According to a study by Urban Institute, people who are better prepared for retirement at 60 purchased their home before the age of 35.
Many housing experts are concerned that the homeownership rate amongst millennials, those 18-34, is much lower than previous generations in the same age range.
Today’s older adults became homeowners at a younger age than today’s young adults.
Delaying home ownership may reduce the wealth that they generate over their lifetime.
There is a great reason why this generation should consider buying instead of signing a renewal on their lease:
- Those who bought earlier got the biggest bang for their housing buck
- The impact of these earlier purchases is significant. Those who bought their first home between ages 25 and 34 have the greatest housing wealth by their sixties. At age 60 or 61, their median home equity (and considering inflation) is close to $150,000
- For those who bought their first homes when they were younger, greater home equity came from home price appreciation and paying down their mortgage debt.
- Those who bought their first home between ages 25 to 34 live in more expensive houses in their sixties than those who bought earlier or later.
As people age into retirement, they rely more heavily on their wealth rather than their income to support their lifestyles. Today’s young adults are failing to build housing wealth, the largest single source of wealth, at the same rate as previous generations.
While people make the choice to own or rent that suits them at a given point, maybe more young adults should take into account the long-term consequences of renting when homeownership is an option.
Bottom Line: Know Your Options! If you are one of the many young people debating whether buying a home this year is right for you, call me and find out how you can own your own home for what you're paying for rent. Let’s talk.