Rent or Buy: A Common Question for Millennials
by Jeff Ogden
Senior Vice President of Production at Gershman Investment Corp
When working with millennial homebuyers, you’ll often hear that this was a question they gave much consideration to. Does it make more sense to rent or to buy? While the answer will certainly be different for everyone, there are some key misconceptions out there as well as valuable points in either direction. When it comes to millennials, many are surprised to find out that homeownership might make more sense for them. Here’s why:
This is one of the most common arguments you’ll hear from millennials about renting over buying. Usually though, those who believe it’s more expensive to buy haven’t done very much research into the monthly breakdown of homeownership. It will certainly vary depending on location, but in many cases, owning a home may put you at the same or even lower monthly payments as you have when renting.
Even if your monthly payments are the same amount when you own your home compared to when you rent, there’s a big difference in where that money is going. When you rent, it’s going straight into your landlords pocket, and when you decide to leave the apartment, that’s where it will stay. On the other hand, when you own a home, your monthly payments are building equity. Should you decide to move sometime down the line, you’ll have built up equity in your home that will help you make your next step. This is a major financial advantage of owning a home.
This is another reason why many millennials are so happy to make the switch from renting to owning. When you own your home, it’s yours. If you’re going to pay to live in a space, you want to be able to make it work for you. While landlords often have restrictions on what tenants can change and require advanced permission, homeowners have more of a blank canvas when it comes to their space. This is a real bonus if you’re hoping to stay put for a while. It will allow you to set your place up for your needs now, and adapt as your life and style changes.
While renters can certainly be part of a community, homeowners tend to put down deeper roots. When you own a home in a neighborhood, it often feels more like your own. This can be a definite plus for millennials who are ready to start their own lives in a new place.
Finally, one of the major concerns some millennials have about buying is a lack of freedom. They think that owning a home keeps them tied down while renting allows for complete freedom. This isn’t often the case. First of all, your first home doesn’t have to be your forever home. Buying a home doesn’t mean you’re committing to one spot for life. Maybe you decide to take a 6-month trip somewhere. Renting or subletting could cover your mortgage while you’re away. Sure, if you’re planning a year-long around-the-world adventure for the near future, you might hold off until you return. But if you have no immediate plans to move to a new city, buying a home doesn’t mean sacrificing your freedom.
When it comes down to it, there are many reasons why homeownership makes a lot of sense for millennials. These are just a few of the top advantages.