7 Reasons Why Millennials Are Renting
Homeownership rates have declined across all age demographics in Canada and the U.S. since the housing collapse in 2009, particularly among the millennial generation. In his latest report (https://www.realestateconsulting.com/the-foreclosure-generation/), real estate consultant and author John Burns predicts that the homeownership rate will continue this downward slope through 2025.
If Burns’ prediction is correct, millennials will be renting apartments for significantly longer than their parents’ generation did. But economic factors are only partially to blame for this ongoing trend. There are many other reasons why the younger generation is forgoing homeownership for an apartment rental leasing agreement.
Here are seven reasons why millennials are renting instead of buying:
They Can’t Get Approved For A Mortgage Many millennials are renting apartments because they simply can’t get approved for a mortgage. It can be extremely difficult for a younger individual with a lower income to be approved for a mortgage without a cosigner. Many millennials will continue to rent until they earn a higher salary, then begin the process of purchasing a place of their own.
They Don’t Want To Make A Long-Term Commitment One of the leading criticisms of the millennial generation is that they are afraid of commitment, whether it’s in relationship, a job, or a place to live. Now, I don’t know if this criticism is entirely warranted, but there is something to be said about the younger generation not wanting to be tied down to any one thing for the unforeseeable future. Millennials would prefer not to commit to a neighborhood if they have their say in the matter. This is particularly true in the case of those millennials who have just moved to a new city and would like to get a sense of the different neighborhoods before they consider living in one neighbourhood for a long-term basis. Renting offers millennials an affordable way to get a sense of a neighbourhood’s feel before deciding on a long-term lease or purchasing a place of their own.
They Are In University University is a time of exploration and growth. Being tied down to a mortgage can be counterintuitive of these aspirations, so it makes sense that most students would prefer to hold off on buying a place before completing their degree. You never know where your education is going to take you and it’s crucial that you’re able to take on any opportunity when it presents itself.
They Want To Live In A Cool Neighborhood If you’re not earning a lot of money, the only feasible ways to afford to live in a trendy neighborhood is by renting. Buying a place in one of these neighbourhoods can require a significant down payment and a high-paying salary — two things that many millennials lack. This makes apartment rentals the obvious choice.
They Can’t Be Bothered With Home Maintenance Many millennials will gladly trade in a sense of ownership for the luxury of not having to take care of a broken appliance or clogged toilet. Being able to call on a landlord or building management to free them of any labour and expense can be a huge relief. As a tenant, you’re responsibilites are far more limited than that of a homeowner, which is a huge advantage of renting over buying.
They Have More Flexibility Affordability and cost plays a huge role in the millennial generation opting to rent over buying, but they also value the higher level of flexibility they have with renting. Millennials treasure the fact that they can pick up and leave when their apartment rental lease ends (or even before if they are permitted to sublet their place), instead of being ‘trapped’ by a mortgage. When you’re young, having the flexibility to travel anywhere in the world on a moment’s notice or simply move to a more enticing neighborhood is certainly attractive.
They Can’t Afford To Buy The leading reason why millennials are renting instead of buying is that they simply can’t afford to buy a home of their own. And while renting does not help you to build home equity, the average monthly rent is significantly less than the total cost of mortgage payments, condo maintenance fees and property taxes — especially if you have a roommate.
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