With sea levels and student debt on the rise and fears of another recession around the corner, millennials in Miami aren’t exactly optimists when it comes to the possibility of owning a home anytime soon. But just how low are their expectations?
A new survey by Apartment List offers insight into the glum outlook of millennial renters in major metropolitan areas across the nation. For a place such as Miami, where rent prices make it almost impossible to put money away, the news is mostly bad.
A solid 8 percent of millennial renters in the Miami area expect to be stuck renting for the rest of their lives. And of those renters who expect to own a home someday, more than 40 percent haven’t even begun saving toward a down payment. According to the survey, affordability remains the greatest obstacle to homeownership, followed by crippling student debt and poor credit.
Only 13 percent of millennial renters in Miami say they could afford to make a traditional 20 percent down payment on a starter home in the next five years. Only 30 percent of renters in the area believe they could put down even 10 percent.
The survey defines a millennial as anyone between the ages of 23 and 38. For most people in that age range, their defining experience with the housing market was its crash and the ensuing instability. Despite that, the survey found that most millennials in the United States still want to own a home someday. Nearly 30 percent of millennials who say they plan to rent forever are doing so because they think buying a home is risky.
When assessing obstacles to homeownership, student debt — that other essential, defining millennial experience — cannot be overstated. College graduates under the age of 35 are about 50 percent likelier to have student debt than their predecessors in Generation X, and the amount millennials owe is roughly 40 percent higher.
The sheer size of the nation’s $1.6 trillion student-debt problem, which is spread among generations, has attracted the attention of various presidential candidates. Sens. Bernie Sanders and Elizabeth Warren have led the political movement to forgive student loan debt.
The Apartment List survey simulated Sanders’ plan to erase all student debt in order to gauge the effect it would have on millennial renters’ access to homeownership. Unsurprisingly, it would be a major boon. Assuming debt payments were instead put toward savings, the survey’s authors estimate the number of millennial renters in Miami able to cover a 10 percent down payment on a home would jump from 30 percent to 43 percent. Nationwide, the rise would be from 25 percent to 38 percent.
Although affordability is the largest obstacle for most millennials interested in buying their own place, it’s not the case for all millennials. The survey found that the largest challenges to homeownership varied by race. Black and Hispanic millennials reported being more worried about poor credit scores preventing them from buying a home, while white and Asian millennials said a down payment was their biggest concern.