I had lunch with a couple of young women recently, millennials. Before I go on, there are a lot of great attributes that Millennials possess. Forbes had an article recently about the idealism of Millennials....they have a "save the world" mentality.
First, I want to say that I am the Mother of two Millennials. One graduated college with no debt and became a homeowner at the age of 23. She gets it. She rents out 2 rooms, which pays her mortgage and allows her to have some financial freedom. The other doesn't want to own a house, doesn't want to be tied down to one area.
Who are the Millennials? I'm looking at this chart and I'm thinking that it is Millennials nationwide. Here in California, the Millennials are bogged down with Student Loan debt and postponing home ownership. Maybe even living with their parents still.
I would love to see a study specific to California. I do think that, because of the price of real estate, Millennials think of buying as unattainable. And they do not want to start at a starter home. They want to start where they were reared.
So, back to lunch with the 2 Millennials, both in their mid to late 20's. One was a single Mom with a young daughter. The other was single, never married, no kids. Both wanted to buy in a very expensive neighborhood, and wanted to wait to buy until they could afford it. In fact, the single, never married, wanted only a Hacienda with acreage in an expensive area. In case you aren't familiar with California real estate, land is expensive, so anything with acreage will be even more expensive than a large Hacienda by itself.
I showed them the Opportunity Cost of waiting , and explained that they would be paying out money to rent, in many cases right now, more money to rent than the cost of a mortgage, PITI. (Principle, Interest, Taxes, Insurance)
The Mom got it. Maybe because she is already "tied down" to a specific area because of her daughter. The other young woman? Well, she was standing her ground that she ONLY wanted to buy when she could get her dream house.
If you're renting, think about buying. I can show you the OPPORTUNITY COST of postponing a purchase. Mathmatically, it makes sense. And picturing yourself in your own home will allow you to feel part of the whole community. Being part of the community allows for the greatest contribution.