Homeownership is one of the most important investments that you will make in your lifetime. For first-time buyers especially, purchasing your dream home is more than obtaining a foothold on the property ladder, it is a meaningful base from which to build a bright future.
3 Hot Home Buying Tips
Yet, for younger generations — Millennials and early Gen-Zers — it is increasingly difficult to achieve this milestone, and they can wind up trapped in the cycle of renting rather than buying. Various reasons contribute to this. Affordability is among the most prominent issues, with the median income of Millennials significantly lower than those of generations that came before them. Not to mention that the supply of affordable homes is detrimentally affected by investors buying homes to use as rental properties. There are also some lifestyle factors; younger generations are staying single for longer, meaning they don’t always have a joint income to help save for a home.
It is important to note, though, that these challenges are not insurmountable. Indeed, with some creative thinking, focused effort, a strategy and some home buying tips, you can find and buy that dream home.
Understand Your Finances
The main hurdle that most Gen-Z and Millennials will face when planning to buy their dream home is gathering finances. This can be due to a variety of reasons. One of the most common is that salaries are lower than previous generations — one study found that despite being better educated, Millennials earn 20% less than Boomers did at their age. Alongside high rents and more significant student loan debt, it’s no wonder that you might be finding it difficult to build a deposit and solid credit profile.
The good news is that, though financing might seem insurmountable, there are strategies available to you. Particularly if you’ve only just graduated from college, you’ll probably find it hard to buy a house. You should immediately start making small but consistent efforts to build this through making small purchases on credit cards and paying them off immediately, or making regular payments on a small car loan. It can also help to open a high-yield savings account and make a sensible budget that ensures you make monthly contributions to this. This isn’t a silver bullet to the economic situation that has stood in your path, but with diligence, you can build up your down payment and prove your ability to make mortgage contributions.
The truth is that most financial options open to you at the moment require work and time. Some Millennials and Gen-Zers have found that among the best ways to create a downpayment for a mortgage is by engaging with investments, though this is certainly not without risk. If you’re keen to become a homeowner immediately, it’s not impossible, but you may have to make some compromises such as higher mortgage interest rates in exchange for a lower down-payment. Generally, though, the most sensible tip for a first-time buyer is to gain a full understanding of your financial situation, make careful plans for savings, and adjust your budget as your income improves.
Creating a Space
Another option to buying your dream home can include being more open to what this means. As a member of the younger generation, you may not have immediate access to funds for a fully decorated, completed, and pristine house in the city. However, it’s important to remember that you do have other advantages that can help to inform your house hunt — time, energy, and creativity.
What does this mean? Well, for a start, rather than simply buying a dream home, it can be more financially viable and indeed fun to create it yourself. This doesn’t necessarily mean building a property from the ground up. However, it could involve finding an older property in your preferred location that needs a significant amount of work. These tend to be more in line with the financial means of most Millennials and Gen-Zers, and it allows you to spend time turning what wouldn’t on the surface seem to be your ideal space, into the perfect home for you and your family.
This doesn’t mean you should buy a dilapidated place. You’re unlikely to be able to secure loans for these. Rather, seek houses that are structurally sound but have features that make them less in-demand. Think outdated plumbing, poor design choices, renovation projects. Talk to real estate agents in your local area, attend auctions — particularly foreclosure events — and see what buildings you can live in relatively easily while gradually making improvements, structural alterations, and superficial additions such as smart home devices to bring it closer to your ideal property.
You should ask yourself what’s more important in your home search — the property itself, or where it is located? A lot of first-time buyers find themselves stymied by an inability to see that they can still have an excellent quality of life away from the cities where the popular location continually serves to make home prices skyrocket. Indeed, one of the ways Millennials are impacting the housing market is through the increased demand for access to entertainment and recreation. Consider how important these elements are compared to the security and comfort you could gain from finding your dream home at a lower price outside of the city limits.
It may be the case that Millennials and Gen-Zers are better positioned to take properties outside of cities than any other generation before them. The rise of the gig economy, and the increased adoption of more flexible remote working practices, can mean that it is more practical than ever to work from home, in a location that doesn’t have the pressures and expenses of the city. One recent study even found that 51% of businesses surveyed were considering consolidating their office space outside of major cities, with 58% considering satellite locations. The changing face of work can help you make decisions about the location of your dream home.
As a member of the younger generations, your dream home can often feel out of reach. However, with some solid long-term financial behavioral practices, you can start to put yourself in a good position to make a downpayment. It’s also worth your time to consider creating your perfect property rather than simply buying it, and choosing a location that is less subject to sky-high prices.