According to American Express Spending & Saving Tracker, which explores statistics highlighting housing plans for consumers in 2016, approximately 42 million (17%) of Americans plan to move in 2016. For those relocating, 53% say they will rent rather than buy—the largest percentage of consumers since American Express began polling in 2012. Conversely, only 40% of Americans plan to purchase a home in 2016, a significant decrease from last year (46%).
Fewer millennials, those in the 18-34 age range have been slow to enter the home buying market and are opting to rent, or live at home with their parents. Student loan debts and tight credit give millennials a different outlook on home ownership and long-term investment than previous generations.
According to a CoreLogic survey, those with money for a down payment, are looking for places with lower than average home prices in the middle of the country where there are ample job opportunities that pay a relatively good wage.
According to NAR the share of millennials buying a home in an urban area declined to 17% in 2015 from 21% a year before. And fewer — 10%, compared with 15% a year earlier — purchased a multifamily home.
For those who opt to rent, renting provides stability, yet a rental is not an investment. When you rent, you’re basically paying off someone else’s mortgage.
When you purchase a home the pros are: home ownership, tax breaks, building equity, and stable housing payments. The cons of owning a home are: monthly maintenance and other expenses, as well as the possibility of potential depreciating value.
The American Express Spending & Saving Tracker survey found:
More Millennials Moving, Not Buying…Yet
- Fifty-five percent of Millennials (55%) plan to rent; whereas only 41% plan to buy – similar to 2015 (54% vs. 41%, respectively).
- Significantly more Millennials anticipate the market will be prime for purchasing in one to two years (32% vs. 25% in 2015).
- 31% of Millennials are moving this year (vs. 21% in 2015); comparatively, only 15% of Gen Xers plan to move (vs. 13% in 2015)
- Perhaps related to their newly emptied nests, the number of Baby Boomers on the housing hunt doubled this year (10% vs. 5%).
If You Can’t Move, Just Improve
- Whether moving or not, 76% of homeowners are planning home improvements in 2016
- These homeowners anticipate spending an average of $5,100 (vs. $4,100 in 2015), a 24.4% increase over last year.
- Among affluent homeowners, 84% are renovating and spending significantly more than in 2015 ($9,100 vs. $6,900)—a trend that retailers and contractors could benefit from.
- Although the majority of consumers might not have $10,000 to spend remodeling or decorating their homes, they can still dream. If given that amount of money, more than half (56%) would re-do a room in their house.
- Other hypothetical home projects include everything from re-doing floors to building a deck or a patio.
Tax Re-Funding Your Home Improvement Projects
- Although the majority of Americans (60%) plan to use cash, check or savings for their home renovations, 25% are banking on their anticipated tax returns for home improvements, up from 21% last year.
- Sixty-five percent (65%) of Americans are expecting to receive a refund, on par with last year (66%). In 2015, 67% of Americans actually received a refund, up significantly from the previous year’s 62%.
- Of those refunds, roughly a quarter (26%) was spent on things like home improvements or other big-ticket costs (similar to last year’s 22%). The bigger allocation was reserved for bills and paying down debt (33% YOY).
If you can afford to buy a home it’s worth it to buy. Some buyers will need help of a co-purchaser or guarantor, which can be a more affordable way to go.
If renting is in your budget for now, you have the stability of no mortgage and other additional expenses, but saving for that day can be the impetus for building equity for your future.
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Ross Ellis is also the Examiner for:
National Parenting Examiner
NY Real Estate