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Many members of the Millennial and Gen Z generations would love to buy a house of their own. But according to this CNBC article, they simply can’t afford to do so.
Not only can they not afford to buy a house, many are moving back in with their parents, as Forbes recently reported, due to inflation, low-paying jobs, college debt, high rents, and the general monthly costs of living on your own. Given the current economy, it’s a smart, sensible move to stash away some cash and pay off their debts, even if it isn’t where they’d like to be at this point in their lives.
None of that is all that surprising, since it’s been all over the news for quite a while now.
But what might be surprising is how some of them are spending the money they’re saving by living with family, considering they’d like to buy a house.
Living a life of luxury…
A new report from Morgan Stanley revealed that 29 percent of Millennials and Gen Z are putting off buying a house in order to pay off their debts and achieve financial security. However, many of them are using the money they’re saving by living with family to purchase high-end watches, purses, jewelry, and other luxury items.
Considering they’re living at home at a time in life when past generations had already bought (or at least rented) their own place, you can’t blame them for wanting to splurge a bit. Who hasn’tdone a little retail therapy to make life seem better?
But then you also can’t blame the cost of living, mortgage rates, and high house prices entirelyon why they aren’t able to buy a house…
In fact, many Millennials and Gen Z are buying houses! According to the National Association of REALTORS® 2021 Home Buyers and Sellers Generational Trends report, Millennials and Gen Z combined are 39% of the homebuyers during that period!
Follow the lead of the 39%…
So, it isn’t by any means impossible for people in the younger generations to buy a house. But, it probably means that the ones who do purchase a home are making a concerted effort to pay down their debts, save money where they can for a down payment, and spend it on a home of their own, rather than high-end luxury items.
For years, it’s been a running joke that Millennials could afford a house if they’d just stop spending money on avocado toast, which they rightfully scoffed at as an over-simplified solution. Saving a few bucks a day is obviously a drop in the bucket it takes to fill with a down payment. (Then again, habits and little savings all add up!)
But when you start talking about buying a trendy purse, watch, or any other luxury item, it starts getting hard to defend. You can’t do that and then claim that it’s the economy, mortgage rates, or high home prices that are getting in the way of buying a house—especially when so many others in the age bracket are managing to do so.
So, if you’re in the Millennial or Gen Z generation and want to buy a home—but currently have to live with family just to make ends meet—don’t feel like it’ll never happen for you.
Just be thoughtful about the money you’re able to save by living with family. Every month, pay down your debts, put some aside for a down payment on a house, and forgo buying expensive handbags (or other such items), and buying a home will be in the bag for you!
The Takeaway:
Many members of the Millennial and Gen Z generations would love to buy a house, but simply can’t afford to do so. Many of them have actually moved back home with their families due to inflation, low-paying jobs, college debt, high rents, and the general monthly costs of living on your own.
However, those two generations comprised 39% of the home buyers in 2021, so it’s obviously not impossible for the younger generation to afford a home.
What sets those who do buy a house, and those who feel that it is entirely out of reach, may boil down to how they spend their disposable income. A recent report from Morgan Stanley revealed that many of those generations are using the money they save by living back home to purchase luxury items, rather than save the money.
If you’re in the Millennial or Gen Z generation, know that it’s possible to afford a home, but that you need to be thoughtful about how you save money, and what you spend those savings on.
Need some guidance? Get in touch today! Kevin and Jennifer Hanley, REALTORs The Hanley Home Team of Keller Williams Realty Atlantic Partners Southside 904-515-2479 HanleyHomeTeam.com
If affordability is a concern and you are unsure were you’d like to live in the near future, you may find this article on the hidden long-term cost of renting compelling. It’s called “The $700,000+ mistake nearly 6 in 10 millennials may make.” You can check out the article here:
The Hanley Home Team Blog 