If you’re a young adult, you may be thinking about your goals and priorities for the months and years ahead. And if homeownership ranks high on your goal sheet, you’re in good company. Many of your peers are also pursuing their dream of owning a home. The 2022 Millennial & Gen Z Borrower Sentiment Report from Maxwell says:
“Many young adults have demonstrated their resolve to embark on the journey toward homeownership soon. More than half of millennials and Gen Zs plan to apply for a mortgage sometime within the next year.”
Let’s take a look at why homeownership makes the top of so many young buyers’ to-do list and what you need to consider to achieve your goals if you’re one of them.
Top Motivators To Buy a Home
Before you start the homebuying process, it’s helpful to know why homeownership is so important to you. The survey mentioned above sheds light on some of the top reasons why younger generations are looking to buy a home. It finds:
No matter which of these resonates the most with you, know there are many financial and non-financial reasons why you may want to buy a home. While your top motivator may be different than that of your friends, they’re all equally valid and worthwhile.
Key Obstacles and How To Overcome Them
Whether your homeownership goals come from the heart or are driven by financial aspirations (or both), it can still be hard to know where to start when you’re looking to buy a home. From understanding the homebuying process, to getting pre-approved, and exploring down payment options, it’s a lot to wrap your head around.
The same Maxwell survey also reveals key challenges for potential buyers. Thankfully, the knowledge and guidance of a trusted real estate professional can help you overcome both. Here’s a look at two of the hurdles potential homebuyers say they face:
1. The Mortgage Process Can Be Intimidating
In the Maxwell study, 33.37% said one of their obstacles was that the mortgage process is confusing or difficult to understand.
“There is a general lack of knowledge about home financing. Mortgages are a complicated topic with no one-size-fits-all answer. It’s difficult to understand the space, let alone determine what the right course of action isbased on your unique financial picture.”
While you may be tempted to do a quick search online to find instant answers to your questions, it may not get you the information you need to understand the full picture. Especially when it comes to financial advice, you want to lean on a true expert. Having trusted professionals on your side can help you to learn what it takes to achieve your dream of homeownership. Not to mention, an expert can give you advice specific to your situation, not generic advice like you’ll find online.
2. It’s Hard To Know How Much You Need To Save
In the Maxwell study, 45.75% believe they don’t have enough saved to cover their down payment or closing cost expenses.
What you may not realize is that, today, there’s a growing number of down payment assistance programs available nationwide to help relieve this pressure. A report from Down Payment Resourcesays:
“Our Q3 2022 HPI report revealed a 1.6% uptick in the number of homebuyer assistance programs available to help people finance homes, raising the number of programs to 2,309, a net increase of 36 over the previous quarter.”
Additionally, as the housing market cools, buyers are regaining some negotiation power and more sellers are willing to work with buyers to help with closing costs. Understanding what’s out there and the options available may help you achieve your dream of homeownership faster than you thought possible.
If you’re serious about becoming a homeowner, know it may be more in reach than you think. Lean on trusted professionals to help you overcome challenges and prioritize your next steps.
If you’re thinking of buying a home and living with siblings, parents, or grandparents, then multigenerational living may be for you. The Pew Research Center defines a multigenerational household as a home with two or more adult generations. And the number of individuals choosing multigenerational living has increased over the past 50 years.
As you consider this option for your own home search, know it could help you on your homeownership journey and provide you with other incredible benefits along the way.
Living with Loved Ones Could Help You Achieve Your Homeownership Goals
There are several reasons people choose to live in a multigenerational household, and for many, the arrangement is a personal one. But according to the Pew Research Center, the top reason people choose to live together today is financial.
A recent study from Freddie Mac also finds more people are choosing to buy a home together so they can save money in the homebuying process. As the study says:
“. . . anincreasing percentage of young adult first-time homebuyers are relying on support from older generations, including their parents, to buy a home together.”
For these individuals, combining their resources can help them achieve their dream of buying and owning a home. By pooling their incomes together to make that purchase, they may be able to afford a home they couldn’t on their own.
