Millennials are making moves to get into homes. One study revealed that 30 percent of Millennials plan to buy a home in the next five years. And, in 2015, Millennial buyers represented a large share of home buyers, at 35 percent.
Now the question is: should you rent or buy?
There are two sides to consider.
When you rent, you write out a monthly check, and ultimately have nothing to show for it. However, you don't have to worry about paying for the maintenance or upkeep of the home. Homeowner's insurance, property taxes, and ultimate payment for the property are not in your hands.
When you buy, you are responsible for the maintenance, insurance, taxes, mortgage payment, and any other property-related expenses.
The bright side is that you own something. A home is an investment.
But, is it the right investment?
A piece of advice from Zillow CEO Spencer Roscoff:
"The best piece of advice for a homebuyer, when thinking about whether to buy or rent, is to evaluate how long they're going to live in the home."
The "breakeven horizon" is what Millennials need to consider. This number is based on a variety of factors, like rental vs. mortgage payments, and how fast the home appreciates in value. Basically, it tells you whether it's worth buying a home depending on how long you want to live there.
This Rent vs. Buy Calculator will give you an idea of whether to buy or rent based on where you hope to live.
In some places, it makes sense to buy if you plan on living there for four years, and other places, rent would be cheaper if you plan on staying 20 years or less.
It all depends on costs of home ownership: the down-payment, mortgage-related fees, home maintenance and repair expenses; plus how much the home will appreciate in value. Don't let a low mortgage payment mislead you. Even if your mortgage payment would be less than your rent payment, remember to consider all costs of home ownership.
Now, I'd love to hear from you!
What are your thoughts/experiences with home ownership? Would you rather rent or buy? When are you planning on getting into your first home?