Morty the Mortgage Guy and the Millennial Story
Are you one of the 33% of millennials that have decided to take up permanent residence in your parent’s basement? Is waiting for your mom to finish doing her makeup so you can get into the bathroom becoming tiresome? Well…..let me tell you how and why YOU should be on your way to purchase a home (besides the above mentioned scenarios).
Everyone from your cigar smoking great uncle Alan to “that” guy that knows everything at the gym are probably overwhelming you with financial advice – "start saving early," "take advantage of your employer's 401(k) match," and, "for heaven's sake, dump those high-interest credit cards"…blah blah blah!
But for many who are looking to build a retirement nest egg, financial advisors say purchasing a home is one of the best investments millennials can make.
Nationwide, millennials have been reluctant to buy homes for various reasons, including a volatile job market, high student debt and the delaying of life events, such as marriage. The rate of homeownership for millennials dipped to a low of 36.2 percent in 2014, according to U.S. Census data, although it's also worth noting that the millennial generation represents the largest percentage of first-time homebuyers.
Here are some reasons why financial experts say young adults should be investing in the housing market:
You'll spend smarter. Rent payments go straight into the pocket of the landlord – and at the beginning of the next month, you've got nothing to show for it
Consider the resale value. Property in solid markets such as New York, Miami or San Francisco is a good investment because those areas attract professionals who want to be there for a long time.Home prices in the Big Apple doubled between 1990 and 2000 and again between 2000 and 2012. The Standard & Poor's 500 index saw a huge 315 percent increase from 1990 to 2000, but only a 14 percent rise from 2010 to 2012
Enjoy the tax breaks. Mortgage interest is deductible from your income tax, lowering your tax burden to Uncle Sam. And homeowners usually don't have to pay a capital gains tax when they sell if the property value increases by less than $250,000 and if the home has been occupied as a primary residence for more than two years
Homeownership has emotional benefits. Homeowners are more likely to be invested in the local community and develop interpersonal relationships that create a reliable support system than those who rent
Low interest rates. Borrowing to buy a place to live is seen by banks as a much safer investment than credit cards, and interest rates are still at rock bottom
Supplement your retirement income. Big benefit from having a home as a storehouse for retirement funds, and their homes will likely be paid off by retirement, allowing them to tap into home equity to fund retirement benefits