Changing Face of Home Ownership – To Rent or Own?

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Changing Face of Home Ownership – To Rent or Own?

In the past, home ownership was a badge of adulthood. It was a sign that you are now considered responsible and grown-up. Recent indicators suggest that this may no longer be the case. Millennials are beginning to see certain advantages to not jumping immediately into owning a home in their 20s and 30s. The question that may be on your mind, is whether renting or owning a home is the right choice for you. Let’s look at the changing face of home ownership – to rent or own?

Recent Trends

In a recent analysis, it was found that home ownership in Australia has been falling for the past three decades. In 1986, nearly half of all 25 to 34-year-olds were homeowners. This number has now dropped to 45%, with the greatest decline in ownership occurring during the last decade. Millennials are also waiting to start their families until they are older as compared to their parents’ generation.

Renting vs. Buying

It is no secret that Australia has been experiencing a housing boom for the past 20 years. Experts report the past five years, housing prices have risen nearly 40%. This means that mortgages now take up a larger percentage of household income than in the past. Millennials must take out a larger loan than their parents to afford the same type of house. This means that even if millennials wanted to own a home, it may no longer be possible.

In addition, you may be at a time in your life where you have student loans, are just starting out in your career, or perhaps are having trouble finding a job. These additional pressures create a sense of uncertainty and can make the thought of long-term commitment scary. Owning a home means that when something breaks, you need to have the money to fix it. If you are renting, you simply call your landlord and it is their problem. Maintenance repairs can be a financial nightmare, especially when pitted against financial insecurity.

Another consideration is that rent payments are generally cheaper than mortgage payments, even though real estate agents might try to persuade you otherwise. There are many reasons to consider renting, rather than trying to own a home. In addition, renting means mobility. If you do not like your home, the neighbourhood, or your landlord, you can simply move. You can always change your mind and decide to own a home in the future, at which point you will probably be more financially secure and ready to take on the challenges.

Millennials think differently than previous generations. Some financial experts blame the inability of millennials to buy a home on their spending habits. In a world where one can spend four dollars on a cup of coffee, these daily habits add up. Baby Boomers consider millennials to be a generation that favours instant gratification over the discipline of long-term rewards. It is just that millennials have a different set of priorities and a different outlook on what is important in life. Renting means more cash that you can choose to save or spend on a few enjoyments in life, or a little of both, taking care of both short and long-term needs.

Changing Face of Home Ownership: To Rent or Own?

Where is This Heading?

Homeownership numbers are currently being propped up by Baby Boomers who purchased their homes when housing prices were more affordable and the job market was more certain. Baby Boomers are now the largest growing segment of the population, which means that home ownership numbers will continue to be inflated. However, when the lifespan of baby boomers has expired, it is questionable but double whether millennials will be willing or able to take up where the Baby Boomers left off.

It is interesting to note that a lack of home ownership does not apply to everyone in the world. In China, nearly 70% of all millennials are homeowners by age 25. Yet, China has seven of the world’s most expensive cities to live in. Australian millennials do not place the same social value on home ownership as the Chinese. Where it is almost a social obligation and status symbol. In addition, many young Chinese borrow money from their parents to finance the move, as wages are too low for many Chinese millennials. They end up owning a home that they could not afford on their own.

Should you buy a home or rent? The decision of whether to rent or buy depends on your personal financial situation, long-term family plans and other considerations that go along with homeownership. Owning can mean severely shaving the budget, and renting may be a smarter decision than homeownership. You must take a look at your situation to decide which is right for you. For many, long-term renting is the smarter choice, but if you decide to take the leap, you need to look at how it will affect your lifestyle.

Philip P.

My primary focus is a fusion of technology, small business, and marketing. I’m an editor, writer, marketing consultant and guest author at several authority websites.

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