Why Gen Z and Millennials Are Delaying Homeownership
Introduction
Zoomers and Millennials are leaving the nest later than previous generations, choosing to delay or even skip the milestone of homeownership. While this may seem like a negative trend, realtor and TikTok creator Freddie Smith believes it can actually be a beneficial way to get ahead financially.
The Benefits of Delaying Homeownership
Smith, an Orlando-based realtor, argues that staying at home with family can eliminate the burden of housing costs, which is a significant financial strain for many young adults. With the rising cost of living, he believes it is advantageous to have a good relationship with family and save money by avoiding rent payments, which often consume a large portion of income.
Foregoing homeownership is often not a choice but a result of financial circumstances. Many young adults face mounting debts from student loans, credit card payments, and car ownership, making it difficult to achieve self-sufficiency. However, there are success stories like Indian Head, Md., Mayor Brandon Paulin, who lived with his parents for years to save up for a down payment on a home.
The Dominance of Renting
Renting has become a popular housing trend due to the increasing difficulty of qualifying for homeownership. Smith explains that the requirements for purchasing a home have changed, with an average salary of over $100,000 now necessary. This leaves a significant portion of the population unable to afford homeownership and forced to rent, further hindering their ability to save money and pay off debts.
Additionally, a study on Zoomers found that they are even forgoing renting and owning homes due to lower earnings, higher costs, and student loan debt. Instead, they choose to live at home with their parents to boost their savings.
The Financial Benefits of Alternative Living Arrangements
Smith believes that living with roommates or staying at home with parents is a smart choice for younger Americans. It helps reduce the cost of living and allows them to save for future opportunities. He emphasizes that there is no shame in taking these steps to become debt-free and get ahead financially.
He acknowledges that many young adults feel frustrated by the rapid change in the standard of living in America. They expected to follow in the footsteps of previous generations who owned homes in the 1990s and early 2000s. However, the current economic landscape requires alternative approaches to achieve financial stability.
Delaying Homeownership for Life Events
Another reason for the delay in homeownership is the decision to start a family later in life. Millennials are marrying and having children at a later age compared to previous generations. This choice also contributes to their extended stay with parents.
Bank of America states that life events like marriage and having children are typical triggers for buying a home. Therefore, the longer young adults live independently or with their parents, the further delayed homeownership becomes.
Redefining the American Dream
Despite the cultural emphasis on homeownership, Smith believes that young adults can seek the American dream in other ways. He encourages them to create their own path and redefine what the American dream means to them. Homeownership may not be the only measure of success as originally thought.
In conclusion, the trend of delaying homeownership among Gen Z and Millennials can be seen as an opportunity to get ahead financially. By staying at home or living with roommates, young adults can reduce their living expenses and save for the future. The changing economic landscape and shifting priorities have led to alternative approaches to achieving the American dream.