Talk about millennials in the housing market shouldn’t be reduced to the claim that they’re “young people” with no buying power, or that they only rent and see no value in purchasing a home. Data from Realtor.com shows that millennials between age 19 and 37 are purchasing more mortgages than Gen Xers and Baby Boomers. Millennials will not be “killing the housing market” as many news outlets have reported, still, home ownership among African Americans under 30 rests at 17 percent, according to the Stanford Center for Longevity.
There is no way to disconnect this from generational disparities, as studies show that home values for Black families are on average 81 times less than the median white family according to The Atlantic. Even more troubling, “the homeownership rate for married black household was down 5 percent compared with 3 percent for male and female headed single Black households,” the Urban Institute reported.
There is still work to be done to lessen the wealth gap between Black millennials and white millennials, but as historian Richard Rothstein said in an interview with the Washington Post, “we need equally explicit government policies to remedy the imbalance.” But it is not impossible for Black millennial homebuyers to enter the market. In fact, it may even be encouraged thanks to low interest rates and the shifting of the market in favor of buyers. Though renting has its benefits, and though purchasing a home is a long-term financial commitment, the benefits of homeownership are also a long-term boon. For families with a stable income, buying a home is a necessary move to consolidate your assets.
Buying a home is part of the “American Dream,” and not without cause: homeownership is a fantastic starting point for developing generational wealth. Homes will usually increase in value, allowing families to grow a financial nest egg for their children. Doubly so, since the rate of a child becoming a homeowner increases by 8.4 percent if their parents were homeowners, according to the Urban Institute. The economic and social benefits of home buying include the ability to defend against unanticipated changes in rent, more choice in surroundings, and no limits on your tenure. “Homeownership also provides a ready mechanism for families to borrow money and get credit,” the Center for Urban and Regional Studies at the University of North Carolina at Chapel Hill stated in recent findings.
“Homeownership is the key to wealth creation,” realtor Ericka S. Black said, “I encourage people to purchase if they can afford to do so.” Not only is homeownership the key to wealth creation, it also allows for social engagement, and thus, benefits. For prospective families, having stable housing is pivotal to allowing children to succeed. Civic engagement increases when families have stable housing, more so when they own their home.
“Many of my first-time homebuyer clients have been Black millennials,” Black told the Informer, “overwhelmingly, Black millennials are purchasing starter properties. They tend to lean towards condos and townhouses within their price range.” First-time buyers benefit from buying starter homes because it allows them to build up equity, thereby making a purchase of their “dream home” more likely later. Or, another option is to renovate or remodel a home to create your “dream home.” Often, remodeling a house will not only increase space or spruce up the area, but also increase a homeowner’s return on investment for the home itself.
Financial freedom, developing a good credit, maintaining a well-valued home, and the ability to participate in your community make buying a home a powerful option. Many millennials are beginning to realize this as they are settling down and starting families. The American Dream, no matter how contrived or unattainable it may seem, has permeated throughout the entire culture, the support of homebuying a consequence of it. But this permeation isn’t without cause: to buy a home is to have power over your own life. For Black millennials, escaping the uncertainty of renting, becoming free to choose where and how long you wish to stay somewhere, is not only a step to financial freedom, but to freedom itself.
“I became a first-time homeowner at the age of 24,” Black told the Informer. Her words of advice: “It’s worth it.”