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Many millennial homeowners are making basic homebuying mistakes — and paying a high price for it, according to a recent report from Bank of the West.
The majority of these young homeowners — 68 percent — report buyer’s remorse and cite regrets that anyone can learn from.
About 1,000 people were surveyed for the report. Most were millennials — defined here as Americans age 21 through 34 — but participants also included folks in Generation X and baby boomers.
The millennial homebuying mistakes documented in the report generally stem from rushing into homeownership. Ryan Bailey, head of retail banking at Bank of the West, goes so far as to say:
“Millennials are so eager to become homeowners that some may be inadvertently cutting off their nose to spite their face.”
While that might sound harsh, the bank found that millennials are jeopardizing their retirement to become homeowners. According to the survey:
- 1 in 4 millennials who have yet to buy a home say they are willing to withdraw or borrow against retirement funds to come up with the money for a down payment.
- 1 in 3 used millennials who already own a home used retirement funds for the down payment.
The reasons behind millennials’ buyer’s remorse also suggest they failed to do sufficient research before buying a home. Among the 68 percent who admit to buyer’s remorse, their top regrets are that they:
- Own a home that is too costly to maintain.
- Realized after moving in that their home has damage.
- Realized after moving in that their home’s space doesn’t work well for their family.
- Should have made a bigger down payment.
Older homeowners are less likely to suffer from buyer’s remorse. The survey found that 55 percent of Generation X homeowners and 35 percent of baby boomer homeowners admit to regrets like the four above.
Still, those percentages are also high, considering that a home is by far the biggest purchase most folks make in their entire lifetime. Homebuying mistakes can haunt you for decades.
Further, it appears older homeowners are making some of the same mistakes as their younger counterparts. The survey found that the most common regret of Generation X and baby boomer homeowners is one of millennials’ biggest regrets, too: Their home is too costly to maintain.
For help doing your homework before buying your next home, check out:
- “Your Mortgage: The Rate That Changes Lives“
- “7 Dumb Mistakes That Cost Homebuyers Tons of Money“
- “Stop and Think: How Much House Can You Really Afford?“
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