Over the last thirty years the American service landscape has been moving into a subscription, free-lance based economy. As lifestyles shift with the times, as goes homeownership.
Like everything, economic factors affect homeownership. Millennials (1975-1994) primarily choose to rent over purchase, due in part to high levels of student debt, with a preference to live in high-cost urban cities, and because renting, though expensive in popular areas, is still cheaper than homeownership in all 50 states. Renting also allows for maximum flexibility with little responsibility. No maintenance or property taxes are additional perks.
However, this trend looks like it might be changing; even though the percentage of millennials living with their parents is increasing, millennials are waiting longer to marry and start a family and are very cautious to purchase property after bearing witness to the wreckage of the 2008 housing burst; Millennials have overtaken Generation X as having the largest share of new loans by dollar volume.
Within the last year, Millennials have moved to affordable areas with strong job markets, taking on larger mortgages to increase their buying power, expanding their footprint in the marketplace. More and more millennials are seeing the value in homeownership, and will soon dominate the housing market. This is due in part to more mobility and affordability in the market.
Because Millennial homebuyers are typically searching for their first home, and they do not have equity from a previous home, they have to put down smaller down payments. Since the market’s affordability has improved and interest rates are relatively reasonable, for some millennials it makes more financial sense to invest than to rent.
As a new generation takes over the market, one thing rings true even in a subscription-based, freelance economy, there is, and there always will be value in owning real estate. It’s not just about owning property, but how you maximize your profit potential with real estate. When you own a home you are building equity, payments are going towards owning, not renting. And there are several tax benefits to owning a home. Not to mention, you could always entertain subletting or renting your home for the additional income.
We know that the real estate market is heavily dependent on the economy, and vice versa, and homeownership will have to keep up with technological and social changes that directly impact the economy in order to remain affordable and profitable.
We understand the pros and cons of homeownership; that’s why we focus on being honest with our clients. We pride ourselves on our advice and service. Our consultants want to ensure that buying a home is only going to add value to your life. If you need help weighing your real estate options, get in touch to discuss your goals.