Listen up millennials! Are you looking to buy a house but feel discouraged because of financial pressures? Are you putting off buying a house in hopes that the next expected recession will cause the housing market to go down again, effectively helping you buy a home for cheap? Keep reading, this might be helpful for you!
If you are a millennial, you probably spent some of your formative years right in the middle of the biggest economic recession of our generation. In 2008 we watched our parents, friends or loved ones lose money, assets, businesses and more. But something else happened; the housing market took a free fall, bringing homes well below their value. Coming out of the recession, millennials are either terrified to invest in real estate in the future, causing them to pay rent through the roof, eagerly awaiting the next recession hit and home prices to hopefully lower, or are part of the small minority of millennials who are in a position to buy a home. But studies are showing more and more that the recession won’t actually help millennials buy a house, but might actually hurt the generation even more.
During a time when millennials are experiencing less job growth and less financial freedom, buying a home seems down right difficult. It almost seems natural to anticipate the next economic downfall as a saving grace to get ahead! Especially speaking to millennials who believe that the next recession will help them buy a house, an article by Curbed is claiming the opposite. The author explains, “The 2008 recession didn’t cause the housing market to go into freefall. The housing market going into freefall caused the recession.” If this is the case, waiting for the next recession to buy a home would be pointless.
The 2008 recession occurred after mortgage lenders started issuing mortgages that would eventually fail in an unfortunate turn of events. The financial system collapse resulted from many people defaulting on these mortgages that could not be sustained. Looking forward, our next recession will be the predictable end to the economic expansion since 2008. The trade war with China would also be a cause, since businesses have been struggling, hiring has slowed down and investing is at a minimum. But millennials might be in for a surprise when the next recession looks different than the last, and maybe not in their favor! If and when there is a next recession, which is projected to hit by 2021, it is not expected to be as severe as the one in 2008 and is also believed to be met with tighter mortgage credit and a shortage in housing supply. So, what can millennials take away from this? Maybe throwing out the idea that waiting for a recession to buy a home would be beneficial for you after all.
It’s true that now feels more intimidating than ever to be a millennial in an ever tricky time to pay off student loans, build up savings and especially buy a home. But rest assured that pushing off home ownership as well as other investments and life decisions in fear of financial trends might not be in your best interest. So, my fellow millennials, let’s conquer each day as it comes and take part in the joy of entering home ownership together despite what lies ahead or behind us! At The Southbound Group, we go above and beyond to get to know each of our clients to find a home and situation ideal for them. If you’re ready to buy, or would like to learn more, reach out to us! We’d love to hear from you.