Even millionaire millennials are now renting instead of buying homes (2024)

FAQs

Why are millennials renting instead of buying? ›

RentCafe chalked it up to a matter of “comfort and smart investing.” Owning a home can come with more than its fair share of maintenance and costly repairs and upkeep. Then there's the flexibility renting offers one to move from city to city for career opportunities.

Renting allows people to still be mobile and not tied down to one location as you would if you were to buy a house you are living in. Especially in this day and age with an ever-evolving job market, the wealthy would rather have the flexibility to move to take advantage of new opportunities when it presents itself.

RentCafe found nearly 52% of millennial households – which includes groups of people living together under one roof – owned a home in 2022 based on data looking at owner and renter households across 260 U.S. metropolitan areas.

What the data shows. New survey data from Apartment List shows that in 2022, 24.7% of millennials said they plan to “always rent” rather than buy a house. That's nearly double the portion that said the same in 2018 (13.3%).

Millennials, aged 27 to 42, make up the biggest group citing affordability as one of the key issues that's preventing them from buying a home. Older millennials, between 34 and 42, were the biggest group that cited the inability to afford the down payment or closing costs as a major reason why they don't own a home.

77% of the people in the US prefer to rent instead of buying a home. The average gross rent was $1,164 in 2019. Rent prices nationwide increased by almost 50% from 2007 to 2017. 127 working hours is the weekly requirement for minimum wage earners to afford the average apartment.

Buying a house gives you ownership, privacy and home equity, but the expensive repairs, taxes, interest and insurance can really get you. Renting a home or apartment is lower maintenance and gives you more flexibility to move. But you may have to deal with rent increases, loud neighbors or a grumpy landlord.

If you're only going to live in a place for only a year or two, renting makes more sense. However, if you're going to stay there for three years or more, then buying would be a good idea and it becomes a better idea the longer you stay.

The value of those properties isn't necessarily through the roof: 40% of landlords own less than $200,000 worth of property, and an additional 30% fall in the $200,000-$400,000 range. Only 30% of landlords own properties worth $400,000 or more, with 7% at the top owning properties worth $1 million or more.

Gen Z's Future in Real Estate Is Uncertain

Any generation's ability to own a home ultimately comes down to whether they can afford a down payment plus closing costs, qualify for a mortgage and handle the responsibility and costs that come along with owning a home,” said Scott Krinsky, partner at Romer Debbas, LLP.

What percentage of millennials have a mortgage? ›

Nearly one-third (30%) of 25-year-olds owned their home in 2022. That's slightly higher than homeownership rates for millennials (28%) and Gen Xers (27%) when they were 25, and slightly lower than the rate for baby boomers (32%) when they were 25.

For the first time, more than half of millennials own a home. The rest are finding it increasingly out of reach. The millennial homeownership rate hit 51.5% in 2022, US Census data show.

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Other research has found millennials are aiming even earlier: Most hope to retire at 59, even though 3 out of 4 aren't confident that will be possible, according to a separate report by Alto Solutions.

Scores of millennials, many well into their late 30s and early 40s, shared the view that high housing costs were the main reason they could not afford to pay enough into their pensions, and that they were prioritising saving up for ever-rising house deposits.

According to The Journal's analysis, people who are 30 to 39 years old — currently the bulk of the millennial generation — have about $3.8 trillion in debt as of the fourth quarter of 2022, or about a $140 billion increase from the third quarter of 2022.

In 2022, the average age of first-time homebuyers was 36, according to the National Association of Realtors (NAR). This is up from 33 in 2021.

Stick to the 28/36 Rule

No matter how you finance your home purchase, most experts agree that people should not spend more than 28% of their gross income on housing expenses, and no more than 36% on debt. For example, if you earn $5,000 each month, your ideal mortgage payment should be no more than $1,400 per month.

Millennials — defined as those born from 1980 through 1999 — make up the largest share of homebuyers and mostly want single-family homes in the suburbs, according to the 2022 National Association of Realtors® Home Buyers and Sellers Generational Trends Report.

Homeowner vs.

In the under-35 age group, 65% of American households are rented. Meanwhile, in the 65+ age group (senior citizens), 79.3% own a home. The median age of homebuyers is 47 years old, while the median age of renters is 38 years old. A whopping 64% of millennials who own homes regret their purchase of a home.

In theory, buying a house after retirement gets you more for your money than renting. However, homeownership also entails substantial financial risks. Issues such as fluctuations in market value, unexpected maintenance expenses, and insurance deductibles can increase costs over and above those of renting.

Is owning cheaper than renting? ›

On a national basis, the average home costs 25% more to own than to rent, the analysis found. The gap in cost between owning a home versus renting an apartment is now at its widest in more than 15 years, according to a recent analysis from the National Multifamily Housing Council.

