Originally published by Lombardo Homes.
It’s a major life decision to switch from renting to owning a home, perhaps one of the biggest decisions you can make as an adult. Some people jump on it as soon as they can, whether they dive into a fixer-upper adventure or revel in a brand-new place. Others, though, have more factors to weigh before deciding—like their job, relationships, and what the housing market’s up to. And then some just prefer renting, plain and simple.
No matter how you view renting or buying, making the right call at the right time means knowing your stuff. Especially for non-homeowner Millennials (ages 28-44), education can be key when knowing it’s time to buy.
We recently surveyed over a thousand non-homeowner Millennials to see how much they understand about the buying process, why they’re still renting, and how they feel about buying a home
FROM RENTING TO BUYING: 51% OF MILLENNIALS CURRENTLY SAVING FOR A HOME
![Graphic showing why American Millennials are renting over buying and what hurdles they face - study from lombardohomes.com](https://lombardo-homes-images.s3.amazonaws.com/wp-content/uploads/2024/07/15123718/LH_Buying_1.png)
Deciding between renting and buying a home is a significant decision for Millennials today, influenced by various financial and personal factors. Currently, 51% are actively saving for a home, but for 77%, high rent makes it challenging to accumulate savings. This financial strain often delays their transition from renting to owning.
Debt is another obstacle, with 74% of Millennials saying it inhibits their ability to save. More than half (54%) carry credit card debt, while 40% have student loans, 26% have auto loans, and 16% have medical debt.
Despite their saving efforts, many Millennials feel unprepared for homeownership, with 58% admitting they don’t feel ready to buy even if they have the money. However, 75% say they’d rather buy than rent, with homeownership as a long-term goal.
Money isn’t always the reason why Millennials choose to rent. Most millennials (79%) don’t see real estate as the most attractive way to invest money. The majority (38%) say company stocks are the best way to currently invest, with preferences split between real estate, and emerging options like cryptocurrency.
MILLENNIAL MISCONCEPTIONS IN HOMEBUYING
![Graphic showing common misconceptions Millennials have about buying a home - study from lombardohomes.com](https://lombardo-homes-images.s3.amazonaws.com/wp-content/uploads/2024/07/15123748/LH_Buying_2.png)
When Millennials were asked about the upfront costs and long-term financial implications of owning a home, they tended to overestimate across the board. In our similar study from 2021, they tended to underestimate some of the costs.
On average, respondents overestimate their buying potential by $22,499 and underestimate interest payments on a $300,000 mortgage by more than $202,000. Additionally, many overestimate home value appreciation, pointing to a lack of understanding of housing market dynamics.
MILLENNIAL UNDERSTANDING OF BUYING HOMES
![Infographic showing the lack of knowledge Millennials have on basic homebuying knowledge - study from lombardohomes.com](https://lombardo-homes-images.s3.amazonaws.com/wp-content/uploads/2024/07/15123812/LH_Buying_3.png)
As Millennials continue to shape the housing market, they must be well-informed before transitioning from renting to buying. Most don’t know key aspects of homebuying, such as ideal interest rates, required down payments, and average home prices in their area.
The average home price in America is $360,681, yet millennials estimate it at $369,468 on average. The average property tax rate in the US is 1.11%, significantly lower than the estimated 8%.
Millennials are on a tricky path to owning a home, dealing with money hurdles and different levels of know-how. Getting through these challenges means giving them easy-to-understand info and thorough lessons on buying or building a home.