Many millennials find it hard to buy homes for themselves, a problem not encountered by those who belong to the earlier generation.
What causes the younger generation to struggle in getting into homeownership?
What are the causes of this homeownership problem?
Even though the millennials are the most educated generation globally, they struggle to have their property more than those from the other generations.
According to Realtor Magazine, the main reason why millennials are having trouble in getting their own home is due to the debts they have. The notorious student loan is the primary suspect to this, as it stops most millennials from starting savings for a downpayment.
Another cause for millennials finding it hard to have their own homes is because they are long-term renters. It means that the longer they rent, the higher they are paying, which causes them to be "rent-burdened," wherein they are spending 30 percent more on housing alone.
Add to that pile of causes is that millennials are delaying their marriages. It means that they won't have any reason to purchase a home since they don't have a family to provide shelter.
Student loan as the primary suspect for this
As other sources say, it shows that the student loan is the one to blame for this problem. According to CNBC, the chance of a millennial getting a new home decreases if their student loan becomes bigger. The loan can increase due to interest rates, which severely affects the millennial's capability to have their own home.
The emerging wealth gap between Millennials and Other Generations
According to New America, there is an emerging wealth gap that causes millennials to have difficulties getting their own homes. Aside from that wealth gap, there is also a demographic shift in young adults having their own home and socioeconomic changes in their generation's characteristics.
Combine that with the previously mentioned causes; it results in many millennials not getting into homeownership themselves.
Furthermore, there are external barriers that block many of them from getting a home. For example, the sudden outbreak of the COVID-19 pandemic can be also be blamed. Other issues that millennials face due to changing aspects and misunderstanding contribute to the said problem.
There are also millennials' living trends that can also affect why they aren't getting their own homes.
Trends that affect millennial homeownership:
- Various shifts in their preferences.
- Delaying their marriage.
- The lack of housing supply.
- Having tighter credit scores.
- Lower Income and Higher Student Debts.
There are also things that can have long-term adverse effects on the millennials once they've reached their old age, such as having a lower wealth at retirement age and having an inequality in intergenerational wealth.
However, there are several ways that those effects can be minimized by providing enhanced financial knowledge and home buying awareness beforehand.
Additionally, the usage of technology to simplify the current mortgage process can also help.
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