In recent years, hundreds of researchers have discussed the “Millennial” as a strange breed of human, likely to spend over $100 on a nice dinner, unlikely to buy a home, and likely to buy products branded with a particular shade of pink – Millennial pink that is! But few have explored the real reasons behind the home ownership issue and provided real, actionable advice based on said reasons.
Let’s put it out there: Millennials watched as their parents struggled through the great Recession, graduated college when the job market was at an all-time low, and lived through some of the most confusing political and economic shifts. So it’s no wonder they want to wait, date, mate, then procreate before buying a home! That said, these five steps can be taken by Millennials of any age, in any financial situation.
- Talk to a loan officer! I know, I know, it seems so far off, so why bother? But it is never too early to have a conversation about where you are today, where you’re going, and what you need to do to achieve your goals. A loan officer can not only do a credit review and provide advice on how to repair or build up credit, but can also provide you with a good sense of what your income today might support, and how you can work towards saving for a down payment.
- Start saving – every little bit helps. You may want to think about co-housing while you’re still young, or cutting down on some of the pricier expenses in your day-to-day life (cough cough, food delivery). Every dollar that typically goes towards those expenses can be put in a savings account and, one day, used for a down payment – the most difficult part of buying a home.
- Consider: where do you want to be in five years? It’s clear that the days of staying at one job for five to thirty-five years are over. Whether it’s to find the right career or to make more money, most Millennials have had to hop jobs and/or cities on a yearly basis, and many see their current situation as temporary. But it’s also important to consider where you are today, where you’re hoping to go, and when you want to settle; that way, you can plan thoughtfully and appropriately for your future.
- Be realistic. What kind of lifestyle do you want? If you want to be in a new construction building with fancy amenities, you may need to consider where you can realistically make that happen – the answer may be Chicago instead of New York City. If you’re locked into a more expensive city because of a particular career, consider what sacrifices you might be able to make in order to make your current lifestyle and your future finances work for you.
- Stop watching home improvement shows! This point goes hand-in-hand with the above question, but you’ll need to start thinking about setting realistic expectations for yourself and your future home. You may not be able to get an all-white, stainless steel appliance apartment, but you could get an apartment that needs a little elbow grease, then put in just a bit more money to get the clean, finished dream home you imagined!
Needless to say, it’s a tricky situation to be in as a Millennial. But being realistic with both your current situation and your future goals (maybe the 18-million-dollar home on Million Dollar Listing is not the best next step) is essential. And, talk to a loan officer! You may not even know what that is yet, but trust me, they would be happy to advise you on your credit, savings, and the other nitty gritty items that will affect your ability to buy a home, whether that’s now, or down the line.