Millennials are disrupting the housing industry. Since 2006, homeownership among those younger than 35 has fallen by 18 percent, according to the Pew Research Center. There are many reasons why this generation is deciding to rent instead of owning a home. Numerous millennials saw their loved ones suffer during the housing market crash in 2007 and are wary towards making that kind of a financial commitment. But that’s not the only reason why millennials are choosing to rent instead of owning a home. Millennials have discovered that the benefits of renting far outweigh the benefits of owning a home.
Flexibility: Buying a home requires you to make a commitment to stay in an area for a long period of time. Financial experts will tell you that you need to pay your mortgage for at least five years to make this huge investment worthwhile. However, millennials tend to switch jobs every three years on average, according to the U.S. Bureau of Labor Statistics. Therefore, it makes more financial sense for millennials to live in apartments where they aren’t tied down. Millennials prefer the freedom to change their job and/or living circumstances upon a whim, if they see fit.
Community: Millennials grew up with cell phones, computers, and the internet. With social interactions right at their fingerprints, millennials enjoy constant social opportunities. Living in a community with hundreds of renters is appealing to millennials. Property Management Companies, for example, often have monthly or weekly social activities, competitions, and prizes.
Amenities: Amenities are often the biggest financial difference between renting and owning. When you own a house, you’re in charge of the electric, gas, cable, and internet bills, paying property taxes, yard maintenance, and household repairs. These expenses can add up quickly. Most homeowners spend an average of $1,100 per year on maintenance costs.
Renters, however, can benefit from amenities like group discounts on services, access to swimming pools and rec rooms, and sometimes even free cable. The biggest perk for renters is the ability to call the landlord when the fridge dies or the faucet has a leak. These unexpected repairs can really hurt a homeowner’s budget. Renters, on the other hand, don’t have to worry about how they’re going to pay for these unexpected repairs; the landlord will take care of it.
Investments: Is owning a home an investment? Many financial advisors would tell you, yes. However, is it the best investment that you could make with your money? What if you took that 10 percent down payment and put it in a diversified portfolio of low-cost index funds? Or you could invest in some real estate that might actually make a profit. There are numerous things you could invest your 10 percent down payment in that will make a better profit that buying a house.
Deciding whether you’d like to rent or buy is a personal decision. What is best for you and your circumstances? Are you ready to commit to a long-term, major financial decision? Or would you like the freedom to move when you want to? Would you enjoy spending money on whatever you want to spend it on instead of investing all of your free time and money into your property?
Millennials have discovered the ease and convenience of renting. And, with RentPlus, millennials can build their credit score by paying their rent on time each month. It’s a win-win situation.