When choosing between renting or buying a home, only 37 percent of Millennials today opt for ownership, according to a report from the Urban Institute. That’s 8 percentage points lower than the two previous generations at the same age (24-35 years). Reasons range from personal preference to economic reality, or a combination. Should Millennials rent or buy a home?
Personally, I am in my mid-twenties and am still building up savings. My husband also has a highly mobile job. Settling in one place for many years is not an option right now. We currently rent our home for those reasons.
For others our age, factors include delaying marriage, large student debt and a preference for living in high-cost urban areas. According to a report at housingwire.com, the average mortgage payment for the U.S. median home in 2018 was $1,578, compared to an average monthly rent of $1,267. When faced with these costs and the reasons listed above, renting is usually the option Millennials choose.
Should Millennials rent or buy a home? Ultimately, the decision depends on one’s current financial situation and readiness to make a long-term commitment in purchasing a home.
For those who can afford a down payment and closing costs, have a stable job in their location of choice, or are ready to start a family, buying can be a sound investment. People who need flexibility, aren’t sure where they want to put down roots, or have substantial debt, renting may be a better option. Working with a financial planner can help you figure it out.