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Why Aren’t Millennials Buying Homes?

Statistically, millennials (typically speaking, people under the age of 35) are the demographic least likely to purchase a home as of 2016. There are many different reasons why the number of millennials buying homes is so low, and some of them may surprise you.

#1 – Student Loans Hold Them Back

The number one thing that lowers the number of millennials buying homes is the size of student loans. In fact, they account for the largest debt in the country, and many young people struggle to keep their heads above water as they try to repay them. Fortunately, the federal government has addressed the issue and implemented the IBR plan, which stands for income-based repayment. Young adults can make small monthly payments, and if a balance remains after 20 years, it will simply be forgiven.

#2 – They Haven’t Found “The One”

Another reason that millennials give for their hesitancy to buy a home is their single marital statuses. Many millennials feel as if trying to buy a house on their own, without a second income, is asking for trouble – and they may be right. Single-income families (and even single-person households) do tend to struggle in today’s tough economic times. For this reason, millennials will often wait until they have married to even consider buying a home.

millennials buying#3 – Millennials Love City Life

The vast majority of millennials across the country live in large cities rather than suburbs or rural areas. Unfortunately, home prices in most cities are skyrocketing, which puts them out of reach for a generation still struggling to pay off their student loan debt. Millennials buying homes typically buy those located in in suburbs of these cities, and some regret their purchases due in part to their daily commutes. As such, millennials will often continue to rent in larger cities across the country.

#4 – They Move Around a Lot

Millennials are often referred to as the “mobile generation” for several reasons. First and foremost, they are known to change jobs frequently to put their college educations to better use – or to get better pay. In fact, many will even move all the way across the country in pursuit of a career opportunity that fits. Pensions and unions alike are becoming scarcer with every passing year, so job loyalty is quite low. Millennials who move often don’t want to be tied to one area by home ownership.

#5 – They’re Waiting for an Incentive

Back in 2008, a significant recession caused millions of homeowners to experience the heartbreak of foreclosure. Shortly thereafter, though, the IRS offered first-time buyers a hefty tax credit to help get the economy moving again. During this time, many millennials bought their first homes. Those tax credits ended in 2011, so the number of millennials purchasing homes each year started to decline. Now that the federal government is expected to raise interest rates, the rate at which millennials buy homes may fall even more.

While statistics show that the number of millennials buying homes in 2017 isn’t likely to go up much, this demographic has very good reasons to keep renting. Between student loans, trouble finding the right job, and a lack of incentives, many find that continuing to rent – at least until they’ve settled down – just makes sense.

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