Majority Of Millennials Have Homebuyer’s Remorse

By CHUCK GREEN

Regrets? Surely, most Millennials have had at least a few. But a majority of them who have purchased homes say they are disappointed with their choices.

And, nope, it’s not because they couldn’t find a welcome mat that looked just right. If only.

According to a survey by Real Estate Witch, Millennials regret buying in a bad location, in a bad neighborhood, in an area that has changed too much, and/or they feel like they outgrew their home too quickly.

In addition, they regret taking on a mortgage that is too expensive and borrowing money at high interest rates.

“The hidden costs of homeownership also prove to be a source of regret for homeowners. In addition to their mortgage, the average homeowner spends nearly $17,500 annually on taxes, insurance, maintenance, and repairs,” a report about the survey says.

Real Estate Witch estimated that among the 33% of Millennials who have previously bought homes, 90% have regrets about their first purchase.

Millennials are still making rash decisions to own homes, Jaime Dunaway-Seale, a content writer at Clever Real Estate, told The Mortgage Note.

That includes buying a home sight unseen, purchasing a fixer-upper that needs major repairs, and offering over asking price.

With ongoing bidding wars, “Millennials might feel rushed into decisions they later regret – compromising on location, stretching their budget, or buying a house with too many projects,” Sharon Cornelissen, director of housing at the Consumer Federation of America, said.

Tara Lauterbach of RE/MAX Heritage Properties in New Jersey, explained that in hindsight, everything is 20/20.

“If they had done it all over again, they might say, ‘I would have held out for a different location’ or maybe they would have skipped that trip to Nashville when they were under contract and then had extra cash for decorating their new family room,” Lauterbach said.

Perhaps they would have spent more because now they realized they will outgrow this home in no time.

“Everyone experiences regret in some form. It’s how they control the feelings and what they do about it that is different from other generations,” Lauterbach said.

Last year, Millennials made up around 38% of all buyers, according to the National Association of Realtors’ 2024 Home Buyers and Sellers Generational Trends report – compared to 28% the year before.

At one point, scoring a home wasn’t even on the radar among many Millennials, according to money.com. Or they couldn’t cut it financially. But the tables turned. From 2017 to 2022, with the maturation of the generation and an uptick in income, there was a spike of 7.1 Millennial homeowners.

Many of these purchasers made concessions on the characteristics of the home and finances to make their transactions work, including paying higher interest rates than they wanted to.

“Millennials already struggle to afford homes, and these high interest rates can add thousands of dollars to their mortgage payments — putting them in a financially precarious position,” Dunaway-Seale said.

Industry leaders have some advice for Millennials who are interested in purchasing a home.

Buying a home is one of the “biggest purchases we make in our lifetime and with that comes a lot of financial stress and anxiety. The path to homeownership looks different for everyone and it’s important not to rush the process,” Glenn Brunker, president of Ally Home, told The Mortgage Note.

And forget the Joneses, he emphasized. “Buying a home to keep up with others is not the right reason to buy a home. While it can help build wealth, it’s not the symbol of wealth or success.”

Brunker suggests going into the process with a budget and a list of non-negotiables to stay on track during the process.

Dunaway-Seale agrees.

“Regret’s often tied to financial stress from overspending on their purchase,” she said.

For Millennials who have already purchased a home, Cornelissen has some comforting words.

“It can be overwhelming to go from renter to first-time homeowner: you may have never had to think about gutters before — or about the cost of a kitchen renovation,” Cornelissen said.

Patience, she continued, is golden. “If you’re patient, you’ll accumulate some home equity and can always move to a home more fitted to your long-term needs in a few years.”

In addition, Cornelissen said interest rates are expected to come down over the next year, which should give homeowners the option to refinance and lower their monthly payments.

“I’d advise them to take a breath,” she said. “If you feel homebuyer’s regret, you will likely lose money if you move out too soon after buying.”

According to cnbc.com, the five states with the highest Millennial homeownership rates are Iowa, Minnesota, Maine, West Virginia, and Michigan.