Here’s Why 81% of 25-34-Year-Olds Don’t Plan on Buying Homes Any Time Soon
Disclosure: This post includes affiliate links. We’re letting you know because it’s what Honest Abe would do. After all, he is on our favorite coin.
Renting vs. owning a home… which is better for your wallet?
I’m a millennial with a steady job, and like many of my counterparts, I moved back home after college.
Sure, I have plans to move out “soon,” but I want to take the time to consider my next step — and what’s the smartest.
Although I look at available rentals, my parents still encourage me to consider buying a house at some point.
Really, the monthly mortgage is the same as renting in my area, if not less. Plus I’d be investing my money, rather than throwing it at a landlord.
But I’d need some help with a down payment, and my credit score is still fairly young, so I don’t know what that’d mean for my mortgage. I also have commitment issues — and I’m a terrible handywoman.
I’m not the only one facing the conundrum. Credit Sesame recently surveyed 1,000 consumers about home affordability and the results are similar for others my age.
Who Owns Homes?
It’s no surprise homeownership is more popular amongst the older crowd.
Approximately 60% of respondents 65 and older own a home, higher than any other age group.
On the other end of the spectrum, 50% of 18- to 24-year-olds don’t own. Of those on the “older” end of the millennial generation (25- to 34-year-olds), 34% don’t own a home.
Even more: In the 18-to-24 age group, 84% of respondents don’t report any plans to buy soon. Of the 25- to 34-year-olds, 81% said they have no immediate plans.
Here’s Why People Aren’t Buying Homes
Credit Sesame reports that nearly half of those between 18 and 34 years old say they don’t own a home because they simply can’t afford it.
The most common reason they can’t afford a home is because they don’t have enough money for a down payment. The second most common reason reported is simply “houses are too expensive where I live.”
Another reason? People who can’t afford to buy a home say it’s because their credit scores are too low to secure a mortgage (13% of 18- to 24-year-olds and 22% of 25- to 34-year-olds).
The percentage of folks who said they won’t buy a home because of their poor credit score remained at a consistent 24% for those 35 to 64.
How to Find Out If You Can Afford to Buy a Home
Let’s jump back to this housing search I’m on.
Sure, I can see estimated monthly mortgage payments on Zillow, which seem promising for my budget, but I know that’s just the beginning. I’d also have a down payment — and what does that amount to?
If you’re feeling just as clueless as me, you’ll want to check out your credit score and your home-buying power.
I use Credit Sesame for this, which is free.
Once you enter your information, you’ll be able to see your credit score, as well as your home-buying power. I can customize my ZIP code, loan amount, percent down and loan type. If I qualify for any loans, Credit Sesame lists them for me.
The mortgage map feature lets me play with purchase prices, down payments and monthly payments based on my ZIP code and annual income.
Your Turn: Do you rent? What’s your reason not for buying a home?
Disclosure: This post includes affiliate links. We’re letting you know because it’s what Honest Abe would do. After all, he is on our favorite coin.
Carson Kohler (@CarsonKohler) is a junior writer at The Penny Hoarder.
