Buying a home is part of every millennials’ dream. However, every year that passes by, it seems that this option is becoming more elusive than ever. A competitive market and growing home prices attribute to the near impossibility of purchasing a home.
As a short-term plan, it might be better to rent a home, considering that it fits the lifestyle of every millennial. Additionally, it poses less risk than purchasing a home.
Renting a Home
There are varying reasons why renting a home is a more beneficial option for many millennials. First, home prices have reached a critical point where many can’t afford them anymore. The second reason is that it fits right into their lifestyle. The third and last reason is that it gives them more options than purchasing a home.
Home prices have increased drastically during the pandemic. Home prices have reached around $340,000 this year, and they are expected to grow even more expensive in the coming years. This is a combination of the home shortage and the lack of construction materials, all of which are due to the pandemic. It might not be worth making this expensive decision for many millennials, considering that most of them travel and move a lot.
Moreover, the shortage means fewer choices for millennials to purchase a home. This can be problematic if you’re trying to get a house close to your workplace and the people you love. Ultimately, you might have to purchase a home and rent a cheap property, but it isn’t ideal if you only earn a median salary every year.
Price to Rent Ratio
If you want to take advantage of the renting lifestyle, you should know a bit more about the price to rent ratio. The cost to rent ratio can help you determine which states offer cheaper options for renting. The states with a favorable price to rent ratio are San Francisco and New York.
However, these states have a high cost of living, with San Francisco having one of the highest living costs in the US, twice the average cost of living in the country. To offset the high cost of living in the states with a favorable price to rent ratio, you should consider making investments.
Making investments should be a priority on your list, especially if you’re renting. This helps you offset the consequences of your high cost of living. It can also help you prepare for the inevitable future when you have to purchase a home. To make it easy to invest, you should choose reliable investment options such as a high-yield savings account and index funds.
Once you gain enough money in investments, you can then transition into purchasing a home. Thankfully, this is still many years into the future and probably during your retirement, but it should still be one of the goals that you’re willing to achieve.
Purchasing a Home
Purchasing a home might be expensive this year, but it might be beneficial for you because you no longer have to suffer the high cost of buying a home in the future. Moreover, there are various ways you can alleviate the increase in home prices.
States With Favorable Home Prices
This option to alleviate the increase in home prices requires you to move, but it’s worth it in the end. The average cost of a home in the US might be around $340,000 this year, but the price isn’t the same in every state.
For example, in New York, it costs about $700,000 to purchase a home, but in Albany, it only costs around $220,000. This allows you to buy a home if you’re only willing to move. The main benefit of purchasing a home as a millennial is that it is a sound investment. The value of a property for sale now can quickly double in the future. Furthermore, if you want a more favorable option, you can invest in flipping a home instead.
If you genuinely want to purchase a property, and one that is very beneficial to your current lifestyle today, then you should consider making an overseas purchase. Many countries out there have more affordable properties than the US. Furthermore, if you’ve saved enough money for a home in the US, you could purchase not only one but more than two properties in other countries.
This is a great investment option, especially if you’re planning to move out of the country. However, you should make this move now so that you can get the best out of your return on investment (ROI).
Purchasing a home can be challenging for many millennials. This is why renting might be a better option. But you should still buy a home in the future as one of your principal investment options for retirement.