With mounting student loan debt and limited employment options on the horizon, many Millenials have all but given up on the dream of owning their own single-family home. Even those who plan to buy a home someday lament that they may be well into their thirties before it ever happens.

Perhaps the biggest reason for this change of heart towards home ownership is a lack of understanding about how to buy a home and why home ownership is so important long term. Another problem is the common misconception about affordable housing in the California area, but with the help of a great real estate agent, you can find a San Diego dream home that you can afford. 

Why Home Ownership Matters

The single most important reason for Millenials to get in on home ownership is the building of wealth through real estate. Rental rates in the San Diego housing market continue to out pace mortgages, meaning that Millenials are overpaying significantly for living space, without gaining any of the equity that they would otherwise have with owned properties.

Over the course of a decade, this could mean paying nearly $200,000 in rent, instead of applying that money toward a mortgage. The problem gets even more extreme for Millenials who wait until their mid-thirties to invest in residential properties. With the San Diego housing marketing growing rapidly, it's only going to become more competitive the longer you wait. 

David Bach, a self-made millionaire, estimates that "the average home owner to this day is 38 times wealthier than a renter." This number may seem extreme, but following a recent report from CNN Money that 26% of Americans have less than $1000 in savings for retirement, it may very well be the truth.

Oftentimes, investing in our own homes is the fastest way to build wealth while enjoying the tangible benefits of living in the home. Home ownership in the San Diego area is considered a relatively low risk endeavor that can save people money and quietly build up equity on its own.

According to The College Investor, the average net worth of the oldest group of millenials who are now in their mid-thirties is right around $20,000. The median net worth of all millenials is closer to $10,000 thanks to overwhelming student loans dragging people downward.

In addition, a Federal Reserve study released in 2014 noted that it only takes $10,400 to be in the upper half of millenials in terms of net worth. A unique characteristic of the San Diego real estate market now is that morgage prices are decreasing while rent prices are increasing. For Millenials who are considering purchasing a home, it may be smarter to find a home for sale that you can afford, rather than renting out a place where you're paying for someone else's mortgage. 

Breaking the Cycle

Part of the problem Millenials currently face is a misunderstanding of the home buying process. With little knowledge of how to apply for a mortgage, manage their credit scores, or even determine their debt-to-income ratios, the process of buying a home seems hopelessly out of reach. If you're interested in learning more about home buying process, we have more tips for Millenial home buyers.

In addition, Millenials who are already overpaying for rent see precious few opportunities to save up for a down payment, even if buying a home would free up more of their monthly income. Thus, it often takes a concerted effort to break out of the mold and purchase a home sooner rather than later.

Going forward, it appears that real estate values throughout San Diego county and much of the US will continue to rise. In addition, mortgage rates are set to increase, and Millenials may miss out on the historically low rates if they don't move fast. Before assuming that mortgage is out of question, Millenials should speak with a lender about their options. 

Find the Right Team

Partnering with a great real estate agent can help you find your dream home while helping you find a lender that can help you with your finances. There are a variety of first time home buyer programs, and low down payment options that can make mortgages more affordable for Millenials without a ton of cash up front.

Working with a qualified residential brokerage in San Diego is a great way to find properties in your price range that meet your needs. You may be surprised to find how easy it is to locate your dream home and close a deal.

Great real estate agents have a large network of professionals to help you look for San Diego homes that fit your budget and needs. If you're interested in looking at any properties or have any questions about the San Diego real estate market, we'd be happy to help! We've helped many first-time home buyers find their home here in San Diego and we're willing to help you find the right community for you.