Is the Millennial generation giving up on the American Dream of homeownership?
Buried with college-loan debt, and carrying gloomy memories of the Great Recession, which may have caused their parents’ home values to sink underwater and lose thousands of dollars in equity, the housing confidence and enthusiasm of Millennials has plummeted to record low, reports a new home-buyer survey.
According to the ValueInsured Modern Home-Buyer Survey, now fewer than half of the Millennial generation—those people aged 22 to 37 years old—see perceived value in buying a home.
In the third quarter of 2018, only 48% all Millennials surveyed believe buying a home in America today is a good investment. This is a record low, down from 54% in the second quarter. The previous high was 77% two years ago.
Here are other findings of the quarterly survey by ValueInsured, a provider of home down-payment and refinance equity protection:
• Only 58% of Millennials now agree buying a home is the best financial decision they can make for themselves and their family. That percentage is the lowest recorded over the past 10 survey quarters.
• Only 61% of the Millennials surveyed believe buying a home is more beneficial than renting, again a survey low. That’s down from a high of 83% two years ago.
• While 76% of all homeowners believe now is a good time to sell a home, only 39% of Millennials who want to become homeowners believe now is a good time to buy a home.
In addition to reporting a steady slide in their conviction for home buying, more Millennials now associate owning with sacrifices:
• Nearly one in four (23%) believe they need to delay having children in order to afford a home.
• 32% do not believe they can afford a healthy and balanced diet while saving for a home at today’s high prices.
• 31% are seriously considering relocating to another city to afford a home.
“Conventional wisdom assumed Millennials were buying homes later because they chose to get married and have children later,” said Joe Melendez, CEO and founder of Value Insured. “New research now suggests homeownership may be the cause—not the effect—of delayed family formation. It is an alarming trend, and we see more acute evidence in expensive housing regions.”
Among Millennials who are still interested and motived to become homeowners “in the near future,” their anticipation is often filled with anxiety.
Among motivated first-time buyers, 49% are concerned rising mortgage rates could make homes currently within their budget become unaffordable later.
On August 16th, Freddie Mac’s Primary Mortgage Market Survey reported that interest rates on benchmark 30-year fixed-rate home loans averaged 4.53%, down slightly from 4.59% a week earlier.
Mortgage rates have been trending upward for most of 2018. Benchmark 30-year fixed loan rates now are a half of 1 percentage point higher than they were in January. A year ago at this time, the 30-year fixed loan average was 3.89%.
A whopping 67% of Millennials surveyed are concerned they will not save enough down-payment money for a home in which they would actually like to live. And, 52% believe a home they buy now will likely drop in value within one year.
Some 68% are concerned about another housing crisis, and 64% admit they will likely experience buyer’s remorse after reaching their homeownership goal.
Their trepidation could be explained by the high stakes these Millennials plan to undertake. Some 85% of those surveyed expect their home down payment to represent over half of their total personal assets.
“Most home buyers experience a healthy amount of jitters before such a milestone purchase—that’s normal,” Melendez said. “But the new normal is highly anxious, inexperienced buyers who are bungee-jumping into home buying without knowing if their safety harnesses will work.”
Melendez believes that is an unhealthy approach, bordering on dysfunctional trend that the housing industry “needs to mitigate to ensure we do not lose an entire generation of future homeowners.”
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.