When it comes to Long Island NY real estate, most millennials say they'd rather rent than buy a home — a decision that could cost them more than $700,000 (or more) over the course of their lives.
Nearly six in 10 millennials (59%) say they'd rather rent a home than buy one, with just one in four saying they are either very or completely likely to purchase a home in the next five years, according to a survey of 1,300 millennials released recently by EliteDaily and Millennial Branding. (This anti-home-buying trend can already be seen: Currently, only about one in four millennials own a home, down from about one in three in the mid-70s and early 80s, according to data from the Demand Institute.) That's "bad news for the Long Island NY real estate industry," the report concludes.
Long Island NY Real Estate Cheaper to Own Than Rent
Whatever the reason, this decision may be a costly one. "In the Long Island NY real estate market it is still cheaper to buy than to rent [each month]" — even when you factor in the insurance and property tax payments, in addition to the mortgage payments, according to Daren Blomquist, vice president of RealtyTrac. And because interest rates are so low, now is a good time to buy Long Island NY real estate — at least if you plan on staying in the home over the long term. As a very rough rule of thumb, if you don't plan on staying in a home you are buying for at least five years, it may make sense to rent instead of buy.
Many millennials will likely rent now but buy a home down the road. But waiting to buy has its costs, too — interest rates and median home prices are likely to rise down the road. At current rates of appreciation, in 10 years the average $190,000 home now would be selling for about $249,000. If interest rates return to their historical norm (from over the past 15 years) of 5.6%, a monthly house payment (including mortgage, taxes and insurance) on a $249,000 home would be $1,574 a month, a 52% increase over the $1,037 house payment for a median priced home now; plus, over that 30 years, you'd pay a total of $566,640 (assuming you put 10% down) for a home worth $558,356 at the end of that period.
If that same millennial rented — let's assume he or she pays $1,312 a month in rent this year (which is the average fair market rent for a three-bedroom nationwide, according to RealtyTrac) — and his or her rent appreciates at a rate of 2.7% a year (the average increase over the past decade, RealtyTrac says), he or she will end up shelling out nearly $717,000 in rent over that 30-year period — all without an asset to show for it in the end. Of course, he or she can cut that by having roommates, but at some age, he or she is probably going to want out of the roommate game, unless it turns out to be a spouse or love interest.
The bottom line in this whole scenario is simple. If you can afford to buy Long Island NY real estate rather than rent, do it. If you can't afford it, don't. You don't want to end up in a situation where you have to foreclose on a home because you bit off more than you can chew.
Find more news articles as they relate to buying Long Island NY real estate in the Long Island NY Home Buyer Tips section under Long Island NY Real Estate Categories to your right. And find us on Facebook and follow us on Twitter for daily updates we post there as well.