Here’s what we know: no economy exists in a vacuum.
Every generation relies on the one (or two) coming after it to support everything from the Social Security trust fund to the stock market so that they can enjoy a comfortable, well-funded retirement.
Housing is no different.
After you’ve spent 30 years paying down your mortgage, every Boomer needs to find a younger buyer willing to take that house off their hands when they’re ready to cash out. And, given the fact that so many people have the vast majority of their wealth tied up in their home equity, those buyers are a critical part of the retirement planning process.
What happens if Millennials aren’t up to the task?
It isn’t looking good: According to Bankrate, 64% of Millennials say they “regret” buying a home with high maintenance costs the number one regret among the younger set. Only 33% of Baby Boomers told Bankrate that they regret a home purchase.
- 15% of Millennials don’t like the location where they ended up.
- 14% worry that their house is too big. Really? Get this: The same percentage said they think their house is too small.
- 12% are unhappy with their mortgage cost (in a record low time for low interest rates).
The No. 1 financial regret among Americans is that they wish they had emergency savings. You know, you look around the house and it’s just a series of things waiting to break.Mark Hamrick, senior economist analyst at Bankrate
What’s really going on? You may have heard that home prices are rising across the board in every corner of the U.S. It’s simply expensive to buy a house right now, and that’s tying up a lot of cash for first-time buyers like Millennials and leaving them with less flexibility with their money. As a result, they don’t have the savings or emergency funds at the ready that they might like, and are regretting their home purchases as a result.
My take: As with everything, time will tell how sticky this trend is. Just because 2/3 of Millennials told one survey that they regret their home purchase doesn’t mean they will regret it for long or will not buy another home in the future. The housing market isn’t (usually) the place for quick returns. It often takes years for the investment in a home to pay off, and by the time that starts to happen hopefully today’s Millennials will be ready to move up to a bigger, better home as the older generations start to retire.