Tags: millennials | buying | homes | housing | invest | real estate

Bank of the West: Almost 70 Percent of Millennials Regret Buying Homes

Bank of the West: Almost 70 Percent of Millennials Regret Buying Homes

By    |   Thursday, 19 July 2018 10:05 AM EDT

Nearly 70 percent of millennial homebuyers are reportedly already regretting their purchase.

About four in 10 millennials are homeowners, according to a new survey of more than 600 millennials (age 21-34) by Bank of the West.

However, 68 percent of them now regret that move after watching parents over the last decade struggle to survive the devastating effects of a market downturn and recession.

According to the Bank of the West 2018 Millennial Study, equities-shy millennials turned to real estate as the cornerstone of their investment portfolio, with homeownership emerging as the most popular ingredient of their American Dream (56%).

Following homeownership, half cited paying off debt (51%) and having the financial means to retire comfortably (49%) as the second and third most critical components.

And yet, their desire to own a home is pushing some millennials to risk their other goals by taking on mortgages and even borrowing against their retirement savings. In fact, one in four say that they are willing to withdraw or borrow against retirement funds to finance down payments for a home.

"Millennials are so eager to become homeowners that some may be inadvertently cutting off their nose to spite their face," said Ryan Bailey, Head of the Retail Banking Group at Bank of the West. "The fact that nearly one in three millennials who already own their homes have dipped into their retirement nest eggs to finance their down payment is alarming."

Millennial homeowners may be rushing into a home buying decision without asking all the right questions. Sixty-eight percent reported buyer's remorse, wishing they had been more prepared going into the purchase.

Forty-four percent had issues with space itself, saying that once they inked the deal they felt stuck in one place, realized there was damage to the house, or discovered that the space didn't work for their family.

Further, 41 percent cited financial regrets, saying they felt stretched too thin financially, it is costly to maintain their home, or they should have put more money down from the start.

"A white picket fence can certainly be a smart investment. To help avoid buyer's remorse, millennials should consider covering their bases and kicking the proverbial tires—reflecting on their physical and financial wishes for their home before they sign on the dotted line," said Bailey.

Time has worked against millennials when it comes to home-buying. Most millennials weren't ready to close on a home when housing prices were at their lowest and interest rates hovered just above zero. And for those who may now feel ready, the new Tax Cuts and Jobs Act eliminates some of the homeownership tax breaks, removing the ability for homeowners to deduct state and local property taxes from federal tax bills.

To be sure, prospects for home ownership don't appear to bode well for any age class.

The latest S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices, shows that home prices continued their rise across the country over the last 12 months.

The 20-City Composite posted a 6.6% year-over-year gain, down from 6.7% in the previous month.

Seattle, Las Vegas, and San Francisco continue to report the highest year-over-year gains among the 20 cities. In April, Seattle led the way with a 13.1% year-over-year price increase, followed by Las Vegas with a 12.7% increase and San Francisco with a 10.9% increase. Nine of the 20 cities reported greater price increases in the year ending April 2018versus the year ending March 2018. 

"Home prices continued their climb with the S&P CoreLogic Case-Shiller National Index up 6.4% in the past 12 months," says David M. Blitzer Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. "Cities west of the Rocky Mountains continue to lead price increases with Seattle, Las Vegas and San Francisco ranking 1-2-3 based on price movements in the trailing 12 months. The favorable economy and moderate mortgage rates both support recent gains in housing. One factor pushing prices up is the continued low supply of homes for sale. The months-supply is currently 4.3 months, up from levels below 4 months earlier in the year, but still low.

"Looking back to the peak of the boom in 2006, 10 of the 20 cities tracked by the indices are higher than their peaks; the other ten are below their high points. The National Index is also above its previous all-time high, the 20-city index slightly up versus its peak, and the 10-city is a bit below. However, if one adjusts the price movements for inflation since 2006, a very different picture emerges. Only three cities – Dallas, Denver and Seattle – are ahead in real, or inflation-adjusted, terms. The National Index is 14% below its boom-time peak and Las Vegas, the city with the longest road to a new high, is 47% below its peak when inflation is factored in."

(Newsmax wire services contributed to this report).

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Nearly 70 percent of millennial homebuyers are reportedly already regretting their purchase.
millennials, buying, homes, housing, invest, real estate
Thursday, 19 July 2018 10:05 AM
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