Why Millennials Should Be Investing In Real Estate
With the Millennial generation coming of age, it is surprising that the home-ownership rate is falling near a historic low. The largest generation in U.S. history, Millennials (born between 1981-1997) are currently ages 20-36. Peak home-buying years fall between 25-45 year olds which includes the majority of Millennials.
Why aren't Millennials buying homes?
Economic challenges: The Great Recession was less than 10 years ago. While the housing market has significantly recovered, Millennials were critically hit when graduating college and entering the workforce. Financial stability remains a challenge, especially in order to build substantial savings for a down payment. Student debt, along with the high cost of living in cities with the best job opportunities, does not allow for much room to save money.
Lifestyle changes: Millennials don't adhere to the same timelines and aspirations that previous generations did. Those who do follow the traditional path are settling down much later than before. Buying a home can feel intimidating or irrelevant when life is heading in a different direction.
Lack of affordable housing: Not only is the current lack of inventory driving prices up but also available developments fail to meet first-time homebuyer and trade-up needs. Bidding wars are extremely common in this market when a rare affordable listing does appear.
Why should Millennials be investing in real estate?
The average cost for a studio apartment in Atlanta is $1,458 per month. You could be paying less than that to own a home! The fact is real estate prices will continue to rise. The longer Millennials wait to purchase their first home, the greater price they pay by missing out on a solid investment.
Urban renewal in the city provides opportunities for Millennials to affordably buy in up-and-coming areas such as Inman Park, Grant Park, Cabbagetown, East Atlanta, and more. Smyrna and Marietta are also attractive options for Millennials with increased development around East Cobb for work and play.
The Atlanta Regional Commission expects the city's population to grow by 2.5 million people by 2040. With a booming economy, Atlanta's job opportunities continue to bring more transplants. The future population of 8 million people will all need housing - and that will come at a steep price.
How can Millennials overcome these challenges?
Set realistic expectations for your starter home. While luxury apartments have made Millennials accustomed to new construction city-living, your first home may come with a few compromises. For first-time homebuyers, the perfect location at the right price may be an older home that needs some renovation. On the other hand, a move-in-ready home could mean a longer commute from outside the perimeter. Condominiums can offer affordable options for better condition and location though sacrificing square footage.
Get serious about saving. If you are not currently saving for a home, this means making a few sacrifices when it comes to your purchases in order to get your savings to a good place. Actively work on your financial responsibility while taking steps to improve your credit score. "Boomerangs" are commonly moving back in with their parents after college to avoid skyrocketing rent in Atlanta - which can be a smart approach to growing savings.
Get creative financially. Consider asking a family member for help with your down payment or an FHA loan which offers as little as 3.5-5% down. If you can purchase a home with a spare bedroom, consider renting to a roommate or Airbnb for extra profit to pay off your mortgage.
While it can be tough saving up money or facing an uncertain future, it's worthwhile to invest in real estate early for maximum payoff. Don't be afraid to make the commitment to a home - even if your job, relationship status, or future plans are not yet set. Your apartment rental may be a convenient lifestyle choice, but it will never pay itself off like the profit from even two years of home ownership.