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What makes home ownership challenging for some millennials?

Millennials graduating during or after The Great Recession of 2008 are in a unique bracket of home buyers compared to generations past. The recession affected many areas of societal growth, including a significant decline of employment momentum, as many millennials faced hard times finding work in lucrative fields after graduation.

More post-graduation adults are reported to have extended their years living with parents or multiple roommates to offset the high price of apartments as opposed to other generations. The economic instability often caused a later start in life for those seeking to establish a permanent address of their own. According to a recent article on CNBC, some of the hurdles that exist for millennials are related to pricing and availability.

The inequality of wages and market costs for millennial home buyers

Once the housing market took a downward turn in 2008, the widespread instability caused families and individuals to relocate to other areas of the country for work. Despite the climbing housing rates that followed after the recession, the status of employment and its unemployment rates continued to lag behind for many people, creating an imbalance between being in the position to purchase a home and the current affordability in the market.

For example, a millennial moving to a city with a better economy is simultaneously challenged with generating enough long-term income and high credit standing to establish a strong likelihood of approval for home ownership applications.

Data reports conducted by Zillow show:

  • Only 39 percent of millennials can afford a 20 percent down payment on a home
  • 62 percent of millennials report searching for a rental home as a backup option when looking for homes for sale
  • Low priced homes are viewed as scarce and apartment prices considered too high
  • Starter homes are competitive in many cities for first-time buyers

A housing availability challenge

Another challenge for millennial home buyers is the fact that more baby boomers are purchasing homes and not letting them go back into the market for new buyers. According to a study by Realtor, 85 percent of baby boomers do not plan on selling their residential property anytime soon. Millennials are also more inclined to look for homes that are smaller, more economical, short sale or fixer-uppers to offset available finances and financing options.

More research and legal oversight can help

Although the housing market is different for millennials than it was for previous generations, there are ways to navigate these changes effectively. One of the greatest assets millennials have on their side is the tendency to apply heavy tech-driven research strategies into their quest for securing the best home for themselves.

Millenials develop a good amount of starter knowledge through exhaustive online self-education. However, first-time home buyers are urged to know the laws and fully understand the documents they are agreeing to when purchasing any type of home including a foreclosure or short-sale.

Legal support is available to combine this research with the technicalities involved in real estate transactions. This can significantly aide in making financially sound housing decisions pertaining to the unique set of obstacles new home buyers are facing.

What other factors could make it difficult for millennials to purchase a home?

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