Other Key Benefits of Multigenerational Living
Not to mention, living in a home with loved ones can have other benefits too, like giving you more quality time to spend together. Darla Mercado, Certified Financial Planner and Markets Editor for CNBC.com, explains how this living arrangement can help on a personal and financial level:
“Residing with relatives can offer advantages . . . you can pool multiple streams of income, for instance. And in households with young children, grandparents can pitch in with child care.”
If this sounds like a great option for you, it’s important to work with a trusted real estate professional to discuss your needs. They can help you navigate the process to find the right home for you and your loved ones.
More people are discovering the benefits of multigenerational living. For the best information and help deciding what’s right for your personal situation, let’s connect and start the conversation today.
It turns out, millennials aren’t the renter generation after all. The 2022 Consumer Insights Report from Mynd says there’s a portion of millennial and Gen Z buyers who are pursuing homeownership as a way to build their wealth, but it may not be exactly the way previous generations have done it. The study explains how they’re breaking into the market:
“. . . younger generations of Americans are not buying into that dream in the same way that older generations have. A growing number of Americans are choosing to make their first real estate purchase as an investment property.”
Instead of buying a home and moving into it themselves, some young buyers are purchasing a home so they can use it as a rental. This tactic may be gaining popularity, at least in part, because of the affordability challenges brought about by today’s higher mortgage rates. The report above mentions how many people in this group are considering this approach. It says:
“Almost half of Millennials and Gen Z (43%) are considering buying an investment property compared to only 9% of Baby Boomers and 27% of Gen X.”
Why Younger Buyers Are Buying a Home To Use as a Rental
This strategy allows buyers to continue living in their current location, like the bustle of a city apartment or a neighborhood that they know and love, where they couldn’t afford to buy. But instead of giving up on the idea of owning a home, they buy a home in a more affordable area with the intention of renting it out.
In a way, they’re getting the best of both worlds. They live where they want, and they still own a home where they can afford it.
Their goal is to generate passive income and diversify their assets. It works like this: in addition to having a rental stream of income, the equity they build in their house will also help grow their net worth over time.
If you’re thinking about buying a home as an investment strategy to build your wealth, let’s connect to explore your options and nearby areas that may have homes that fit what you’re looking for.
If you have additional loved ones coming to live with you but don’t have enough space, it may be time to consider a larger, multigenerational home.
Some key benefits of multigenerational living include a combined homebuying budget, shared caregiving duties, enhanced relationships, and more. These benefits might be why more people are choosing to live in multigenerational homes today.
Let’s connect so you can find a house that meets your changing needs and has plenty of space for you and your loved ones.
Many members of Generation Z (Gen Z) are aging into adulthood and deciding whether to rent or buy a home. If you find yourself in this group, it’s important to understand you’re never too young to start thinking about homeownership. The sooner you start planning, the sooner you can move on from renting.
As you set off on your journey and plan your next move, here are a few reasons to think about homebuying this year.
The Reasons Gen Z Want To Become Homeowners
While the majority of Gen Z haven’t entered the housing market yet, a large portion plan to according to a realtor.comreport. The report found that 72% of Gen Z would rather purchase a home than rent long-term. As George Ratiu, Manager of Economic Research for realtor.com,says:
“With nearly three-quarters of those surveyed preferring to buy versus renting long-term, the housing industry should be prepared for millions of Gen Z buyers to bring a new wave of demand along a similar stage-of-life timeline as the millennial generation before them.”
But why do so many members of Gen Z value homeownership? According to the latest Home Buyers and Sellers Generational Trends Report from the National Association of Realtors (NAR), young homebuyers – more than any other age group – want to become homeowners because they want to have a place of their very own.
That may be because one of the biggest benefits of homeownership is having a place that you can truly make your own by customizing it to your style and personality. Whether that’s the décor, painting, or renovations, when you own your home, you don’t have to limit yourself to what your lease and landlord will allow.
