Most Millennials Regret Buying A Home
Interesting article by Diana Olick (@DIANAOLICK) over @ CNBC.com that talks about most Millennial buyers remorse after purchasing a home. Almost 2/3 had regrets in one way or another, compared to 44% of US homeowners who have regrets.
Some of the reasons are:
Repairs & Maintenance: Incredibly they did not realize that as the homeowner vs the renter, they have to pay for all repairs, maintenance, and upkeep, as well as taxes, water, and HOA fees, if applicable. If they did not set these fees aside, they are then dipping into savings, or avoiding necessary repairs or taxes.
Location: I guess no one told them rule # 1, location, location, location. This includes busy streets, next to any number of things like utility lines, cell phone towers, railroad tracks, busy freeways, higher crime areas, or being in lower elevation flood zone areas or next to a creek, river, or such that can flood them out.
Size: Buying too small was another factor. While the trend is smaller, and the Tiny House craze is going full bore, in reality, who wants to live in a house the size of a large garage or bedroom? I need room, I need a home office, and so does my wife and her ever expanding wardrobe.
The Internet: At first I dismissed this idea at the beginning of the article as to how on earth it could hurt? Yet 57% of Millennials use the social media in their home search, three times the Gen Xers & Baby Boomers. Only 30% ever visited the neighborhood to look at homes for sale. Neighborhoods change from block to block, and for example in South Dallas in the Oak Cliff area, homes that sell for $250,000 on one block, go for $450,000 one block north. And go a couple more blocks south? You might not make it out alive.
Home Prices: And while the mortgage rates are still low, in many places home prices are at or have exceeded the prices at the peak of the last bubble. So not only are they allowing lower down payments and credit scores, factor in the high mortgage payments, and the PMI insurance they will have to pay until they have 20% of the note paid offer, then toss in an unexpected disaster like a loss of job, spouse, or limb.
What I am getting at is another possible mortgage storm is brewing not only the Millennials, in fact all new homeowners.
Home buyers regret, yet another NPL trend to be aware of…
Christopher Winkler
Manager
Silverwood Capital Fund I
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