Millennials regret buying homes


Despite a housing shortage, many millennials have purchased homes in their 20s and 30s, just like their parents before them.

But for those who do, it’s often not the homeowner’s fantasy they once dreamed of.

A whopping 90 percent of millennials have regrets about their first home purchase, according to a new report from the Real Estate Witch. That’s a slight increase from last year’s report, which saw only 82 percent say the same thing.

The regrets about the first home range widely. Around 27 percent said they regretted choosing a bad location, while 26 percent said they came to regret the bad neighbors their home is near. Just under that, 25 percent of millennials, which comprise those born from 1981 to 1996, said high interest rates caused them to have regrets about their home purchase.

A ‘For Sale’ sign is posted in front of a single family home on October 27, 2022 in Hollywood, Florida. The majority of millennials had regrets about their first time home purchase.
A ‘For Sale’ sign is posted in front of a single family home on October 27, 2022 in Hollywood, Florida. The majority of millennials had regrets about their first time home purchase. Joe Raedle/Getty Images

Jason Gelios, a realtor with Community Choice Realty in Southeast Michigan, said millennials are already a buying group that will get hit the most when it comes to higher mortgage rates because of the rising costs of goods in other areas like groceries.

“Millennials are willing to accept a higher interest rate because the majority of them will be putting less money down on the home,” Gelios told Newsweek. “With this thinking, it could cause millennials to have some buyer’s remorse because of the higher payment and overall cost of owning a home.”

Even for millennials who haven’t purchased a home yet, high interest rates, which have neared 7 percent, appear to be wreaking havoc on their choices.

Roughly two-thirds of millennials said high interest rates made it a bad time to purchase a home, with 96 percent of millennials adjusting their plans accordingly.

Around half have decided to save more for a home due to these rates, and 40 percent said they’re increasing their budgets. One in three millennials also said they would be putting down a larger percentage on a home, buying an altogether less expensive home or even delaying their plans to buy altogether.

Jim Armstrong, a realtor in New Jersey and Pennsylvania, said high interest rates, little money in savings and an overall housing shortage are some of the biggest roadblocks he sees millennials face.

Still, he believes there are ways millennials can avoid any first-time buyer’s remorse.

“If they take the time to view homes in various neighborhoods and are connected with resources to do their due diligence on a variety of levels, they should be able to make a solid choice that works best for them,” Armstrong told Newsweek.

Because millennials hold far more debt than their elder generations, they are especially impacted by the high interest rates across the market. Baby Boomers, for example, were two times more likely to say interest rates have not affected their home buying plans.

This statistic arrives as 85 percent of millennials have some form of non-mortgage debt, with 22 percent owing more than $50,000 and 57 percent owing more than $10,000.

It’s also a situation that’s getting worse, as millennials were 16 percent more likely than a year ago to owe more than $50,000 and 24 percent more likely to owe more than $10,000.

Still, many millennials might be making a mistake if they decide to wait until interest rates fall down to historic levels.

“Many millennials put their search on hold thinking typical rates should be in the 3s, but what they don’t realize is that the average interest rate since 1970 is 7.74 percent and there are low downpayment programs and interest-rate buydowns that can be negotiated with the seller,” Armstrong said.

Today, interest rates are below the historic average, and they’re expected to drop a few more times in 2024, so millennials are in the best position to act now, Armstrong added.

“After that happens, it will be extremely competitive as formerly hesitant buyers jump back into the market,” Armstrong said. “Now would be the best time to research low down payment programs and make a move before the competition heats up.”

But for millennials, even ignoring the interest rates, one such problem could lie in their ability to afford a home in the first place.

While the median home in the U.S. is $431,000, most millennials can’t swing that. The study, which surveyed 1,000 U.S. adults who planned to buy a home during 2024, found that 57 percent of millennials planned to purchase a home that costs less than $400,000.

The housing market appears to be on a rebound, with mortgage rates generally declining despite continual home price highs.

But Daryl Fairweather, Redfin’s chief economist, previously told Newsweek that the U.S. housing market is 4 million homes short of demand, signaling competition will still be a problem even with lower interest rates available for homebuyers.

To date, roughly 75 percent of properties on the market are out of reach for people in the middle class, according to the National Association of Realtors.

“The problem is there just are not enough options for homebuyers,” Indiana-based realtor Chuck Vander Stelt told Newsweek. “Existing homes are expensive and come with wear and tear buyers may have underestimated. New construction homes are really expensive. Many homebuyers make major compromises in order to get a home bought.”

Do you regret buying your home? Contact s.blake@newsweek.com

Uncommon Knowledge

Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.

Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.



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