Millennials and the Property Ladder: Reality Versus Expectations
The notion that millennials have been kicked off the property ladder is a myth, according to many experts. However, many in this generation believe it is the truth. Here, we unravel this misconception and offer insights into the realities of the current market.
Current Challenges in the Housing Market
Anyone earning an annual income of $35,000 or less is particularly squeezed out of the housing market. A relative in South East Florida, who was paying $1,800 per month in rent, saw their rent increase to $3,000 a month by the end of October, leaving them with the challenge of finding a new place to rent. Yet, like many others, they are struggling to find suitable alternatives.
Reality Check: The Millennial Mindset
The misconception arises due to the belief that millennials enter the job market or complete their education and immediately secure high-paying jobs, leading to the ability to buy a big home immediately. However, this is not the reality for the majority of them. Most start their journey in smaller, more affordable accommodations, often in low-rent areas. They establish their lives and careers step-by-step, gradually improving their living conditions over time.
Future Housing Indications and Advice
The future of the housing industry remains somewhat uncertain. Factors such as the economic impact of ongoing pandemics and innovative technologies could significantly influence the market. For example, printed houses, which can reduce construction costs and speed up the building process, could become more commonplace. Additionally, the expectations of the millennials themselves play a crucial role. Many are caught in the trap of trying to emulate the large homes their parents or grandparents owned, which can lead to financial strain and less flexibility.
One practical piece of advice is to design a small, expandable floor plan with one or two bedrooms initially. As personal needs grow, additional space can be added. A house with three exterior entrances would be ideal, as one can be used for expansion, leaving two usable outer doorways. Consider including a reasonable-sized kitchen, bathroom, laundry area, and a space for cooling, heating, and water heater. Bed sizes should adhere to local planning department guidelines, usually requiring 120 sq. feet for the main bedroom and 70 sq. feet for secondary bedrooms.
If you are uncertain about your job prospects or don't plan to start a family soon, exploring the tiny house movement might be a viable option. Tiny houses can be pricey, but with proper research and construction, they offer a cost-effective and flexible living solution. Alternatively, co-operative housing models, like Habitat for Humanity, can provide a realistic approach. Future homeowners can band together and invest sweat equity, learning valuable maintenance skills in the process.
To summarize, the challenge faced by millennials in the housing market is partly due to unrealistic expectations and the current economic climate. However, careful planning and strategic thinking can help navigate the complexities of today's housing market.