Homeownership is an investment people start planning and saving for well in advance of their actual purchase. However, one generation is not setting their sights on buying a home as quickly as previous generations. Studies have shown that Millennials are much less likely to buy a home than their Gen-X and Babyboom counterparts for several reasons.
For starters, buying a house is significantly less affordable these days as home values rocket, and annual income averages plummet. While some regions of the country boast a more affordable housing market, packing your bags and relocating somewhere new isn’t a decision you make overnight. Besides coordinating moving services, purchasing a new home and selling your current property are equally financially challenging and time-consuming.
Aside from the initial incurred costs, other factors contributing to millennials’ home-buying procrastination include delaying life events like marriage (which naturally lend to homeownership) and high student debt levels.
While millennials may not be pursuing homeownership, Generation Z graduates are beginning to enter the workforce, and it turns out, they’re more likely to buy homes than millennials are. Additionally, Gen Zers will have access to a more favorable home-buying market than newly-graduated millennials once did.
While crushing student debt is still as relevant as ever, experts predict the current inventory crisis plaguing the housing market will resolve itself within the next decade, translating to an ample supply of starter homes available for purchase. Fortunately for Gen Zers striving for homeownership, this inventory crisis’s grand finale will likely coincide with their prime homebuying years. With these projected changes in mind, homeownership, undoubtedly, lies within the realm of possibility for the hundreds of soon-to-be 2021 college graduates.
Cost-savings strategies when building a home
There are a plethora of ways to save money when buying a home. Saving up for a 20% down payment, increasing your credit score, and collecting loan quotes from multiple lenders are all ways to secure the best deal possible when buying a home. However, if your budget allows and you’re able to land a large salary straight out of college, you may decide to build a home rather than buy an existing home.
Deciding whether to buy or build a home can be difficult. However, constructing a new home provides many advantages that buying does not offer. When buying a house, you may end up having to pour more money into the purchase than you expected with possible renovations or repairs necessary to make the house livable or fit for your needs. Building a house ensures that you will attain everything you need from your home upfront. If building from scratch is too daunting a prospect, pre-drawn custom house plans are a happy middle ground between buying a house and designing a house plan from scratch. Pre-drawn home plans can end up being significantly more cost-efficient and time-efficient than their custom counterparts.
Decide on a type of home
Pinpointing your ideal lifestyle can aid in the home-buying process. Are you dedicated to having a yard? Would you prefer an older house that may require upkeep or a newer house that doesn’t compete with an older home’s charm and whimsy? Regardless of how you envision your first home, it’s important to keep expectations in check and determine what’s affordable for you.
Build up your credit score
Working on your credit score is a vital part of saving money when buying a house. Applying for a credit card as soon as you can is the best way to begin building your credit score, given that credit bureaus take into account the age of your credit accounts when assigning a score.
However, you might want to touch up your budgeting skills and curb overspending habits before obtaining a credit card. Any potentially compromising financial vices can cause irreparable damage and make building up a credit score more complicated than you might initially anticipate.
Save your money
It’s that simple. Unsurprisingly, buying a home is expensive. However, many homeowners fail to account for how much homeowners spend upfront outside of a down payment. Ensuring that you have enough money saved up in your reserves can make all the difference when purchasing your first home and stave off too much financial stress. The sooner you start, the more you save, and the better off you’ll be.
The bottom line
Buying a home can be expensive, but it’s a worthwhile investment. While the prospect of making such a big purchase can be daunting for someone fresh out of college, it’s an attainable goal as long as you’re making wise financial choices. If one of your dreams is to own a house, it’s never too soon to start planning and saving to make that dream a reality.