We know how it feels to be a homeowner because we are buying houses for cash quickly and we bought a lot of them in the past. At the time you are reading this blog you realize that being a homeowner is a challenge these days especially with rising interest rates that passed 5%.
For quite some time now, owning a house was a part of the American Dream. According to the 2020 Federal Reserve study people that own the house may have a net worth 40 times greater than people that are renting. It’s easy right now to sell your house fast but to buy one it might be the challenge. Being a homeowner is a huge responsibility when it comes to the hidden costs like taxes, insurance and of course repairs. On top of that it’s getting harder to buy a house with inflation rising and high demand for housing and interest rates hikes.
Prices for single family houses rose by 15% from January 2020 to 2021. One of the reasons was historically low interest rates. When interest rates are lower, homebuyers could buy more expensive homes because of that. Technically there was more buying power. The federal reserve raised the interest rates to combat inflation which is currently around 7-8%.
Rising interest rates and low wages make it almost impossible for younger generations to become homeowners. On top of that we have a student debt. A lot of young first time home buyers with a bachelor’s degree have around 37 000 in student debt. To make things harder institutional investors like Blackrock that have plenty of cash in hand and they can easily outbid regular homebuyers.
A lot of younger people have a different outlook on life and they are less likely to purchase a house or a car. The average marriage age for men and women is 35 and 33. By putting on hold bigger purchases and marriage they have more freedom and they can travel more. Millennials spend 200 billion on travel in 2018. Many younger buyers underestimate hidden expenses like surprise repairs, maintenance etc. According to an article from Benzinga 63% of millennials regret buying a house. Some of the reasons include being tied to one location, experiencing a bad neighborhood, or just simply overpaying for the property.
There are a couple of benefits of being a renter for those younger buyers. They don’t have to worry about leaky toilets, not working furnaces or price depreciation. Gen Z’ers and Millennials change jobs often. Sometimes every 2-3 years it’s easier for them to rent in those instances. They also value more amenities like swimming pools, gyms so they can meet like minded friends.
To sum up everything, being a homeowner comes with responsibilities like maintenance and keeping up with the surprise bills. Inflation and rising interest rates are putting younger generations out of reach when it comes to buying a house. How long will that last? We don’t know.
IF you would like to sell your house fast Call our office at (847) 242 2212 or shoot us an email at info@moderntimeshomes.com. We are more than happy to help.