Is the Dream of Owning a Home Worth it for Millennials?

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In early 2019, it was reported that only 36 percent of millennials between the ages of 24 and 36 in the U.S. own homes. When looking at the same age group in 2005, 45 percent of individuals owned homes. Researchers have found that this number is likely to continue to drop, as student loans and increasing housing prices have become bigger barriers than ever before.

However, for millennials who dream of one day owning a home, is the financial stress that comes with added debt worth it? Explore some of the pros and cons involved with currently be a millennial homeowner.

How much debt is now involved with owning a property?

As of 2018, the average national mortgage debt was reported as being $201,811. Two years earlier, that number was 3 percent lower. The increased mortgage debt could be attributed to both the rising cost of homes, as well as the availability of 100 percent financing in newer developments. Mortgages are also easy for many individuals to get. Even if someone hasn’t always made good financial decisions, there are mortgages for poor credit scores. While mortgage debt certainly isn’t a bad thing to have (especially when compared to the cost of renting), there are numerous expenses involved in homeownership. From property taxes to routine maintenance, millennials are rightfully stressed about the financial burdens that they could face.

Many millennials are already stressed about their finances

In addition to being anxious about the costs involved in owning a home, millennials are now the generation that is the most stressed out about their finances. 67 percent of individuals in this age group report feeling stressed out about their savings, and 23 percent say that thinking about their finances make them feel physically ill. These figures are significantly higher when compared with the average population. What is driving the high levels of stress? With student loan debt being at its all-time highest ($1.5 trillion as of earlier this year), and many cities having housing prices that are no longer affordable, it is no surprise that fewer and fewer young people are buying homes.

What are the dangers of owning a home without being in a good financial position?

In the 2008 recession, thousands of individuals purchased homes that were more expensive than they could afford. Due to decreases in home values and salaries, these individuals ended up losing nearly everything. As reported by the Seattle Times, one man living in Washington experienced a pay cut (to about half of what he was making prior to the financial crisis), and his condo decreased in value so much that he now owes $100,000 on a home equity line of credit. His story is common throughout the country, and could happen again. Even if there is no large scale financial crisis in the next few decades, combining student loan debt, credit card debt, and car loans with a mortgage can lead to missed payments, default, and eventual foreclosure.

Is it worth it for millennials to go into even more debt to accomplish the dream of owning a home? It depends. For those who are still paying back thousands of dollars in student loans and other debts, waiting to lower their balances is often a good move. However, for millennials who have their financial situation under control, the investment can be highly rewarding.

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