Millennial homeownership has been off to a slow start. Roughly 1 in 3 millennials under the age of 35 own a home as of the end of 2018, according to the U.S. Census Bureau. That's 8 to 9 percentage points lower than previous generations' homeownership rates at ages 25 to 34, according to research from the Urban Institute's Housing Finance Policy Center.
Underestimating the hidden costs associated with buying and owning a home, including the ongoing responsibilities of maintaining it, is the No. 1 millennial homeowner frustration.You need to know that you can truly afford to both buy and own a home, and to get the full picture, you need to do more than simply compare your current rent payment with the potential mortgage payment, Daryl Fairweather, chief economist at real estate site Redfin, tells CNBC Make It.
First-time buyers also often overlook the costs of upkeep and repairs. HGTV recommends buyers plan to spend 1 to 3 percent of the home's purchase price on annual maintenance. So if the home is priced at $300,000, your budget for this should be at least $3,000 each year. The key to avoid regrets in the long run is to play it safe at the outset, Lawrence Yun, chief economist of the National Association of Realtors, tells CNBC Make It:"Start with a starter home and later trade up, rather than going for a 'dream home' on the first try."
In many cities around the U.S., particularly in coastal areas, home prices are out of reach. Only 67 percent of homes available in 2018 located in metro areas tracked by Redfin were priced affordably for millennials — down from 71 percent of homes in 2017. In Los Angeles, only 19 percent of homes are in a price range that millennials can afford, based on their median incomes.
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