Buying a home is the most typical route to financial security for most Americans. Most people build the largest portion of their lifetime wealth accumulation by owning a house and steadily paying off the mortgage, so becoming a homeowner is crucial for your financial well-being. But there are some pretty serious obstacles in the way for Millennials, and it all starts with a lack of savings.
According to recent statistics, 62% of Americans have less than $1000 in savings, and 21% have absolutely nothing in savings. This is a huge problem for would-be home-buyers because of the mortgage crisis a few years back. It used to be a lot easier to get a mortgage, but because lenders were engaging in predatory lending practices there were a lot of foreclosures and then the bubble burst on property values. Today there are tighter restrictions on who can get a mortgage, so having a substantial down payment is crucial.
Over 905 of Millennials report they want to own a home some day, but there are plenty of obstacles standing in their way. Currently home ownership is around 62%, and only about a third of Americans under the age of 35 currently own a home, a distinct decrease from ten years ago. Another problem facing Millennial home buyers is a lack of affordable housing, also brought on by the housing market collapse. There just isn’t enough inventory and that is driving prices up.
Millennials are caught up in a vicious cycle. Things like rising rent payments, student loan debt, and stagnating wages are making it nearly impossible to save money for a down payment on a house. However, there are programs that can help with loans, grants, and down payment assistance for first time buyers. The sooner you start, the better off you will be. Learn more about buying a home from this infographic!