63% of millennials who bought homes have regrets—usually because they missed this one crucial step
Millennial homeownership has been off to a slow start. Roughly 1 in 3 millennials under the age of 35 own a home as of the end of 2018, according to the U.S. Census Bureau. That’s 8 to 9 percentage points lower than previous generations’ homeownership rates at ages 25 to 34, according to research from the Urban Institute’s Housing Finance Policy Center.
Yet many of the younger people lucky enough to own a place still suffer from buyer’s remorse. Nearly two-thirds, or 63 percent, of millennials (ages 23 to 38) say they have regrets about purchasing their current home, according to a new poll of about 1,500 homeowners from Bankrate.
Only 35 percent of baby boomers (ages 55 to 73) say the same, while about 50 percent of Gen Xers (ages 39-54) cop to some remorse.
The top reason millennials have regrets
Underestimating the hidden costs associated with buying and owning a home, including the ongoing responsibilities of maintaining it, is the No. 1 millennial homeowner frustration.
It’s a common mistake, experts say, and it can be a costly one.
You need to know that you can truly afford to both buy and own a home, and to get the full picture, you need to do more than simply compare your current rent payment with the potential mortgage payment, Daryl Fairweather, chief economist at real estate site Redfin, tells CNBC Make It.
“Do a full check of all finances,” Fairweather says. “A lot of hidden fees come with owning a home that you might not consider immediately.” That includes the insurance, property taxes and closing costs — which can be2 to 5 percent of the home price.
Those kinds of hidden costs even tripped up real estate mogul Barbara Corcoran early on. “When I bought my first home I showed up at the table to close without the closing costs,” she told CNBC Make It. “Thank God I was able to borrow it from the very nice seller or I couldn’t have closed on the place.”