When Owning a Home is No Longer the End All, Be All
Owning a home used to be viewed as an inevitable rite of passage into adulthood. The expectation was that you’d meet a nice guy or gal, buy a house, settle down, have a couple of kids, maybe. It was all a part of achieving the American dream, of carving out a little piece of the world for yourself and your family. These days, more and more people are opting to rent instead.
Owning A Home Isn’t Always the Best Investment
“Owning a home is an investment,” you’ve likely heard, or, “It’s better to buy a home than throw money away on rent.” However, a home may not necessarily provide the best return on investment, so if an investment is what you’re looking for, a home probably isn’t the best place to sock away your money.
Instead, many potential homebuyers are choosing to invest their money in a way that will likely yield them more money, and with even less risk, to boot.
The ‘Settling Down’ Part Isn’t as Much a Priority, Either
Aside from other investments being more lucrative, there are cultural factors at play that mean fewer people are interested in buying a home. People in the age group most likely to be purchasing a home value their freedom more than they do the attachments that come with owning a home.
They are also more likely to wait to start families or even opt-out of having children altogether. In fact, one survey says that one of the main reasons that Millennials desired to buy a home was for their pets. Not their kids; their pets.
Many home buyers today don’t consider themselves financially secure enough to take on the crushing debt that is a mortgage. This is due at least in part to stagnant wages and paltry entry-level salaries plus crippling student loan debt.
The lack of drive for owning a home in the current generation of homebuying-aged adults may also be attributed to the fact that they witnessed the mortgage bubble burst, experiencing firsthand what too much debt can do to a family. So many homes were foreclosed upon, and that is bound to have left emotional scarring on the generation before who lived through home loss but couldn’t do anything about it.
Single-Family Rentals are Likely a Better Investment
Odd as it sounds, you might have better luck financially if you invest in a rental home that someone else will live in. The single-family rental market is absolutely booming. Demand is high since fewer people choose owning a home or they’re unable to qualify due to tightened requirements for mortgage applicants since the 2008 mortgage bubble burst. This means that rent (and profit) is higher, as well.
This means that you can likely turn over a bigger profit long-term while maintaining the freedom that comes with renting by investing in a single-family rental while renting your own place to live.
If you’re thinking of owning a home as an investment, single-family rentals might be a better option than a personal home. Talk to your financial advisor about which option might be best for you and your lifestyle.