A new survey has found that 90% of millennials in 2024 are regretting buying their first home.
Stephen Graham in his YouTube video telegraphs his belief that due to the ongoing affordability crisis, inventory shortage, and record-high mortgage rates, this trend of buyer’s remorse is far from over.
1.) Higher Prices
Year on year, housing prices climb at an average rate of 5%. This hike seems somewhat more pronounced in 2024 as the number of available listings climbed by a measly 49,000 units nationally.
For context, this is one-third of what was available to the market in 2016.
As a result of this contrast, the current housing market is one where buyers and sellers are hesitant.
Sellers do not want to give up their existing mortgage interest rates and thus they are agitating an already low property inventory.
The average buyer, on the other hand, would need to earn at least $115,000 a year to afford a decent home.
2.) A Bad Time To Buy
A survey found that 83% of respondents harboring the belief that now is not a good time to buy while 60% felt that it is the correct time to sell.
A whopping 75% of respondents telegraphed that the economy is on the wrong track, and this is the highest percentage of people with this sentiment since the lockdowns of 2021.
The last time the real estate market was this bearish was in 2012–a time when the entire economy was grappling with the effects of the subprime crisis.
Not helping the status quo is the fact that 81% of the working class believes their salaries are not proportionate to the daunting housing market.
Additionally, 39% of respondents indicated they expected to pay a higher interest rate than they were comfortable with, while 36% noted that they were willing to make multiple offers.
Thirty percent planned to max out their budget and 29% said they were ready to pay more than a home’s asking price.
3.) Too Much Maintenance
In 2024, 33% of respondents indicated that their biggest regret was buying a property requiring an extensive amount of maintenance.
This statistic is an increase from 2023’s 25% and the result of home refurbishments being more expensive than last year.
When it boils down to the dollars: From the third quarter of 2022 to the same time in 2023, repair costs experienced a $400 hike.
Newly released data shows that homeowners can expect to shell out as much as $14,155 per year or $1,180 per month on maintenance. These figures encompass expenses related to property taxes and utilities.
Perhaps most shocking is the fact that the costs of repairs and remodeling have surpassed the inflation rate and currently sits at 6.2%.
For this reason, a comprehensive pre-purchase assessment by a professional entity is essential before every purchase.
And even if the assessment proves favorable, homeowners – bar those who buy newly constructed houses – would be prudent to keep a budget for repairs.
4.) Buying Too Quickly
Another regret harbored by 30% of a survey’s respondents was that they bought too quickly.
A fair chunk of these statistics are millennials, 27% percent of whom own in less-than-ideal locations and another 26% who do not like their neighbors.
The latter is in the context of another millennial tendency: Buying homes near airports, railway lines, or busy highways.
While it is prudent to do everything possible, including not buying impulsively, one should note that in the current competitive market, few are likely to get exactly what they want.
5.) Buying in a Bad Location
There are two things to consider as a millennial:
1.) Buying a home is likely to be the single biggest purchase in a lifetime
2.) What are the chances that the property will be sold in favor of another house?
Research shows that people change homes every 13 years on average.
With these considerations in mind, buying into a less-than-ideal situation is never the end of the world.
With the right amount of enthusiasm and innovation, almost anything can work, and after a while, the house can be resold.
This is not as applicable to buying in a bad location. It is an issue that often occurs when people do not see the place in person, research the area, or speak to the neighbors.
Unfortunately, the chances of a bad location morphing into a good location are microscopic–and reselling can be a difficult task.
6.) Paying Too Much
Around 38% of buyers – 42% of whom were first-timers – say they paid more than the asking price in 2023.
Millennials make up a large amount of this category: One in five of them claim that their mortgage is too high, and one in four feel that their interest rate is excessive.
High mortgage regrets are usually the product of insufficient or no market research.
“Nine times out of ten, the first loan estimate you get is not going to be the lowest price and it’s up to you to shop around to make sure that you’re really saving the most money,” says Stephen.
He also advises getting a quote from a lender, taking it to a second lender, and asking them to beat it. This process need not be limited to two financial institutions and should be repeated as many times as possible.
Once the potential homeowner has gone through enough lenders, they can start at the entity they got the first quote from, and repeat the entire process.
This exercise can save the new homeowner up to $84,000 over the lifetime of a home loan.
Another way to avert the regret of having paid too much is by setting a budget before shopping. If the vendor rests on a price that exceeds this budget, walk away.
7.) Buying a Fixer-Upper
Twenty-six percent of home buyers say they regret buying a fixer-upper.
Buyers usually resort to these deals because they are easier on the pocket and there is less competition.
When buying a fixer-upper, the buyer needs to assume that the price of repairs and remodeling will be 25% more and the project will take twice as much time than initially thought.
Stephen warns that a common pitfall for first-time homeowners is contractors, as they are known to take advantage of inexperience and overcharge.
Like with shopping around for mortgages, research is required and even then, buying a fixer-upper can be treacherous fare.
8.) Being Pressured Into Making an Offer
Twenty-three percent of home buyers say they felt pressured to make an offer.
The Association of Realtors found that buyers typically bought their home for 100% of the asking price “with 28% paying more than the asking price”
This is a common regret among millennials. A study found that more than three in four house buyers in this demographic were prone to consider accepting an interest rate 7% higher than the national tariff.
Sixty-five percent of Millenial home buyers were happy to accept an interest rate of 10% or more, and 23% – to their own undoing – would accept a rate of 15% and upwards.
“I mean come on,” Stephen rants, “we just have to call that for what it is: ‘Stupid’. At this point, it just seems like people are getting so eager to buy anything they can, probably because they want to get in before prices go even higher.”
“They’re willing to make absolutely horrible decisions to get there without any financial consideration whatsoever.”
It gets worse. The survey showed that 67% of millennials were prepared to buy a home with asbestos, 62% were happy to buy a house with mold, and 58% would not be deterred by foundation issues.
9.) Not Buying Sooner
A larger number of millennials (68%) claim that they wish they had purchased homes when prices were lower. Stephen telegraphs that this sentiment in the housing market – as is the case with so many other investments – is useless.
But because of the regret prevalent among millennials, they are willing to resort to extreme measures.
Research has shown that in their bid to buy a home they are willing to:
- Change jobs
- Relocate to a rural area for reasons of affordability
- Sublet portions of their homes to help pay their mortgages
- Default on other payments
- Ask for donations on GoFundMe
- Move to a substandard neighborhood
- Put off having children
- And deprioritize weddings
If this is what it takes to buy a property, is it worth it?
As an alternative, renting is not only cheaper in the US but comes with significantly less stress.
Avoiding Buyer’s Remorse
Given all that goes into buying a house and home ownership today, Stephen advises against buying unless you intend on living in the house for at least eight to ten years. One of the reasons is that the costs of closing deals will eat away at the equity.
Be sure to review the reasons you are buying the house. Once this is clear, ensure that these needs are being met.
Ask yourself: Is this property an investment and will it accrue value over time?
If none of these boxes are ticked, perhaps the time or place for buying the property is not right.
Source: YouTube/Stephen Graham
