Millennials are just now getting into the housing market, which is remarkable because they are also the oldest and latest to get married, have children, and purchase a home. Most media commentators focus on the fact that millennials are obsessed with “hookup culture,” living in a city, focusing on their career, and living their lives too publicly on social media. However, these are simplifications of a larger problem.
The millennial generation came of age in the worst economic recession since the Great Depression. Millennials who were just beginning their careers became shut out by baby boomer workers who waited to retire, big companies that delayed hiring, skyrocketing tuition, and disappearing jobs. Millennials couldn’t find jobs, keep their jobs, or get a promotion – the trifecta of bad luck.
However, the United States has slowly clawed its way out of the Great Recession and is enjoying a long-lasting expansion. The stock market is rising, finding a lucrative job isn’t so difficult, and the housing market is stronger than ever. The oldest millennials (those in their 30s) are finally ready to settle down, have children, and become first-time homebuyers.
Renting is Good … When You’re 20
Millennials grew up renting. They rented in college, and they rent now. It's normal to rent in your 20s. Your living situation is flexible, you’re dealing with student-loan debt, and your jobs are uncertain – you needed the ability to move from place to place. Most millennials needed that flexibility in their 20s. However, now you’re in your 30s, it’s time to invest. You likely have an established career and a little more money, so it's time to take the next step and become a first-time homebuyer.
INVEST IN Real Estate FOR Financial Security
Real estate is the most reliable way to build wealth. Real estate values, while cyclical, historically have always gone up (especially in California), you can use the mortgage interest payments as a deduction, and you finally have your space. Owning a home is transformative fiscally and for yourself. If you’re in a position to buy a home, you should take it. Consider it an investment in your future.
Your Money Pays Your Landlord’s Mortgage
Here is a small secret: landlords pay their mortgage with your rent. Yes, that’s right. Landlords aren’t flush with millions of dollars and buy properties with cash (well, most don’t). Landlords leverage their income and assets to get mortgages to invest in and purchase properties. Then they rent those properties to pay their mortgage and to earn a little income.
Moreover, yes, all those benefits you read above, they get to take (most of) them (there are more benefits for the home in which you live). Your money is helping them get richer, so why not use your own money for those benefits? You could be a homeowner and enjoy that passive income.
When you pay down your mortgage, you will get the benefits. You would get the financial security of owning a home. You could use the equity you build in your home to extend lines of credit. In short, a home opens up huge possibilities that allow families to begin building their wealth.
It's Your House; You Call the Shots
When you rent, you’re used to the landlord giving you all the rules. Maybe you can paint, but you have to ask for permission. You can have a dog -- but only if it's under 50 pounds, and you pay the pet deposit. No, you cannot knock down that wall even if it would open up the room (and why should you, the landlord can refuse to renew your lease and eject you).
However, in your home, you’re the boss. You decide the colors of your walls, the floor, the bathroom layout, and whether to knock down a wall or two. You get to keep your pets, you can smoke (or not) – it is your house. Owning your home is freedom. Investing in a home gives you the freedom to decorate and remodel your home any way you want to.
Solid Foundation for the Future
Your home is your first step into a new world of financial security, including higher credit scores, passive income, and new tax breaks.
Perhaps the biggest financial advantage of owning your own home is access to a new line of credit. What you do with that line of credit is totally up to you. Want to redo your bathroom? How about landscape your yard? You could even use the line of credit to purchase another property as an investment, this time to rent.
Owning your home significantly increases your financial resources and allows you to compound that wealth with new investments and rental properties. Owning a home is a huge opportunity. If you can, you must seize it.