[Business Insider, Getty]
- Nearly two-thirds of millennial homeowners in a Bankrate survey said they regretted buying a home.
- A cutthroat housing market with shrinking inventory have caused buyers to rush purchases.
- First-time buyers are more likely to buy fixer-uppers or houses online, which can have hidden costs.
Millennial homeowners are experiencing buyer’s remorse.
Nearly two-thirds (64%) of millennials in a new Bankrate survey said they regretted buying their homes. The survey polled more than 1,400 homeowners. Just over 20% cited expensive maintenance costs as the reason for their regret, while 13% said it was because they overpaid.
Those reasons may come as no surprise in today’s cutthroat housing market, marked by a historic housing shortage and lumber scarcity that have propelled housing costs to a record high. That has resulted in heated bidding wars where competing buyers are throwing down all-cash bids and offering higher down payments.
The skyrocketing prices and tight inventory are creating new affordability challenges for millennials, who have reached peak age for first-time homeownership. They led the housing market last year, but as the boom turned into an inventory crisis, homeownership fell out of reach for many in the generation yet again.
Many of those able to snag a house did so by paying above market price, and some rushed the process in hopes of grabbing something before someone else did.
Consider Stella Guan, who told Insider’s Taylor Borden in February that she regretted buying a home during the pandemic. Guan, who moved from New Jersey to Los Angeles, said she “wanted to get things done fast” and made seven or eight offers before one was finally accepted. Guan believed she landed her dream ranch-style home, saying she thought she got lucky since there was “somehow no counteroffer.”
But the home had black mold and repairs cost way more than she’d planned. She budgeted $30,000 to fix up the property but ended up paying upwards of $50,000 to overhaul the house. While Guan planned to update the home to her tastes, she said: “I spent all my money on repair and not renovation.”
Unable to lure a new buyer, she sold to an iBuyer and recouped only 50% of her money. She said the state of the housing market could push people into regrettable decisions.
Homeownership isn’t always as it seems
Guan isn’t the only one who found home improvement costly, according to findings from Bank of America’s sixth annual millennial home-improvement survey.
It found that millennials were more likely to buy a fixer-upper than a new home and that some were using loans more frequently than cash to fund home-improvement projects exceeding $10,000. When BofA last conducted the survey, in 2017, only 34% of respondents said they were using loans for home improvement. Today 42% of respondents said they were.
The data suggests that some millennials are resorting to buying old homes and renovating them as an alternative to attempting to outbid an all-cash offer but that some are now living in fixer-uppers they can’t afford.
Other first-time homebuyers are increasingly making offers on houses they’ve shopped for online and through social media. While the move is second nature for a digitally savvy generation, it has also proved an easier and less time-consuming process for those buying a house in an area they’re not residing in and a way to move swiftly when houses are flying off the market. But some may be realizing their new houses aren’t all they seemed to be behind the screen.
Thao Le, a professor of housing economics and real-estate finance at Georgia State University, told Borden, “The trajectory of the pandemic, and thus the economy, is still very much unpredictable.” She added that before committing to homeownership, “aspiring buyers should evaluate their financial situation and job security carefully.”
By Hillary Hoffower