Whether it is in real estate or general retail, the general consensus that millennials own the economy may be greatly exaggerated. While the proliferations of fledgling businesses like Uber and Netflix have led many to predict that they will choose not to own, and drastically shape the future consumer society. According to a CNBC report, when it comes to larger purchases, millennnials are not that different than past generations. Mike Maughan, head of brand growth and global insights at Qualtrics — and a millennial himself, noted that the company, a Provo, Utah-based survey software firm, teamed with venture capital firm Accel Partners to conduct a survey that found 53 percent of millennials own homes and overall, 88 percent of millennials who do not own a home have one on their wish list.
“The sharing economy is here to stay and has changed how many people work and live. But it doesn’t mean that traditional purchases such as cars and homes are less enticing to millennials.”
Millennials continue to hold their own views when it comes to homeownership. Whether it is truly different from previous generations can be debated. Sophia Bera, founder of Gen Y Planning and a member of the CNBC Digital Financial Advisor Council, said she sees evidence that millennials are truly transitional when it comes to views on home ownership.
“I am noticing more millennials buy or rent depending on area they are in, seeing people go from renting to buying to selling and renting again to buying again, as opposed to buying and hold that property for decades.”
When offering financial advice, Bera said there is one drawback to homeownership, stemming from a core millennial need greater than ownership — mobility. She said millennials should weigh before buying a home whether they may be interested in a job change and move across the country. And when they do move, Bera said they should rent for some time before putting down stakes and purchasing.
“There is a higher value in mobility and if that is case, I try to talk them out of buying too soon.”
Moreover, parents may put too much pressure on millennials to buy a home. Long-held beliefs about the value of home ownership is no reason to buy a home now. Nor is a focus on current low mortgage rates compelling on its own.
“What’s going on in your personal economy is more important than the actual economy.”
Bera said before buying a home millennials should consider the following personal finance milestones, including a down payment, establishing an emergency fund, planning to live in the area for at least five years and buying what you need and can afford, balancing mortgage with retirement savings and balancing the mortgage with current debt. Bera added that paying off student debt before purchasing a home is a good move.
“It’s hard to have a lot of financial obligations and a mortgage is a big one. Pay off a car or student loans before buying so you have less monthly obligations.”