Changes in Demographics Impacting Rental Markets
Back in 2016, the New York Times wrote an interesting article. It suggested that Millennials were more apt to be living with a parent as a roommate, than co-inhabiting with a significant other. There are a number of factors for this shift.
Great Recession Started Trend
The Great Recession had an impact on a generation moving out. Rather than getting a first apartment, some young people opted to move into Mom and Dad’s basement. And they have never left. A lack of housing inventory has also had a big impact. The tight inventory of available homes for sale, as experienced in the Boulder and Denver metro areas, is keeping young people from making the leap from renter to home owner.
Increasing Home Mortgage Interest Rates Could Increase Trend
As interest rates are forecast to climb in 2018, we may see this trend increase. There is a likelihood that potential home buyers who are on the fence, may be priced out of the market as rates increase and inventory remains tight.
Get a Roomie and Buy A Home!
There is of course, a way around all of this for the would-be first time Millennial home buyer. Bring your roommate/s with you! With the trend being that more people than ever are having roommates to reduce the cost of their monthly housing cost, don’t fight the trend. Rather, bring your roomie to your new place. After all, you know your roommate, have a working relationship to make the monthly payment and get along well enough.
True, in prior generations, part of buying your first home was making a step to independence. However, with area rents being as high as 30% (or even more) of monthly incomes, having a renter or two in your new home is a great way to become a home owner and not go bust in the process.
Don’t wait to rent your extra room, hoping to see if you can afford flying solo. As you move into your new digs, start with a roommate to cover a portion of your mortgage payment. You still get to claim all the benefits when you prep for taxes next year. And, not to sound a drumbeat of despair, but with mortgage rates on the rise, waiting only increases your costs.
Besides, the housing market has been appreciating on a steady basis, but nationally and locally. Take advantage of the opportunity to grow your equity. Even better if you can increase your position through a helpful roommate’s monthly rent.
House Hunting 101
As you go about seeking your first home, keep your potential future roommate in mind. While going solo might afford you the opportunity to let the dishes pile up, a roommate gives you the extra funds to pay down your mortgage faster. So, as you start the search, ask yourself some important questions – do you want to share a bathroom with a potential roommate? Do you need a basement space in your first house for renters? Does the condo you are considering have accessible parking for a roomie? Asking these sorts of questions of yourself as you start the process will help you acquire a property that is attractive to future roommates!
Research Boulder Rentals!
Even as you are looking for that perfect first home, keep an eye on the rental market in your new neighborhood. Research what you can likely receive in rent from your future renter. Also, with the increasing popularity of overnight rentals such as VRBO, be sure to double check the ordinances for renting a furnished space on an irregular basis. Some communities are pushing back on this type of housing; Boulder Colo being one that has implemented rules!
Having a good idea of what you can rent a room for in various neighborhoods will help you find a place that you can really afford! Of course, in a perfect world – say somewhere in the midwest where we are not seeing a major influx of both home buyers and renters… you might in such a place buy within only your own means and have a renter for extra income. In the Denver metro and Boulder housing markets, you might not be able to afford this luxury. You’ll have to decide what’s best for you – being a renter or getting off that train and becoming a home owner and landlord!