Homeownership may be part of the American Dream — but many are waiting longer to achieve that dream.
“I am seeing people wait longer to buy a home, particularly those from their late-20s into their mid-30s,” said Arvin Sahakian, vice president at mortgage site BeSmartee.
In fact, Americans are now nearly 33 when they realize their homeownership goals, compared to 29 in the late 1970s, according to new data from real estate firm Zillow. People are also renting longer, with the median amount of years renting reaching six — nearly a 33% increase from the late 1970s.
“Most young Americans should realize that homeownership is within reach,” said Kelly Hager, CEO of Kelly Hager Group Real Estate Services in Missouri. “However, it’s often a matter of rising non-housing expenses and evolving societal norms that keeps them from purchasing their first home.”
Hager said several factors are playing into Americans staying away from home ownership, including the increasing price of energy, medical care and college.
Since 1970, the price of U.S. colleges has increased on average 400%, and since 2000, college has increased 112%, Hager said.
“In a nutshell, escalating real estate prices are not the reason why people are waiting longer,” she added. “In many markets real estate prices are just now getting back to normal amounts of appreciation pre-housing bubble.”
Brian Koss, executive vice president of Mortgage Network in Massachusetts, said Millennials are putting off buying for multiple reasons—some are financial, some are emotional and some are quality of life issues.
“Generally speaking, Millennials are more interested in experiences than material things,” Koss said. “They prioritize time with friends and personal time over financial achievement. For example, they will choose living somewhere that is convenient and suits their lifestyle, rather building equity in a less exciting town or neighborhood.”
Koss said since many Millennials choose to live where they can’t afford to buy — it’s easier to rent. However, on the other hand rent is so high, it makes saving for a home impossible.
“Emotionally, many Millennials view homeownership as a huge risk,” Koss added. “Because they saw family members deeply affected by the housing crisis, the American Dream is not only unattractive to many, but seems like a nightmare.”
John William Barger, a realtor in Tampa Bay, Fla., not only sells mainly to Millennials, but is one himself.
“I can say without a doubt that my generation is waiting longer and longer to buy a home, and as prices continue to rise, it is becoming harder and harder to find anything in the $100,000 to $200,000 range,” Barger said.
Several factors have contributed to this trend, he said.
First, most Millennials graduated college during the Great Recession, and most didn’t find suitable employment out of college. Couple that with crippling monthly student loan payments, and most people under the age of 35 can barely afford to rent an apartment, let alone save up for a down payment on a home.
He added that, culturally, Millennials like instant gratification which translates to move-in ready homes, though at their price level, a fixer-upper is the best most can afford, he adds.
“This generation more and more eschews debt as well, tainted by their experience both with student loans as well as what they may have seen and experienced in their own families during the past five to ten years,” Barger said.
“As a result, I have several clients who have elected to live with their parents until 28 or even 30, choosing to take the money they would have been applying to rent and utilities towards a down payment on a home,” he said.