Buying property has always been a major rite of passage for a person. Whether they are young or old, this marks a time in their life where a huge change happens. Owning property is a way to become a fully established adult who has a major commitment to something, aside from a family of course, so it makes sense why it’s such a valued investment.
Before, buying property used to be really simple. People would work a job, save money, then buy a home and a mortgage, sometimes even getting a loan. Now, owning a home or property is much more different than previous generations. The new generations of young people, particularly millennials and soon-to-be Gen-Z, are finding the process is a little stranger.
Working a 9-5 job doesn’t always cut it now, and sometimes loans are hard to get because they’re trying to pay off student debts or other expenses. This has inevitably led to the new generation doing things differently when it comes to their property or lack thereof.
Here are some ways they do it differently.
1. Renting Over Buying
The first is a major one and it is that young people are finding themselves renting instead of buying. There are a few reasons for this: 1. The ability to partake in luxury apartment living is often cheaper, or more realistic, for their age and career situation. 2. They want to live in big cities where jobs are more abundant. 3. They need flexibility in their lives to travel so not being tied down to a property makes more sense. These are some of the reasons why younger generations are opting to rent property or apartments instead of owning them.
2. Taking Out Longer-Term Mortgages
There are generally two types of mortgages: short-term and long-term. Most younger generations will look to purchase their house by using a mortgage, because paying for a higher down payment may be harder with debts or fluctuating market costs for a home. A longer-term mortgage costs less on a monthly basis, even though the loan term is longer, which is appealing for people who need to pay back debts, save, or budget. This is a way that many young people are trying to own their own property because they are committed to it for a longer period.
3. Subletting or Renting Their Property
Before, the idea was that you simply buy a home, and you live in it, but now things are changing. The cost of living is increasing because of things like inflation and other factors, so people need to make money from more than just a salary or job, which is why they use their property to sublet or rent. The rental property allows people to either live in the same building they rent out or provide an opportunity for someone to live somewhere. This helps people find somewhere to live or find another source of income to help pay for mortgages on their personal property.
4. Finding Roommates
Being strapped for cash isn’t an unusual phenomenon so sometimes the best way to reduce this concern is to find someone else to live with who can offset the costs of the property or apartment. Living with a roommate and splitting the rent is a good way to help cut back on the overall cost of rent or the mortgage. Living with roommates has become the norm for younger folk, and it’s not unusual for people to have roommates in their 30s now. Similarly, many people split the rent with a significant other when they move in together.
5. Buying Homes Later in Life
It’s no surprise that younger generations are buying homes at a slower and lower rate than previous generations, so it’s also not a shocker that they’re buying homes later in life too. It used to be commonplace for someone to graduate college, get a job, then buy a home all within a few years, but it’s not the same world anymore. It’s harder to find high-paying jobs fresh out of school coupled with a higher cost of education, loans/debts, and more expensive properties, it takes people a long time to eventually afford their own home. Sometimes, it’s not uncommon for people to go their whole lives without buying their own home too.
6. Buying Smaller homes
When younger folk eventually do build up the money to afford a home of their own, it’s also not shocking that they are buying smaller houses as well. Big square footage homes, with plenty of property size for a yard, are quickly becoming less feasible for cost. It’s not economically viable to buy a mini-mansion as it used to be, not to mention, many young people understand that they don’t need as much home space as their parents or grandparents’ generations did. Smaller family sizes have contributed to this, but also, eliminates the need to downsize later in life which is a big weight lifted from their shoulders.
7. Living in Less Expensive Areas
Living in the city is fun when you’re young. There are more job opportunities, a bigger dating scene, more variety in culture, food, entertainment, and it is a place where young people can thrive, but it’s also highly expensive. There aren’t as many opportunities to own a home in a city, and sometimes apartment living can feel too limiting, so younger generations are starting to move off the beaten path. They are moving out to the countryside and smaller communities where there is work, but also more homes available. This lower cost of living is making it more feasible to own a home at a younger age, even if it is farther away from city life.
The trends in property ownership for the younger generations are not surprising, but it’s good to look at to understand why homeownership and apartment renting are so different from older generations. These 7 things are some of the ways that the younger crowd is taking on home buying and property in their lives.