Millennials said they can't afford to buy a home — housing costs have increased, and it's hard to save when money is going toward student-loan debt.
- More millennials are planning to rent forever, according to a new Apartment List survey.
- Most said it's because they can't afford to buy a home — housing costs have increased, and it's hard to save when their money is going toward student-loan debt and climbing rent prices.
- But some millennials prefer to rent for the flexibility and to avoid the added costs of homeownership.
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More millennials are planning to rent forever.
Just over 12% of millennial renters plan to "always rent" — more than the 10.7% that said the same last year, a new Apartment List survey found. The survey polled more than 10,000 millennial renters in the US.
Housing prices have been climbing steadily — first-time homebuyers are paying 39% more than they were nearly 40 years ago, according to Student Loan Hero. And only 13% of millennial renters across the US will be able to afford a traditional 20% down payment within the next five years, the Apartment List survey found.
That explains why most survey respondents said the biggest financial obstacle to homeownership is saving up for a down payment. Nearly half of millennial renters who want to buy a home haven't even begun saving for a down payment, and only 13% have more than $10,000 saved.
Millennials are struggling to afford a home not just because of increased housing costs, but because they're burdened with other expenses, like student-loan debt. Of millennial renters aspiring to own a home, Apartment List found that 58% of those with a college degree and no student debt have an average of $18,914 saved for a down payment. That average drops to $8,200 for 50% of those who have a college degree and student debt.
Saving up for a home can also be hard to do when shelling out money for climbing rent prices in the meantime. In 1960, the median gross rent was $71, or $588 in today's dollars. The current median US rent is $1,700.
Some millennials prefer to rent, and it's changing the face of homeownership
But not all millennials are aspiring homeowners.
Forty percent of Apartment List's survey respondents said they like the flexibility of renting, 37% want to avoid maintenance and other extra costs of homeownership, and 28% said buying a home is financially risky (respondents were allowed to select more than one response).
Some millennials prefer to rent instead of buy, and developers are creating communities of single-family rental homes to meet this growing demand, reported Diana Olick for CNBC. The millennials Olick spoke to said they didn't want to deal with the hidden costs of homeownership — renting is an easier way of life for them.
That's because homebuyers often need a bigger budget than they anticipate: New furniture, monthly fees such as property tax and homeowner's insurance, and repairs can tack on unexpected expenses.
That millennials are renting longer — or forever — is changing what homeownership in America looks like. Owning a house is no longer a defining part of the American Dream, Olick wrote, and more people are bypassing the need for a starter home altogether.