A study conducted by the Urban Institute (UI) has discovered that millennials (those born between 1981 and 1998) have been putting off homeownership. A real estate investors association in Indiana seeks to change this trend, encouraging millennials to invest in homes and reap long-term profits.
Millennials Prefer to Rent than to Invest
According to the UI study, a “sluggish” movement trend of millennials from renting a property to homeownership, has been observed. UI have cited reasons for this trend, which are financial in nature. These include:
- Increase in millennials getting married and having families of their own;
- Increasing debt from student loans in college; and
- Increase in rents that make it harder to save for real estate down payment.
Millennials vs. Other Generations
UI also stated that millennials had a 37% homeownership rate in the year 2015. This rate is 8 % lower than both Baby Boomers (born 1945 -1962) and Generation Xers (born 1963 -1980) when each group was the same age as Millennials today. Millennials were found to have larger student debts than boomers at the same age, and in a lot of cases, even more than gen Xers as well.
Preferring to Rent Instead
Apart from practical reasons, millennials have been putting off homeownership for concerns that are not financial in nature, driving down homeownership rates for their generation.
“The preference of educated millennials to move to more expensive urban centers has contributed to their lower homeownership rate,” UI analysts observed. The group also emphasized a slight attitudinal change toward homeownership among the generation’s members.
A Better Alternative
Any real estate association should not be disheartened, however, by this trend. Some have taken the lead to encourage millennials to consider purchasing homes and real estate, and selling or leasing them for profit. The Central Indiana Real Estate Investors Association (CIREIA) has been encouraging many individuals, and millennials in particular, to view homeownership as a venture that will reap for them financial benefits in the long run.
Investing Rather Than Homeowning
Buying a piece of real estate should not be viewed as an end-all approach. For instance, you can continue to earn profits by taking these properties, and renovating or “flipping” them for selling to other individuals. While there are additional expenses to renovating, this will increase the value of the house and allow you to list the house at a profitable price. With the profits you have earned from the investment, you can go on to buy other properties and repeat the process.
Real Estate Investment Education and Support
Before you can make a profit, however, you need to ensure that you will get interested buyers. This may be tricky if you don’t play your cards right. That is why a real estate investment education is very helpful.
CIREIA can help give millennials that education and provide the necessary tools for them to succeed in their real estate investments. As a real estate membership, it offers educational classes and seminars where you can earn credit hours towards Professional Housing Provider (PHP) certification.
Millennials, say goodbye to homeownership being a liability, and hello to real estate investing as a long-term source of income.