A recent CNBC article reports that a large percentage of millennials regret buying their home. Currently, about 40% of millennials (ages 21-34) are home owners according to a recent Bank of the West survey. Yet, 68% of them feel buyer’s remorse. This figure is about double the rate of Baby Boomers in the same circumstance.
Why Millennials Are Feeling Buyer’s Remorse
According to the article, the millennials’ remorse comes from three areas.
The first is overspending on the down payment. According to the Bank of the West’s survey, approximately one-third of the millennials had dipped into their retirement savings for their home down payment. This may have occurred because these millennials were so eager to buy a home that they were willing to dip into retirement savings to make it happen. Many financial advisers counsel against such action. While there may be times when dipping into retirement savings makes sense, doing so to come up with a down payment on a home may not be such a great idea.
Continuous Costs of Homeownership
The second source of remorse stemmed from the ongoing costs of owning a home. As any homeowner will tell you, the cost of purchasing a home is just the beginning. Above and beyond costs such as heating and electric bills, taxes, and insurance take a chuck out of the family budget. Then there are things like maintenance and repairs that also cost money. Homeowner’s cannot simply call up the landlord to deal with a leaky faucet or a heating and cooling repair expense.
The Home Isn’t a Good Fit
The third source of remorse stemmed from buying a home that wasn’t the right fit for the family. Twenty percent of the millennials surveyed were frustrated when, after moving in, they found damages that needed repairs. Still others expressed regret that the house just didn’t fit their family well enough. One good way to avoid surprises is to obtain a home inspection prior to purchasing. These inspections usually don’t cost a large amount and can be very helpful with identifying problems before moving into the home. Damages to the home may allow for a reduction in purchase price or may be a tool to negotiate with the seller to address the damages discovered by the inspection.
Another good strategy is to give thought to the features you want in a home. Make a list of the “must-have” features and the “would be nice to have” features. In today’s competitive market, unless you can afford anything you want, compromises are part of the process. When you know what you are willing to compromise on and what you’re not willing to compromise on, you can then search for the house with the best fit for you.
The bottom line is that buying and maintaining a home is a major commitment. For many people, a home is their largest asset. Given the amount of money you must spend to acquire a home, you owe it to yourself to think about what you want before you buy and get expert help in the process. This will go a long way towards making sure you don’t end up regretting your purchase.
Ed Woods is the Managing Attorney of several of the Bond & Botes Law Offices throughout Mississippi. He holds a Bachelor of Science from the University of Southern Mississippi, and a Juris Doctorate from Mississippi College School of Law. Ed puts his extensive knowledge of bankruptcy law to use defending consumers from debt collection lawsuits and more. Read his full bio here.