A 2014 Eventbrite poll found that 78 percent of millennials would choose to spend money on a desirable event over a desirable purchase and 55 percent said that they’re spending more on experiences than they ever have, CNBC reports.
Millennials “aren’t spending our money on cars, TVs and watches,” Taylor Smith, CEO and co-founder of Blueboard, tells CNBC. “We’re renting scooters and touring Vietnam, rocking out at music festivals, or hiking Machu Picchu.”
Young people also prioritize small luxuries, such as restaurant meals, daily Starbucks runs and, of course, avocado toast. Forty-seven percent of respondents ages 18 to 34 told Realty Mogul they’d prefer to rent over buy if it meant they could still afford such indulgences.
But although finances alone aren’t the only thing holding young people back from home ownership, cost remains a major factor in whether or not they choose to buy.
Home prices keep rising while wages have remained largely flat. So, recent data from Apartment List shows, although 80 percent of millennials would like to purchase real estate, very few young people are in a good position to buy.
According to the report, “68 percent of millennials said they have saved less than $1,000 for a down payment. Almost half, or 44 percent, of millennials said they have not saved anything for a down payment.”
While an indulgent vacation may set a millennial back a few thousand dollars, the cost of owning a house is vastly higher. A 20 percent down payment on a $200,000 home would cost $40,000 alone, before closing costs, maintenance and other the other expensive elements of home ownership even come into play.
Additionally, many millennials, it seems, don’t fully grasp how expensive real estate has become, especially in desirable cities. If they push saving for a house to the back-burner in favor of spending money on travel, many might be in for a rude awakening when it comes time to start working toward a down payment.
As Apartment List reports: “In Los Angeles, the market with the widest gap in expectation and reality, the actual median price of a condo is $420,400, meaning that a 20 percent down payment comes out to $84,080. Respondents in that region estimated that they will need $36,340, which is less than half of the actual amount.”
There’s no rule that young people can’t travel and purchase real estate, but those who do want to make home ownership a reality should start saving. After all, you can never put away too much.
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