Owning your own home is part of the American Dream, but that dream is looking more and more distant these days. Most Americans have less than $1000 in savings, and many have zero savings. Wages are stagnating and the cost of living is going up. Things are looking pretty bleak.
Millennials, more than previous generations, think of owning their own home as part of the American Dream. But as much as many Millennials want to become homeowners there are significant challenges standing in their way.
Currently only about a third of Millennials own their own homes. Mounting student loan debt and wage stagnation are the biggest obstacles, but there are other factors keeping Millennials in the rental market. Poor credit scores are keeping Millennials from qualifying for mortgages in the ever-tightening lending climate. A few years back the housing bubble burst, necessitating more stringent requirements for getting a mortgage. Another unfortunate side effect was underwater mortgages, which has caused people to stay longer in homes they don’t necessarily want because they owed more than it was worth. Today that is manifesting as fewer starter homes on the market, driving up real estate prices and leaving buyers with fewer and more expensive options.
Rent is also going up, and that is leaving many would-be home buyers with less cash available to put up a down payment for their first home. Millennials are putting life milestones off until they are older and more financially stable, often to the detriment of their overall financial stability. Buying a home is the best way for most people to grow their wealth, and in most cases it makes your housing costs stable and predictable.
So what are Millennials to do? There are a number of first time home buyer programs that can help out with things like down payment assistance, in addition to grants and tax breaks. Programs like HUD, HFA, and FHA were designed to help get people into home ownership, because owning a home is better for the economic stability of the whole nation. There are even government run programs that allow you to borrow against your home’s equity to do repairs in the case of buying a fixer-upper. There are programs that aim to get rural people in homes, improve energy efficiency, and help people find affordable housing and affordable mortgages.
Learn more about your options when buying your first home from this infographic!