Millennials are delaying homeownership for a variety of reasons. As a result, they are choosing to rent longer than previous generations.
In general, renting allows millennials to remain flexible and mobile in the job market while paying off their substantial debts before settling down. Instead of being tied down to a house, renting offers millennials more options.
In this blog, we’ll tell you five reasons why millennials prefer renting. Let’s get started…
1. Student Debt
Many millennials are still trying to pay off large amounts of college debt, which is one major reason why they continue to rent. Approximately $1.6 trillion in U.S. student loans were owed as of February 2020, and that was before the COVID-19 pandemic. With the social, psychological, and financial impact of the pandemic, millennials are even less likely to take on a 30-year mortgage.
In addition to a monthly mortgage payment that is similar to a rent payment, a purchase of a home usually includes a 20% down payment, which most millennials do not have. The combination of saving up for a down payment and paying large student loan bills can often make homeownership out of reach for millennials, especially those early in their careers.
2. They Settle Down Later In Life
Millennials tend to marry and start families much later than their parents – they’re 10 to 20 percent less likely to have married in their 20s. Aside from that, the median age of the first marriage is also the highest in history – 29 years old for men and 27 years old for women. Many millennials prefer to delay marriage and the joint income that comes with it until they eventually get married.
Furthermore, millennials are much less likely than previous generations to be parents at this stage in life – only 3 in 10 live with a spouse and child, versus 40 percent of Gen Xers at a similar age. Due to the lack of need to settle down and worry about finding a good school district, many are delaying purchasing a home.
3. They Are The Most Mobile Generation
73% of millennials plan to move within the next ten years, compared to 58% of Gen Xers and 42% of baby boomers. Millennials also pack up and move every 2.2 years, as opposed to Generation Xers who move every 3.7 years, and baby boomers who move every 5.7 years.
Therefore, it makes sense that millennials would avoid the hassle and extra cost of buying or selling a home and instead choose to rent.
4. Always Job-Hopping
Since millennials change jobs more frequently than older generations, renting is a convenient option for them. One in five millennials has changed jobs in the past year – five times more than non-millennials.
Even if the job change does not require a cross-country move, millennials may still change their homes to move closer to jobs within the same city. In addition to complicating things, purchasing a home can hinder progress with a new job and turn it into a hassle rather than an exciting new challenge.
5. Renting Fits Their Lifestyles
The desire to rent is probably one of the main factors keeping millennials in the rental market. Renting suits many millennials’ lifestyles better than owning a home.
In spite of their parents living in the same house and staying in the same job their entire working lives, millennials prefer more flexibility and value a rewarding, meaningful career over a stable, consistent one. Renting makes these pursuits easier for them.
According to Goldman Sachs, the Millennial generation is the largest generation in US history-bigger even than the Baby Boomers. Furthermore, they have less money to spend, despite the widely held belief that young people squander their earnings on $5 lattes. A lack of jobs and lower incomes have left younger Millennials with less money than previous generations.
Due to the generation’s prime spending years, the residential multifamily real estate sector is poised to flourish! Now, investors are acquiring real estate assets that will allow them to meet the oncoming demand for housing and residential properties, which will allow them to build enduring wealth.