63% of Millennials Regret Buying a Home

What's up, you guys? It's Graham here. So, we got to talk about this one. A new survey was just released that found that 63% of millennial homeowners regret buying their home. Now, typically when I read articles like this, they tend to exaggerate the truth immensely. There's just no way that's true; that's an insanely high number. We're talking about almost 2 out of every 3 people. So, let's look into this and figure out exactly what's going on.

So, first of all, let's start off in the very beginning with a much broader statistic. Bank Rate found that 44% of homeowners regret their home purchase. I am still shook, like that number is staggering. How does someone spend so much time and money on something that they're soon going to regret? Generally, real estate is never any sort of impulse purchase; it's not like getting drunk one night and going on Amazon and then ordering a bunch of stuff you don't need. In order to buy a home, it requires, at minimum, weeks of foresight and planning. Looking at homes you want to purchase, writing offers, negotiating the deals, speaking with lenders, going over disclosures, and finalizing the sale. In every single step of the way, you're given disclosures and given the opportunity to back out of the deal throughout the entire process multiple times.

So, I say this as a millennial who's pretty much spent their entire adult life in real estate buying property. Let's go over this information and figure out exactly where these people went wrong, and then use this information to make sure this never happens to you. So, let's get into some of the numbers here. Of the 63% of millennials who regret buying a home, these were their reasons: 18% said the maintenance and repairs were more costly than they anticipated. 12% said they bought too small of a house. 8% said they bought in a bad location. 7% didn't think it was a good investment. 7% also said the mortgage was too high. 6% didn't get the best interest rate. 5% bought too big of a house. And even more staggering, 100 percent of people regret not smashing that like button if you haven't already.

Now, I might get some hate for saying this, but as I'm reading through all of this, I can't help but think to myself that nearly all of this could be prevented ahead of time with just a little bit of forethought. From the way I see it, all of these mistakes stem from their own choices, decisions, and lack of planning, rather than a fault of actually owning the home. So, let's take the time to go through these one by one.

First one: maintenance and repairs were more costly than anticipated. Now, this is an oversight that I sympathize the most with, and I understand it. Like, when you're renting, unless you actually go and break something, chances are your landlord is going to fix it. Like, if there's a leak in the roof when it rains, your landlord is going to fix it. If the water heater stops working, your landlord is going to fix it. And especially when you're accustomed to this, it's easy just to see a mortgage payment and think to yourself, "This is going to be my own payment; nothing is going to break." But guess what? Something will always break, and things love to break as soon as you buy them.

Now, this can largely be prevented by having a home inspection done on the property before purchasing it, and that will tell you exactly which equipment is nearing the end of its lifespan and what is most likely to end up breaking. Now, this won't uncover and prevent everything, and sometimes things just break that are completely outside of our control. But a good home inspection and home warranty plan should be able to prevent or cover probably about 90% of things that would happen in the first 1, 2, or 3 years of homeownership. It's also about having the foresight and planning to think to yourself that everything has a lifespan. Fifteen years from now, you're going to have to replace the roof, and that is going to be ten thousand dollars. You're going to have to replace the stove and the refrigerator probably after 15 years. Or if my avocado toast clogs the garbage disposal and it breaks, I got to understand that's a $200 repair that's on me. Understanding all of this means that you could better factor this into the cost of homeownership to really make sure that this is the right decision for you to make. Or you may just want to hold off from purchasing a home until you have more money saved up for any unexpected repairs that might end up happening.

Alright, so next one: twelve percent of people bought too small of a house. And again, this is something I could somewhat understand. Let's say you buy a house and you're a single guy; you meet a girl and you guys get married. Then you have kids, and all of a sudden, the house is too small. However, homeownership is not meant to be something that you buy, live in for a year or two, and then sell and move on. I generally encourage anyone who's buying a home to do so with the expectation of living there for at least five to seven years or at least keeping it for that length of time. This means that if you're planning for a family soon and you know you're going to need a larger house, chances are you shouldn't be buying a house right now just to sell it a year later. You're probably better off just renting. Anytime you remotely think you're gonna be outgrowing a home in the near future, it's just not worth buying unless you know you can rent it out for a profit.

It's so important to understand why you're buying a home in the first place and what problems that's going to solve for you. Like, is it going to save you money? Are you putting down roots? Or is that home just a good investment? If it doesn't fall in one of those categories, chances are you should just look elsewhere. And again, like I said, this is something that is largely preventable.

Now, next: eight percent regret buying their home because they bought in a bad location. This is something I have to roll my eyes at because this is mind-boggling. Let me say this again: bad location. I have to apologize on behalf of all millennials out there. I even got my avocado toast shirt on to show support for that. Link in the description. But this is—I'm sorry, I'm sorry, guys. Unless you're buying a home by throwing a dart on a map while blindfolded, this is entirely preventable with just a mild amount of research. Like, spend just a weekend driving around the area. Go and check out the neighborhood at different times of the day just to see what it's like. Check some of the crime reports and statistics to see if this is a neighborhood you want to live in, or go and talk to people who are walking down the street and ask their thoughts about what it's like to live in the area.

