This is a tale of different millennials in 2 countries – the United States and Australia. Both groups are fuelled by the “Great American/Australian Dream” of buying a home.
Both groups are miserable but one group has a stronger potential to accomplish its goal than the other.
A report published by Bankrate showed that 63% of millennials in the United States have buyer’s remorse or regret their decision of buying a home. One of the biggest contributing factors to buyer’s remorse was having to deal with high mortgage rates.
The American millennials already have their plate full dealing with the burgeoning student loan debt crisis which has blown up to $1.5 Trillion and has affected the ability of the millennials to manage a comfortable lifestyle.
Still, despite the financial difficulties, 79% of the American millennials intend to pursue their dreams of owning a home. They regard it as more important than saving up for retirement, buying a car and sustaining a successful career or business.
The pressure to own a home has pushed more Americans to apply for home loans. According to a report by the Mortgage Bankers Association, home loan applications have been rising at a rate of 2.9% every week.
Unfortunately, home loan rates are also rising. In 2018, the home loan rate topped 5% – 5.05% for a 30-year term.
Freddie Mac, one of the United States’ biggest lending corporations, believes the combination of factors – rising home loan rates and applications – have made home ownership unsustainable.
Across the Pacific Ocean to Australia, millennials are also grappling with the realization that the Great Australian Dream may end up becoming the impossible dream.
According to a study released by the Australian Institute of Health and Welfare (AIHW), home ownership in Australia is down from 71.4% to 67.5%. However, this was increased in the number of private rentals from 18.4% to 25.3%.
The disparity in data appears to suggest aversion to home ownership is a matter of choice among the Australian millennials.
The Australian millennials prefer to rent homes or apartments that are located closer to their place of work instead of buying a home and having to deal with mortgage payments and maintenance costs.
This theory is supported by a survey conducted by a WestPac Life which showed that millennials would rather save up that get a loan to finance their dream home. The WestPac study revealed that the Australian millennials would rather save 10 times more money for a home than for a vacation.
So while the millennials in Australia seem further away from realizing their dream of home ownership compared to their counterparts in America, they are also further away from being trapped in a debt nightmare.
It is justified to say that the greatest dream for anyone – regardless of where he or she lives – is to own a home. However, you must acknowledge that your greatest dream also carries the heaviest burden.
Taking on a home loan will only make that burden heavier. Instead of going for quick-fix solutions, take the hard road. Save your money. Park your excess cash in conservative investments that offer higher rates than a savings account and returns higher than the inflation rate.
While you should work for your money, make your money work for you through smart investing.
In time, the dream of owning a home will become a reality.