Not to mention, owning a home provides much greater long-term stability and security than renting. When you own a home, there’s also protection from steadily rising rental costs because your monthly mortgage payment is locked in for the length of your loan (typically 15 to 30 years).
Work with a Real Estate Professional To Achieve Your Goals
Whether you’re just getting started on your homebuying journey, you want to learn more about the process, or you’re fully committed to buying your first home this year, it’s especially important to connect with a trusted real estate advisor soon, as you won’t be the only first-time buyer in the market. According to a recent survey from realtor.com, a majority of first-time buyers surveyed are looking to purchase a home in 2022. As the survey notes:
“First-time home buyers retain their optimism despite a challenging housing market in the past year. Hoping to achieve their goal of homeownership and provide a comfortable space for their families, young buyers are setting out to learn what they can about the market and setting their list of priorities for their home purchase.”
That means you’ll likely face strong competition from other first-time buyers. One way to get a leg-up on that competition is to work with a real estate professional to make sure you have the support you need to make an informed and confident decision.
If you’re planning your next move, you’re not alone. Just know it’s never too early to consider the benefits of homeownership over renting. To learn more, let’s connect today so you have a trusted professional on your side to help you explore your options.
The sense of pride you’ll feel when you purchase a home can’t be overstated. For first-generation homebuyers, that feeling of accomplishment is even greater. That’s because the pride of homeownership for first-generation buyers extends far beyond the homebuyer. AJ Barkley, Head of Neighborhood and Community Lending for Bank of America, says:
“Achieving this goal can create a sense of pride and accomplishment that resonates both for the buyer and those closest to them, including their parents and future generations.”
In other words, your dream of homeownership has far-reaching impacts. If you’re about to be the first person in your family to buy a home, let that motivate you throughout the process. As you begin your journey, here are three helpful tips to make that dream come true.
1. Reach Out to a Real Estate Professional
It’s important to reach out to a trusted advisor early in your homebuying process. Not only can an agent help you find the right home, but they’ll serve as your expert advisor and answer any questions you might have along the way.
The latest Profile of Home Buyers and Sellers from the National Association of Realtors (NAR) surveyed first-time homebuyers to see how their agent helped them with their home purchase (see chart below):
As the graph shows, your agent is a great source of information throughout the process. They’ll help you understand what’s happening, assess a home’s condition, and negotiate a contract that has the best possible terms for you. These are just some of the reasons having an expert in your corner is critical as you navigate one of the most significant purchases of your life.
2. Do Your Research and Know What You Can Afford
The second piece of advice for first-generation homebuyers is practical: do your research so you know what you can afford. That means getting your finances in order, reviewing your budget, and getting pre-approved through a lender. It also means learning the ins and outs of what it takes to pay for your home, including what you’ll need for a down payment.
Many homebuyers believe the common misconception that you can’t purchase a home without coming up with a 20% for a down payment. As Freddie Macsays:
“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”
The chart below shows what recent homebuyers have actually put down on their purchases:
On average, first-time buyers only put 7% down on their home purchase. That’s far less than the 20% many people believe is necessary. That means your down payment, and your home purchase, may be in closer reach than you realize. Keep that in mind as you work with a real estate professional to better understand what you’ll need for your purchase.
3. Don’t Lose Sight of What Home Means to You
Finally, it’s important keep in mind why you’re searching for a home to begin with. Overwhelmingly, first-generation homeowners recognize the financial and non-financial benefits of owning a home. In fact, in a recent survey:
73% of first-generation homeowners say the safety and security homeownership provides is increasing in importance.
Nearly two-thirds of first-generation homeowners say the importance of building equity in a home is growing more important as well.
As AJ Barkley explains:
“For many first-generation homeowners and their families, homeownership has a unique importance, given the collective efforts to overcome financial challenges that can often span generations…”
If you’re a first-generation homebuyer, being prepared and working with a trusted expert is key to achieving your dream. Let’s connect today so you can get started on your path to homeownership.