But high rent, stagnant income, and student loans are holding people back
Both urban millennials and wealthy older Midwesterners think it’s a great time for home-buying. Unfortunately, only one of those groups can actually afford to.
Even though millennials want to buy homes one day, a recent survey by the National Association of Realtors says many are reluctant to take on more debt right now. Between their student loan debt and stiff competition in home-buying, millennials aren’t confident they can afford it. Home costs are going up, but their incomes aren’t.
“It’s becoming very evident… that the financial and emotional impact of repaying student debt is contributing to a delay in purchasing a home for many would-be buyers,” says NAR Chief Economist Lawrence Yun. “At a time of quickly rising rents, mortgage rates at all-time lows and increasing housing wealth, a lot of young adults in their prime buying years are struggling to enter the market.”
What your age (and income) are saying
Almost half of millennial respondents have student loan debt, and the majority of all respondents that have student loan debt live with someone else or rent. Fewer than half of millennials are comfortable with adding mortgage payments to their mountain of student loan debt.
When it comes to income, it shouldn’t be a surprise that Americans making more than $100,000 annually are most comfortable taking on a mortgage while also paying off student loan debt (38 percent) and most feel like they would qualify for a mortgage, too (60 percent).
However, that’s not the case for those making under $50,000. Seventy percent of them admit it would be difficult to qualify for a mortgage. We already know low-income earners are having a hard time keeping their homes: Some Americans are spending more than half their paychecks on mortgage payments.
Location, location, location
When it comes to home-buying expectations, it’s all about where you live.
According to the survey, almost half of respondents believe the economy is improving, but location is a key factor: Two-thirds of rural residents don’t think the economy is improving. More than half of those living in the Midwest or South are more optimistic about the economy than their West and Northeast counterparts.
Out west, almost three-quarters of residents believe home prices have gone up in the last year — more than 20 percentage points over their South, Midwest and Northeast neighbors.
Homeowners vs. renters: the battle continues
While both renters and homeowners believe home prices are up from last year, almost 40 percent of both renters and cohabitators, respectively, believe it’s not a great time to buy a home right now. In fact, more than half of renters believe home prices will go up in the next six months.
That has a big impact on renters and those living with someone will actually consider buying a home in the future. Most renters (59 percent) and cohabitators (61 percent) believe they will have a hard time qualifying for a mortgage.
Article last modified on March 8, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Everyone Thinks It’s a Great Time to Buy a Home - AMP.