The millennial job market is strong, with labor force participation for the cohort above the national average according to Forbes contributor Neale Godfrey. But does it mean that Gen Y is ready to take the plunge into home ownership?
A large investment in a home seems like a huge step, and many couples think they will outgrow their two-bedroom starter-home bungalow pretty quickly if they want to have children in the future. Should millennials buy a starter-home for now, or keep saving for a more permanent purchase?
Godfrey offers some pros and cons for each decision:
Mortgage rates are low—According to Dan Green of The Mortgage Reports, “It’s a terrific time to buy a home. Sales are rising, supply is dropping, and prices have increased in many cities and neighborhoods. As compared to next year, today’s market may look like a bargain.” If you guess right on that home and location, you may be making a wise investment that will build future value.
But actually owning a home can come with a high price tag and extra fees—Redfin Corporation estimates that, “Maintenance and repairs, which homeowners can expect to [pay] total one to two percent of their mortgage costs annually.” These extra costs may not be that easy to calculate. If you are moving to the ‘burbs, for instance, you now may need one or two cars. The point is that most Americans spend about half of their income on housing and transportation, according to the Location Affordability Index.