Take a look at this great article by Brittany Anas in Apartment Therapy, portions of which are below.
Back in 2011, I decided to put an offer on my first-ever home. It felt risky with a capital R—especially since I was working as a reporter in a thinning newsroom at a print newspaper where the last Friday of the month was known as “layoff Fridays.” Faced with what felt like increasing economic entropy, I took a hard look at my finances and tried to find some stability. Since rent was on the up and up (and newspaper salaries weren’t), I decided homeownership was a smart and somewhat attainable move to keep at least my housing payment stable for the next 30 years. I took up a second job bartending to help save up for a down payment: 20 percent so I wouldn’t be subject to additional interest and private mortgage insurance. I decided to base affordability solely on the money I brought home from the bar, knowing if I lost my reporting job, I’d still be able to make payments.
Though I may be an “exceptional” example of a Millennial homeowner, my thinking is very much tied to the world my generation inherited. We graduated into The Great Recession and did so saddled with record high levels of student loan debt. Job prospects—let alone high-paying ones—were bleak. Millennials moved workplaces—and geographic locations—early and often in order to secure constant employment. There were financial traps all around us and we had to stay constantly wary. And behind all of this instability was the housing market, says Jon Reeves, a clinical psychologist is practicing in Seattle, Washington.
“Millennials may perceive home buying as more risky than previous generations because we were raised on infinite choice, frequent change, and came to age with a lot of financial volatility,” Reeves says.
Think about it: There were financial traps all around us and we had to stay constantly wary. It seems that, because of this, we Millennials learned that in order to do anything, we had to do it perfectly. We only feel ready to move ahead when they’re 100 percent sure they can handle it. That means our daydreaming is spent not only thinking about home aesthetics or ways to keep up with the Joneses, but making sure the mechanics behind the facades run as smooth as possible. We spend our free time reading and researching tips and trips to minimize risk and avoid any costly mistakes that would keep us from getting through adulthood financially solvent. We ask, “How much would that fixer upper increase in value after DIY renovations?” and “Is it even a smart investment?” Will we have enough money to cover the mortgage every month—even if one of those appliances break soon after we move in, our work contract doesn’t get renewed, or we have a medical emergency not covered by insurance? Are those seemingly risky adjustable-rate mortgages actually a better choice than the fixed-rate ones our parents took on—especially if our jobs could ask us to move at any time?
With all of this behind us, it’s no surprise that Millennials are losing faith in the “American Dream.” It really hits home to our risk-averse nature. But as someone who has taken on the risk and found it rewarding in many ways more than I planned, I’m here to say: Maybe it’s time for us to reconsider how risky homeownership really is. Yes, it’s hard and expensive in some ways, but there also can be a wonderful return on investment. For example, the home I bought for $193,000 is now worth $325,000 and my mortgage is more affordable than most one-bedroom apartment rentals in my neighborhood and this has allowed me to take on more life-fulfilling risks like going freelance full-time as a travel journalist.
While I’m just one example and there are definitely cases where things don’t work out, I still think buying a home—even when it feels a tad risky—may be largely worth it. But don’t just take my word for it: I talked with other homebuyers like myself who embraced other less-than-perfect situations when they purchased their homes. Here’s what they have to say:
When it comes to real estate, what risks have you been willing to take? Did they ultimately pay off?