More Americans are reconsidering whether they should own their house
Is owning a home worth it? More than a quarter of Americans don’t seem to think so.
More people say they plan on opting out of homeownership over the next five to 10 years, according to new data from the credit bureau Experian.
More than a third say they want more flexibility to relocate. A quarter of them don’t want to carry that much debt and are fed up with the responsibility of maintaining a home. But the problem goes deeper than that, says Sandra Bernardo with Experian.
“There are many factors that play here,” she says. “There’s sort of this perfect storm of many things happening all at once.”
Some of those factors playing into this mentality change towards homeownership include a higher rate of people being denied a loan for a house, and a less affordable market.
“The west coast is becoming more and more expensive for consumers,” says Bernardo. “According to the National Association of Realtors, the median house price increased 6.5 percent from a year ago. It’s at an all-time high of $263,800 as of June … Why people are opting out really has to do with the trend of high prices and low inventory in the market.”
Another major factor playing into the results from Experian is the age of those surveyed.
“Another point to that is that out of the majority that wants to opt out, more than 30 percent were millennials. They tend to flock to the more expensive cities,” she said. “Many of them are delaying marriages and having children which is why most people settle down and start buying homes.”
Regardless of what millennials are doing, 43 percent of people surveyed said they were denied a home loan. That’s up three percent from last year.
“What’s interesting to me is that while a majority of people said they understand how important credit is … 43 percent were denied a loan and the majority of that group is denied because of a low credit or limited credit history,” Bernardo says. “It’s very important to be checking that periodically especially if you want to be taking on a home loan.”
Those people that were denied a loan are taking action. More than half — 56 percent — plan to pay off their debt to better their credit, and 51 percent are aiming to pay their bills on time. After that, 29 percent say they’re going to monitor their credit score, and 23 percent vow to keep their balance low on their credit cards.
These are all steps that Bernardo says are part of the foundation people need before applying to buy a home, and it all starts with a little research.
“Consumers also need to be creating a budget and sticking to it. They need to know how much the down payment is going to be as well as the closing costs to know that they can afford it,” she says. “These days, there’s no excuse for not understanding your credit better. There are some many places you can find resources and get an education on credit.”
Article last modified on September 21, 2017. Published by Debt.com, LLC .