Millennials and Starter Homes - Good or Bad Idea?
Generation Progress, a national progressive advocacy and action network for young people, recently cited data from the Bureau of Labor Statistics which shed a positive light on the Millennial labor market - especially for ages 25 - 34. Older Millennials have a much higher percentage of labor force participation than the national average.
Buying a first home could be a reality for many Millennials who are actively working and earning better salaries than in years past. If you have already been planning on buying a first home - is it really time to take the plunge?
Buying a home is more complicated than it seems. The home you may be able to afford now, may not be your forever home. The most common type of home purchased remains the detached single-family home. The best approach is to weigh your options on whether to buy a starter home or keep saving for purchasing down the road.
Mortgage rates are low - so it is a terrific time to buy. Sales are rising, supply is dropping, and prices have increased in many areas. Compared to next year, today's market may be a bargain. If you choose strategically - you may be making a wise investment that will build future value.
Do the math. You may have enough money stashed away for a down payment, but that does not include closing costs, property taxes, maintenance, homeowner’s insurance, utilities, landscaping, etc. It is estimated that maintenance and repairs can total 1 - 2% of your annual mortgage costs.
So how does a Millennial move forward? Take a deep breath and compare your budget with your expectations. Consider things like your potential family size and your job/income flow. Compare the total amount of money you will be spending over time, and subtract the potential value you may receive if you someday sell the property.
Most starter homes are only intended to be lived in for 5 years. Many young buyers are looking for close proximity to urban areas. There are so many factors to consider when buying a starter home, and the decisions are not easy. We believe in homeownership, but realize that loans bring stress and responsibility. However, you may look back over your decisions in life and be disappointed by the opportunities that you passed on. Get out there and explore, dream, and discover. Don't be afraid to take chances when the timing is right.
Should Millennials Even Bother With A Starter Home?
June 5, 2016
Forbes.com / Personal Finance / #DreamHome
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