Over 72 million millennials reside in the US, and a large percentage of them aspire to own a home. As per Zonda, 98% of millennials plan to purchase a house at some point in their life. The reasons for this decision can be diverse. The graph below demonstrates why millennials are choosing to become homeowners, according to Zonda's sixth annual millennial survey.
The leading causes include building equity, transitioning into a new life stage, seeking stability, increasing home values, and wanting to personalize their living space. Here is a more detailed explanation of each reason.
Reason 1: Building Equity
Building equity through homeownership is a key reason why millennials are buying homes. When you buy a home, you make monthly mortgage payments that go towards paying off the principal balance on your loan. As you pay down the principal, you build equity in your home, which is the difference between the value of your home and the amount you owe on your mortgage.
Owning a home is a long-term investment that can help you build wealth and increase your net worth over time. This is because homes typically appreciate in value over time, meaning that the value of your home is likely to increase over the years. If you sell your home in the future, you may be able to sell it for more than you paid for it, which can provide a significant return on your investment.
In contrast, when you rent a home, you don't build equity in the property. Instead, you're essentially paying for the use of the property for a set period of time. When your lease is up, you may be faced with rent increases or the need to find a new rental property.
Furthermore, renting can often be more expensive than owning a home over the long run. Rents have risen dramatically in many areas over time, and there's no guarantee that they will stop increasing. When you own a home, your monthly mortgage payments are typically fixed, which can provide a greater sense of financial stability and predictability.
In summary, building equity through homeownership can help millennials build wealth and become more financially stable over the long run, while also providing the potential for significant returns on their investment.
Reason 2: A change in life stage
As millennials reach their prime homebuying years, a change in their life stage may be a key reason why they are buying homes. For many millennials, this change could involve needing more space, a different location, or a change in lifestyle.
For example, many millennials may be starting families and require more space for their growing families. They may need extra bedrooms for children or additional space for a home office. Owning a home can provide the stability and security needed to raise a family, as well as the opportunity to customize the home to meet their specific needs.
In addition, millennials may be at a point in their careers where they are looking for new opportunities or need to move for a job. Owning a home can provide the stability needed to make a career change or move to a new location. It can also offer the opportunity to build equity in a desirable area, which can increase their net worth over time.
Furthermore, millennials may be looking to change their lifestyle, such as moving to a more walkable or bikeable neighborhood, or a community with more amenities, such as parks or local restaurants. Owning a home can provide the opportunity to live in a desirable location that meets their lifestyle needs.
In summary, a change in life stage is a common reason why millennials are buying homes. Whether it's the need for more space, a different location, or a change in lifestyle, owning a home can provide the stability, security, and flexibility needed to meet these evolving needs.
Reason 3: Stability or settling down
Stability and the desire to settle down can be a significant reason why millennials are buying homes. Many millennials are now reaching a point in their lives where they want to establish themselves in a particular place and put down roots. This could be related to their career, family, or personal preferences.
For example, many millennials may be looking to establish their career in a particular city or region and want to own a home in that area. By owning a home, they can establish themselves in the local community, build relationships, and have a sense of belonging. Additionally, owning a home provides the stability and security needed to focus on their career and professional development.
Furthermore, millennials may be looking to settle down and start a family. Owning a home can provide the stability needed to raise a family and put down roots in a particular neighborhood or community. It can also offer the opportunity to customize the home to meet their specific needs, such as adding a nursery or a backyard for children to play.
In addition, millennials may have a clearer idea of what they want their life to look and feel like, and owning a home can help them achieve that vision. They may want to live in a particular type of community, such as a walkable neighborhood or a community with good schools. Owning a home can provide the opportunity to live in a desirable location that aligns with their values and lifestyle preferences.
In summary, stability and the desire to settle down can be a significant reason why millennials are buying homes. By owning a home, they can establish themselves in a particular place, put down roots, and create a sense of belonging. This can provide the stability and security needed to focus on their career, raise a family, and achieve their vision for their life.
Reason 4: Rising home values
One reason why millennials are buying homes is the potential for rising home values. Historically, home values have tended to increase over time, and owning a home can be a long-term investment that provides a return on investment through appreciation. As the value of the home increases, so does the homeowner's equity in the property.
For millennials, this can be an attractive prospect, as they can build wealth and increase their net worth over time. Moreover, if they decide to sell the home at a later point, they may be able to realize a profit from the sale, providing them with additional financial resources.
It's worth noting that home values can fluctuate over time, and there are no guarantees that a particular property will appreciate in value. However, over the long term, real estate has historically been a reliable investment, and homeownership can be a way to benefit from this trend.
Additionally, owning a home can provide a level of financial security, as it can act as a hedge against inflation. As the cost of living increases, so does the value of the home, potentially providing a measure of protection against rising prices.
In summary, the potential for rising home values is a key reason why millennials are buying homes. Owning a home can be a long-term investment that provides a return on investment through appreciation, and it can also act as a hedge against inflation, providing a level of financial security.
Reason 5: Wanting to make somewhere “mine”
Owning a home provides a level of freedom and control that is not possible with renting. When renting, tenants must abide by the rules and restrictions set by the landlord, including limitations on decorating or renovating the space. This can limit the tenant's ability to make the space their own and create a sense of belonging. By contrast, owning a home provides the opportunity for millennials to personalize their space according to their tastes and preferences. They can choose paint colors, flooring, fixtures, and furniture that reflect their unique style and personality.
This sense of ownership can also be a source of pride for millennials. They can take pride in their home and the work they put into customizing and maintaining it. This can contribute to a sense of accomplishment and can be an important aspect of their overall well-being.
In addition to the sense of personalization and pride, owning a home can also provide a sense of community and belonging. By establishing roots in a particular neighborhood or community, millennials can connect with their neighbors and create lasting relationships. This can help them feel more grounded and connected to their surroundings.
Finally, owning a home can create lasting memories. It can be a place to host gatherings with friends and family, celebrate milestones and create traditions. This sense of history and continuity can be particularly important for millennials who are looking to establish a sense of stability and roots. Overall, the desire for personalization, pride, community, and belonging can be significant motivators for millennials to consider homeownership.
As a real estate agent, I understand the importance of homeownership and the benefits it can bring to your life. If you're a millennial considering buying a home, now is the time to take advantage of the market and start building equity, finding stability, and creating a space that is truly yours. Whether you're looking for your first home or your forever home, I'm here to help guide you through the process and find the perfect property to fit your needs. Don't hesitate to reach out to me to start your journey towards homeownership today!
TANYA BARRANS
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For nearly 50 years, Windermere has put integrity and professionalism at the heart of our business. This, along with our commitment to building thriving communities, is what has helped Windermere grow into one of the largest and most respected real estate brands in the country, with more than 300 offices and 6,500 agents throughout the Western U.S. and Mexico.
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