The dream of owning a home is still viewed as the number one long-term financial goal for Americans, with 54 percent saying it was their primary long-term financial objective. This is an 11 percent increase from a year ago, according to a recent survey conducted by Reportlinker. In fact, 81 percent say home ownership is the best long-term investment a person can make.
The investment advantage is one of the forces driving millenials’ interest in buying. In the first quarter of 2017, the number of new-owner households was double that of new-renter households, an indication the younger generation is moving into the buyers’ market.
A major challenge for would-be homeowners is the lack of housing inventory. The U.S. is in the midst of a housing shortage, largely because members of the millennial generation want to live closer to urban areas – and the numerous restaurants, attractions and short commute times they offer. In response, builders have focused on urban housing rather than the less expensive suburbs, leading to a decline in overall housing starts and a focus on higher-priced city homes. But as millennials marry and look to leave their rentals behind, starter homes are beginning to make a comeback and builders are now shifting their focus from luxury homes to lower price points that first-time buyers can afford. They’re also expanding beyond urban areas into the exurbs where land is cheaper.
Among homeowners, 31 percent have a mortgage, while 15 percent own their home outright. Those most likely to be mortgage free are those 55 and over (36 percent), while half of those aged 35 to 44 are more likely to still be chipping away at their payments. More than a quarter of respondents to Reportlinker’s survey say they rent from a private landlord. Renting is especially common among older millennials aged 25 to 34 (44 percent) while four in 10 young millennials (age 18-23) say they stay with friends or family for free.