By: Amanda Ferrari
The Millennial generation includes individuals born between 1981 and 1996. This generation may have the reputation of living with their parents longer than generations before. Millennials may also be known for eating avocado toast for breakfast and living a minimalist lifestyle. Millennials are now powering our workforce, and they are beginning to put down roots of their own. Here are three reasons why millennials should not hold back with their next real estate purchase.
Real Estate as a Hedge Against Inflation
Around 30 years ago, when Millenials were just emerging on this earth, one dollar was worth more than twice today's dollar. The average cup of coffee was $1.49; today, when I grab a cup of coffee with a friend in Bend, Oregon, I average $5 for a 12 oz latte!
The purchasing power of a million dollars today only required about $500,000 back then.
When people are willing to pay more money for goods and services, their cost increases. The driving up of costs reduces the value of a single dollar. This past year we saw inflation grow at an alarming rate of 7%. The Federal Reserve aims for around a 2% inflation rate each year as a general rule.
Real estate is one of the most reliable hedges against inflation. It is "real" and tangible, and people will always need a place to live. Real estate values and rents not only tend to keep pace with inflation but drive inflation itself. As a result, they often rise faster than the inflation rate.
2. Millenials Need More Space
Given the age of Millenials, it is likely they already have young children or plan to have children in the coming years. From personal experience, I have learned that it gets harder and harder to move as children grow up and establish friendships at their school and in their neighborhood. If I dare mention the thought of moving to my husband, my children will hear me from a mile away and demand reassurance that we are NOT moving. Change is very difficult for kids, and it gets more complicated as they get older.
With the potential for a growing family, you may desire a neighborhood where children can safely roam with friends. You may want to consider a house with a bonus room, a yard, or an extra bathroom for those teenage years. We are fortunate to have so many parks in or near many of our Bend neighborhoods. Bend's public schools are all excellent, and you will want to check on the zoning and school bus transportation options.
If you are already a homeowner you may have more equity than you realize. This equity can be the key you need to fuel your next move, especially if you're looking to purchase a larger home. When you sell your current house, the equity that comes back to you in the sale can be used toward the down payment on your next home.
3. Start Building Home Equity
If you are renting, consider the many financial advantages of owning a home. When you rent, you build your landlord's wealth; when you own your home, you develop YOUR wealth. Also, when you own your home, the mortgage rate is locked in, and you do not need to worry about rising payments.
Over time, as a homeowner, you will build more and more equity. This equity will help fuel a home purchase in the future. Even if your new home is not your perfect forever home, getting started and building equity is an essential key on your pathway to homeownership.
The bottom line is now is not the time to be dragging your feet. There are several advantages, that are not just financial, to getting started or moving up in today's real estate market. Let's connect today to explore your options.