 34 years of age.
For older groups of Millennials, the work force activity is higher compared to the national average.
With plenty of Millennials currently working and making higher incomes, investing in a new house could be possible for many people.
For those Millennials who fit this description, they may already have made their board on Pinterest with stunning pictures of their dream houses.
They may also have watched House Hunters a million times.
If you are like these people, you probably have your own dream house already planned out. You have started saving for its down payment.
Now you are wondering if it is time to go for it?
The whole process is more complex than you think. Oftentimes, it is overwhelming to think that the house within your budget now may not be the perfect one in the future.
When you live in a one-bedroom apartment, transferring to a two-bedroom bungalow feels like the right thing to do.
However, there are various factors why you would eventually outgrow your first home.
What if you want to add another room, to have children or remodel?
Save Until Later or Buy Starter Home Now?
The obvious answer is to weigh all your options first. As stated by the National Association of Realtors, the Generation Y buyers got a 35 percent as the biggest share of home buyers.
So actually, a large number of Millennials are buying houses. If you are confused about what house to acquire or how long it will take you to save, the detached single-family home the most popular kind of home that is purchased.
The costs of homes continue to increase all the way through 2016.
Home loan rates are also low, but according to Janet Yellen, it will eventually change.
Bankrate states that as of June 1, 2016, the mortgage rates are: 3.05% 15-year fixed, 3.81% 30-year fixed, 3.76% 30-year jumbo and 3.22% 5/1 ARM.
The housing market today seems like a bargain as opposed to next year’s selling prices.
The supply is decreasing, sales are increasing and prices have soared in many cities.
To make a smart investment that will have high value in the future, you should be able to choose the right home and location today.
Just think about it. Saving money for that down payment is not enough, because it is just the beginning.
There are other expenses that need to be addressed such as maintenance, utilities, yard care, painting, homeowners insurance, closing costs and property taxes.
In line with this. the Location Affordability Index indicates that a large number of Americans spend about 50% of their income on transportation and housing.
First of all, your expectations should match with your budget today and in the future.
While it is quite hard to estimate, these are real costs to take into account.
For example, if you want to have children later on, you or your partner will probably leave the job industry for a few years to take care of the little ones, your source of income will likely be cut down.
And, although you may both decide to keep your jobs, your finances will be affected with childcare expenses.
You can find online tools that can help you make the right financial decisions.
Realtor.com features an online calculator that will help you assess your financial situation whether to buy or rent.
The site estimates the total amount of money you might be spending in the future, minus the market potential value you could possibly get if you decide to sell the property at some point.
The Myth with Starter Home
The baby boomers can agree with me on this one. For most people, they bought their starter houses with the intention of residing in them for five years only.
In my own situation, that five years became ten years. We came to a point that we were willing to move out further in the are in order to get a much better deal.
Based on the Home Buyer and Seller Trends Report, the Millennials are making life decisions differently.
Nowadays, a lot of young home buyers are more interested to live in the proximity of urban areas. Millennials are investing in older houses on the outskirts of major towns.
Buying a property is not an easy decision. Mark Twain may have described best the situation in buying a home when he said that you will be more disappointed twenty years from now, by the things you did not do as opposed to those you actually did do.
In other words, do not be afraid to chase your dreams now. Go get that starter house.
The MIllennial Renters
From a survey conducted by the Apartment List company involving 30,000 renters across the country, about 37% of Gen Y renters have not saved anything for a down payment.
On the other hand, 79% of these renters state they dream of owning a home, which shows a serious gap between financial situations and expectations.
In reality, even the ones dedicated enough to save some money are still struggling to purchase a house. In bigger cities, the millennial renters who were able to save have kept $5,830 on the average. It means just one-fifth the financial savings, and did not reach the standard 20% down payment for a starter house that has a $175,000 selling price. A data scientist, Andrew Woo from the Apartment List, said that this inability to save raises concerns whether or not the Gen Y market will also hold off marriage and babies.
One factor is that the first-time home buyers are paying mortgage insurance or higher mortgage interest rates, and making lesser amounts of down payments.
What resulted in the most terrible downturn in the economy since the Great Depression more than eight decades ago, was the excess real estate debt and overpriced housing bubble about ten years ago, causing a market crash.
Millennials have basically entered an employment industry that is still recovering from the crisis.
Also, this is the time that has a high student debt, approximately $30,000 on the average.
The National Association of Realtors released a survey last month, indicating 53% of young buyers below 35 years of age stated that education loans were the reasons for their delayed purchases.
The experts from the St. Louis Federal Reserve advised the Millennials to delay buying a home for many years.
That is until it is possible for a person to purchase a property that will not make the financial balance sheet of the family highly leveraged and alarmingly undiversified.