In recent years, owning a home has become less prioritized by younger generations. However, self-made millionaire David Bach says it is the best investment a Millennial can make.
“If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter,” said Bach.
Buying a home is “an escalator to wealth,” he tells CNBC.
In his book, The Automatic Millionaire, he wrote, “As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!”
So why aren’t Millennials investing in homes? There are many different reasons. First of all, Millennials currently face high student loans and insufficient income to pay off their debts. Also, rent is rising all over the country which makes it difficult for young people to save toward becoming a homeowner.
Another reason is a lack of knowledge. According to Equities.com, “Chief among the challenges that Americans, particularly millennial first-time buyers, face in their path to homeownership is a lack of knowledge about the minimum mortgage qualifications. A survey by Fannie Mae showed that 40% of all consumers said they didn’t know the minimum down payment required for a home, and 54% didn’t know the minimum credit score required.”
The best way to fix this problem is to start research. Investing in real estate is something that every Millennial should consider. There are many misconceptions that Millennials believe that is keeping them from buying homes. They should remember that, when buying their first home, they are not buying their dream home. They’re just getting in the market.
Another important aspect for Millennials to consider is to start saving money any way they can. Bach says, “Actually do the math. Look and see what things costs, starting with the smallest options. This way, you’re really clear on your goals and you won’t just say to yourself, ‘I’ll never afford this.'”