Whether you call them the millennials or even Generation Y, there’s been some speculation about this generation’s hesitance to buy homes not only in Philadelphia, but in other cities across the nation, too. As it turns out, the reason behind it is a bit surprising. They just don’t have the funds.
It Isn’t That They Don’t Want to Buy
Millennials are just as excited as anyone else about buying a home and starting a family, but unfortunately, their circumstances aren’t allowing it. Per the Apartment List renter survey, which is doled out annually, about 75% of the millennials in Philly said they planned to purchase a home in the future. That’s great news, considering that they currently make up the smallest group of buyers on a national scale. However, per that same survey, about 79% of millennials just can’t afford it. The real kicker? Only 3% of those surveyed said they had the money to buy a home within the next year.
Other Reasons They Just Aren’t Buying It
Of course, money isn’t the only thing keeping the young adults in the area from buying a home. Although 79% of them can’t afford to buy, many had other reasons to give. Of these same people, about 47% said they weren’t ready to commit to homeownership just yet, and 46% said they wanted to wait until they were married to buy a home – which they consider to be a smart choice in today’s economy and real estate market.
Why This is Hurting Generation Y
Even though the millennials are avoiding homeownership due to money woes, the truth is that they’d end up saving quite a bit of their monthly income if they did buy homes. Right now, homeowners in and around the Philadelphia area spend an average of 14% of their incomes on mortgage payments. Renters – many of whom are Generation Y – pay nearly double that. Another thing to consider? Millennials are significantly overestimating the money they need for a down payment by double. Surveyed individuals said they believed they’d need just over $23,000, but per Trulia, that number is more like $12,000.
What the Future Holds
According to the numbers, and when it’s considered that millennials are overestimating down payments, the truth is that most of them could be homeowners in as little as two to three years. It’s expected that each passing year will bring an increase in the number of young adults buying homes, whether or not they’ve decided to settle down or get married. After all, homeownership saves money – especially in Philadelphia – and the sooner these folks can start building some equity, the better off they’ll be.
Millennials still aren’t buying homes, and for the most part, many of them just can’t afford it yet. However, the job market in Philadelphia is getting better by the day, and millennials here are making some impressive salaries. It’s expected that the number of young adult homeowners will continue to rise over the next three years, though it may take some time before they overtake even the baby boomers when it comes to home purchases.
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