Majority of Millennial Homeowners Regret Their Purchase
For decades, buying your first home has been a rite of passage in America. As a result many Millennials may have felt pressured into buying — even if the purchase wasn’t in their best financial interest. Now a new study conducted by Bank of the West seems to underscore that sentiment, finding that a great number of Millennials regret buying their homes.
As CNBC reports, Bank of the West’s survey of 600 Millennials found that 46% rented and 42% owned a home while 11% lived with family and 1% stayed with friends. Of that 42% that own, a whopping 68% said they regretted their purchase. By comparison only 35% of Baby Boomers expressed the same concerns. Explaining the finding, head of retail banking Ryan Bailey said, “Millennials are so eager to become homeowners that some may be inadvertently cutting off their nose to spite their face.”
When asked why they had grown to resent their home purchase, 40% said it was a poor financial decision to buy. Moreover one-third of owners reported taking from their retirement accounts in order to fund their down payment. Bailey called this particular stat “alarming,” adding, “Borrowing from your retirement may make sense in special circumstances, but it’s definitely not a recommendation.”
Speaking in broad terms, half of respondents said they regretted buying because of the home itself. Some more specific reasons cited included damages discovered after move-in (20%), realizing the space didn’t work well (19%), and learning that it was costly to maintain (20%). The lattermost point is one often overlooked by homeowners making the transition from renting to buying. As Realtor.com chief econonomist Danielle Hale put it, “When you’re a homeowner, you can’t call your landlord to fix things, so you want to make sure you have a little extra cash in the bank.”
All these figures may lead one to wonder why these buyers purchased a home in the first place. With 49%, the leading answer to that question among Millennials was “to feel a sense of stability.” Responses tied for second place at 47% include “it makes more financial sense to own my home versus renting” and “so I can modify it and make it my own.” Additionally 44% said they wanted more room while 40% saw the purchase as a good financial investment.
Although the Bank of the West survey focused on Millennials, its findings and lessons aren’t unique to that generation. For one it’s important to note that owning a home isn’t right for everyone and that, in some cases, renting may actually be the more sensible option. Similarly, regardless of your age, staying within your budget when shopping for houses as well as finding a home that will meet both your immediate and longer-term needs is paramount to your purchase paying off. With home prices rising and the housing market heating up once again, hopefully the latest round of buyers won’t have to learn the same hard lessons.