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Millennial Home Ownership: Make It Work For You

May 24, 2018|

Millennials hanging out on the beach

There’s no doubt about it, millennials have become a powerful group. Roughly defined as those born between 1981 and 1996 (give or take a couple of years), there are more than 83 million millennials in the United States1 alone.

The millennial influence has entire industries scrambling to figure out how to best market and sell their products. But is this even a group that wants “stuff?” It turns out, not so much.

Many millennials are dropping cash on life experiences like humanitarian work, concerts and athletic events, and once-in-a-lifetime trips abroad rather than actual products. In fact, one survey found 78% of millennials would rather spend their money on an experience like a concert or extended trip than a desirable item2.

That begs the question—if you want to spend your money on life experiences, is now the time to buy a home?

Millennials walking dog on the beach
Many millennials seek experiences over things, including a home. But can you have both?

 

Is homeownership even a good idea?

At the height of the 2008 Great Recession, many millennials were old enough to experience its negative effects on their own lives or witness the effects on their parents. Jobs were scarce, foreclosures were on the rise, and people were hesitant to spend money in general.

Today, while the economy has improved, some effects of the Great Recession linger, making the cost of living difficult for many people. Unemployment is down, but in some places3, wages aren’t keeping up with rising home prices.

The millennial homeownership challenge

But that doesn’t mean millennials don’t want to own homes. In fact, 85% fully expect to own a home at some point4. And the trend of millennial homeownership is on the rise, with millennials making up the largest group of homebuyers5.

Even though more millennials are buying homes, that doesn’t mean all millennials are in a position to purchase now or even soon.

Some millennials may delay buying a home out of financial necessity—many millennials are saddled with high student loan debt6—while others prefer to put their money toward experiences while they’re young.

Owning a home without cramping your style

If you’re thinking, “I don’t want to spend my money on a home. I want to spend my money living my life!” it may be time to rethink the way you view home ownership.

Some financial experts go so far as to say not buying a home is the number one money mistake7 millennials are making. That’s because the numbers don’t lie. If you spend an average of $1,500 a month on rent for 30 years (a common mortgage term), you end up spending $540,000—and at the end of it, you still don’t own anything.

Millennials unpacking after a move into a house
Buying a house is a smart financial choice for millennials.

 

Sure, owning a home comes with expenses like upkeep, HOAs, and so forth. But with the right approach, you can still afford a home and have the time and money for the freedom you want.

Take a look:

Get a roommate or two

One of the best ways to offset the costs of homeownership is to get other people to pay your mortgage for you—or at least help you pay it.

Roommates are a great way to do this. Depending on the market in your area, renting out a couple of bedrooms in your home can cover a large portion of your mortgage while also splitting the cost of utilities as well. If you have a $1,200 mortgage and rent out two bedrooms for $500 each, you’re paying just $200 a month for your mortgage—not a bad deal.

Bonus: roommates can also help keep your house maintained if you want to travel.

Embrace the gig economy

A 9-to-5 job may help you qualify for a mortgage, but it doesn’t always give you the freedom you want to live your life.

That’s why many millennials are moving from traditional jobs into the gig economy8. These types of jobs are flexible, part-time, or contract-based. Freelancing, signing up for gigs like driving an Uber, selling your services on Thumbtack, or finding contract jobs that last a few months at a time can help you earn money without tying you to one job (or location). In this way, you can put away money for a home while checking out the places on your experiences checklist.

Let’s be neighbors.

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Sign up on Airbnb

Putting your home on Airbnb can also put some serious money in your pocket. Let out your home and make money while you go on your own vacation.

You get to set the price, which can get top dollar renting if you own a home in an in-demand area that’s close to tourist sites, national parks or landmarks, or popular events.

Adding smart home features provides convenience for you as a host and for your guests. You can add a personal touch by greeting your guests through the video doorbell. Guests can come and go freely without worrying about keys by using their unique access code for your smart lock. And smart lighting and a smart thermostat controls add an extra level of comfort while helping you control costs.

Person using a Vivint Smart Lock
Smart home technology adds convenience and security to Airbnb rentals.

 

Take a mini-vacation

You don’t have to spend an entire summer backpacking across Europe to have memorable experiences. You can still afford a home and travel by paring down vacations or trips to a few days or a week. Whether it’s a cruise, a trip with friends, a staycation, or a week-long humanitarian project out of the country, a mini-vacation can satisfy your appetite for adventure without sacrificing your ability to own a home.

Owning a home is a smart financial decision for most people—even millennials who want to prioritize their spending on experiences rather than things. But don’t think you have to choose one over the other. With some creative thinking, you can have the financial stability of home ownership and the freedom to live your life.

Take home ownership to the next level with a smart home


Sources

  1. “American Generation Fast Facts”. 2017. CNN.
  2. “NOwnership, No Problem: Why Millennials Value Experiences Over Owning Things”. 2015. Forbes.com.
  3. “Cities Where Wages Haven’t Kept Pace with Rising Housing Costs”. 2013. Governing.com
  4. “What millennials think about the future”. 2017. Aperion Care.
  5. “Who’s Powering the Housing Market? Surprise! It’s Millennials”. 2017. NBC News.
  6. “The Average Net Worth of Millennials By Age”. 2018. The College Investor.
  7. “Self made millionaire to millennials: Don’t rent a home—buy”. 2018. CNBC
  8. “Decoding millennials in the gig economy”. 2018. Deloitte Insights.

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