Key points. Renting a property is often referred to as throwing away money. That's because, unlike with a mortgage loan, renting doesn't help you build equity. Renting isn't necessarily the wrong move for everyone though.

A major disadvantage of renting to own is that renters lose their down payment and other non-refundable charges if they decide not to purchase the home. Some sellers may even take advantage of renters by making it difficult or unappealing to purchase the home — with the goal of keeping the down payment.

Potential drawbacks to owning a rental property include lack of liquidity, dealing with tenants, and deteriorating neighborhoods. Investors who understand the pros and cons of owning a rental property can better decide if investing in real estate is the right move.

To become a real estate millionaire, you may have to own at least ten properties. If this is your goal, you need to accumulate rental properties with a total value of at least a million.

(According to the Pew Research Center, about 36 percent of American households rented, rather than owned, their homes in 2019, the last year that reliable data was available from the Census Bureau.) Moody's first started tracking the metric in 1999, when the typical rent-to-income ratio was 22.5 percent.

The amount will depend on your specific situation, but a good rule of thumb is to aim for at least 10% profit after all expenses and taxes. While 10% is a good target, you may be able to make more depending on the property and the rental market.

Do most millennials own homes? ›

Millennials have finally reached a significant milestone as more than 50 percent of millennials now own their homes, according to the latest data from the Census Bureau, Apartment List writes in the fourth installment of their annual Apartment List Millennial Homeownership Report.

Around 70% of millennials say they cannot afford a home due to the hike in interest rates and home prices.

While millennials still own fewer homes than older generations do, over the past five years about seven million have joined the ranks, bringing the total to about 18 million.

A staggering 73% of U.S. millennials are scraping by paycheck-to-paycheck, according to new data from finance and commerce research hub PYMNTS.com. Survey respondents in that age group cited debt payments and supporting dependent family members as the main drivers behind living that way.

People ages 30 to 38 account for nearly $4 trillion of total household debt in the U.S. For millennials, that's a 27% increase in debt compared to 2019 — a steeper hike than any other generation, Yahoo Finance reporter Akiko Fujita told CBS News. Millennials are racking up debt due to soaring inflation, Fujita noted.

A 10th of millennials said they already earn $100,000, compared to 9% of Gen X and 11% of baby boomers – the only income bracket where boomers earn more than millennials.

According to our research, millennials are the most educated generation in American history. Approximately 38 percent of millennials have a bachelor's degree or higher, compared with 32 percent of Generation X and 15 percent of baby boomers when they were the same age.

WASHINGTON (March 28, 2023) – The share of baby boomers has surpassed millennials and now makes up the largest generation of home buyers, according to the latest study from the National Association of Realtors®.

Over 50 million workers said goodbye last year, and it's a trend that's shown no signs of slowing, based on the latest months' data. The Great Resignation was increasingly dominated by Gen Z.

Can I retire at 57 with $1 million dollars? ›

But retiring with $1 million is still possible, even as early as age 55, if you're smart about it. It will require some careful planning since you'll have to wait 10 years for Medicare, but it can be done. If you're not sure how to get started, consider working with a financial advisor.

Here's what you need to know. Among the many findings in the report, here are some of the major findings: Even though 66% of Millennials work for an employer that offers a retirement plan, only 34% of Millennials participate in their employer's retirement plan. Only 5% of Millennials save enough for retirement.

Some people decide to continue working because they need the money, while others love what they do and can't imagine not doing it anymore or just need to stay busy. With continued improvements in health care and life expectancy, people can spend as long in retirement as they spent working.

According to a recent survey conducted by GOBankingRates, 31% of women ages 55 to 64 regret not saving for retirement sooner — in fact, it's their biggest financial regret. The survey also found that 27% of women over 65 have the same lament.

According to a detailed report by the Employee Benefit Research Institute (EBRI), many of us are in fact very likely to run out of money – no matter the income level.

Compared with these generations, millennials have more debt, a lower net worth, and a worse chance of making more than their parents. Those factors, particularly the rise in student debt, have prevented millennials from getting a home.

Sky-high rent is why 39% of the millennials who moved back in with their parents last year did so, per a survey by PropertyManagement.com. More than half said they boomeranged back home to save more money. It's proof that living at home with parents can be financially beneficial.

This means millennials are spending a median 45% of their income on rent—far higher than the 30% cost-burden threshold.

Nationwide, millennials have finally passed 50 percent homeownership, but they have purchased homes slower than previous generations. For instance, when Gen X was the same age as millennials today, their homeownership rate was 58 percent. Homeownership varies greatly by location.