A recent study revealed that approximately 63% of millennial homeowners (individuals between the ages of 25 and 40) have regrets about purchasing the homes they now occupy. Even though rent continues to rise across the country — to rates that are not keeping up with average incomes — homeowners in this age group expressed remorse related to various categories.
Discover the primary reasons millennials are experiencing regret after purchasing their first home — and what you can do to avoid these same regrets.
Unexpectedly high maintenance costs
According to poll data, one of the biggest reasons millennial homeowners regret buying their first home is unexpectedly high maintenance costs. 21% of those surveyed said that this is the biggest reason for feeling remorse toward their purchase.
What types of repairs and maintenance is the culprit? Despite the extensive list of property repairs that can come up, several stand out in terms of costliness. Foundation, water heater, roof, termite damage, water damage, and HVAC repairs can cost thousands to tens of thousands of dollars. For those who jumped into homeownership without an adequate understanding of the risks of the repairs required, these costs can cause massive financial hardships. If they do not have proper savings (which most millennials do not), additional loans and credit card debt are almost guaranteed to follow.
Didn’t shop around for the best mortgage rate
Coming in at 12% of responses, many millennials state that their biggest regret is not shopping around for the best mortgage rate. Even a seemingly insignificant difference in rates can make a large difference in the ultimate price someone pays for their home. Higher percentages can also greatly increase a homeowner’s monthly mortgage payment.
Some of the main factors that influence mortgage rate percentages include one’s credit score, current inflation rate, loan terms (e.g., length of time), down payment, and home price.
Purchased too large of a home
14% of millennial homebuyers stated that they bought too large of a home. Compared to the general population of homebuyers, this is double the percentage (7%) of average respondents.
There are some theories when looking for the reason behind the disparity in responses between each group. Currently, the average size of American homes is 2,491 square feet. This figure has risen by almost 1,000 square feet since the 1980s (when many millennials were born). Trying to purchase what they’ve learned is the “normal” size for a home could have largely influenced this age group above and beyond any other age group. Additionally, as a younger group of individuals (some who do not have children), some have likely discovered that they do not use all of the available space in their homes.
Didn’t buy a large enough home
On the opposite side of the spectrum, 14% of millennials who were polled said that they purchased a home that wasn’t large enough. Only 9% of homebuyers across generations expressed that they had this same regret.
In the absence of solid data, this could primarily relate to lower incomes and higher student loan debt among millennials. Unable to purchase their desired home size, many millennials have likely been forced into settling for a property size that is smaller than what is adequate for their family size.
And although everyone ultimately has the choice of whether or not to buy a home, renting as an alternative isn’t a much better option. For those who can manage the initial down payment, paying a monthly mortgage is often far less expensive than paying rent. This is why, for those who can afford it, homeownership is far more appealing.
Bought in an undesirable location
As part of reducing expenses when buying a home, some millennials admit to having purchased property in an undesirable location. In total, 15% of respondents shared this regret.
Unfortunately, this can also result from having a real estate agent who does not fully disclose the issues of a specific area. This is why it is crucial to work with a trustworthy local realtor when buying your first home.
Paid too much for their home
Another consequence of not working with an experienced real estate agent is overpaying for a home. In this study, 13% of millennial respondents said that this was one of their top regrets. Overpaying for a home should never be something a homebuyer worries about – unless they’re buying a home without professional guidance.
Working with the right realtor means that you have an expert negotiator on your side. Experienced realtors also know what pricing in each neighborhood looks like over time. Never fear paying too much for a home when working with an honest professional.
Have too high of a mortgage payment
On top of having massive piles of student loan debt (unlike any other generation in history), the monthly payments of an expensive mortgage can feel crushing. 13% of millennials say that they are now faced with mortgage payments that are too high.
Compared to the data from all homebuyers, only 6% said that they have this same regret. Although there are several theories for this discrepancy, it is likely because of the many other expenses millennials face. For example, the average student loan payment for a single loan sits at $460 per month. With most millennials taking on multiple loans to fund their education, adding a mortgage payment is probably stretching them too thin financially.
How you can avoid feeling regret when buying a home
Whether or not you are part of the millennial generation, regrets can happen to any homebuyer. In addition to doing your own research, working with an experienced professional can help you avoid regretting your first home purchase.
If you’re thinking about buying a home in Destin, Florida, contact Yvonne Summerfield. Named as a top real estate agent in the United States by the Wall Street Journal, Yvonne will truthfully answer your questions and help you navigate the Destin, Florida, real estate market until you purchase the home of your dreams for a great price.