Now, what I think is realistically happening here is that millennials are so thirsty to own a home, but they can't afford one. So what they do is they go online and they find the cheapest home that they can possibly get just to say that they now own a home. And because of this, it's easy to get caught up in the excitement of buying a home without really realizing that buying a cheaper home usually just means you're buying in a less desirable neighborhood. Now, of course, just a guess here, but this huge oversight is entirely preventable with just a little bit of planning. Like, to me, this is almost like buying the wrong shirt size without realizing what shirt size you are and then blaming it on the shirt that it doesn't fit.

And you don't want to even look at this! I found a separate study just now that found that only 30 percent of millennials even visited their desired neighborhood to look at homes listed for sale. Come on! That is stupid. We got to call that for what it is: stupid. But you know what? Let's have some fun with this. I will play devil's advocate because I do like to remain as neutral as I can on a lot of these topics. It is possible for an area to deteriorate in value. You could very well have purchased a property five years ago, and then people slowly move out of the area. It becomes a little bit more dangerous. Maybe a wave of foreclosures wipes through. All of this is very well possible.

But this is just a risk of homeownership; even with the perfect planning, there is still the small possibility that the neighborhood just becomes less desirable over time. But on the flip side, the area could very well become even more desirable after you buy it. Like, to me, it's almost like buying a stock and then just regretting it as soon as it goes down in value. It's just a fundamental risk. Anytime you buy something, that needs to be factored into your decision.

And with that, we'll flow nicely into the next one. That 7% didn't think it was a good investment. The big flaw here is by thinking that homeownership is automatically an investment just by buying something, which it isn't. Now, owning a home can absolutely be a very phenomenal investment, but very rarely does this ever happen by chance. In order for a home to be a good investment, you really have to treat it like you're running a business. The value has to be there, the numbers need to make sense, and there needs to be some upside when you buy it. If you don't see that there's profit to be made, then you really shouldn't be buying the home. I attribute this mistake to a lack of education and misinformation that owning a home is the ultimate American dream, and they falsely assume that this is the best way to build wealth. And by the looks of it, nearly one out of ten people are not doing the proper research ahead of time to determine whether or not this property is actually going to be a good investment. But again, barring any sort of extreme circumstances, this mistake is entirely preventable ahead of time.

And speaking about preventable issues: 7% of people regret their home purchase because their mortgage payment is too high. Now, I don't mean to be harsh on any of the people surveyed here, but your mortgage payment is not a surprise. The amount of mortgage disclosures that you're given to sign prior to buying a home is staggering! Like, I was given at least 60 pages of paperwork to sign explaining exactly what my mortgage would be, with 30 years of amortization spelled out month by month, along with every other disclosure that you could possibly think of to sign ahead of time. When it comes to signing a mortgage, everything is carefully disclosed ahead of time, and there is nothing left to the imagination.

And even with all of that, there's still a three-day waiting period after you sign your mortgage documents that gives you three days to review it even further before you decide to move forward with it or reject it. Even in the event that you take out an adjustable rate mortgage, which means that your mortgage is locked in for a few years, and then after that it readjusts to whatever the current market rate is, you know that going into it, and you know exactly what you're signing. And you have years to plan for this ahead of time.

Now, realistically, I think that most people just end up buying a home without fully comprehending exactly how much that's going to eat away from their income. Or maybe homeownership is fun for the first year, but as the novelty wears off, they feel more and more that they're overspending on a home that isn't giving them the same enjoyment as it once did. Now, my advice is: anytime you're buying a house, never max out what you can buy. This way, in the event of any sort of job loss or reduction in pay, you're not left supporting a mortgage that was only affordable on the top range of your income. My recommendation anytime you're doing this is to always buy a home that you could afford as though you're paying it off in fifteen years, but you take a 30-year mortgage on it to give you more flexibility with your payments.

Now, speaking of all of that, another six percent said that they regret buying a home because they didn't get the best interest rate. So, first of all, anytime you're buying a home, you're always encouraged to shop that loan around different lenders to really try to get the best rate. I've gotten huge reductions in my interest rate by getting pre-qualified with three lenders and then using those three quotes to shop around and each have them bid each other down further and further and further until I'm left with the best rate possible. This is something that generally takes one to four days; it's usually pretty simple, and most of it is done over email. This way, you're never left guessing, "Did I get the lowest interest rate I possibly could have at the time?" Then, in the event that rates do go down after you buy the home, which happens, you're not stuck because you could do a refinance. Yes, usually you'll end up paying a few thousand dollars when doing this, but when you add up this savings of doing this and getting a lower interest rate, spending a few thousand dollars could easily save you thirty, forty, or fifty thousand dollars over the lifetime of the loan. Usually, this pays for itself after just the first few years.

And then finally, we had the last one: five percent bought too big of a house. And again, this one sounds like a fault of poor planning more than an actual fault of the home itself. And there isn't really much I can add to this one besides plan ahead of time, so I'm just not gonna say anything with this one.

So, when you put all of this in perspective, here is exactly what I see: about 85% of these regrets could have been avoided with one day of budgeting, planning, and investigating the actual property. These regrets that people mention have more to do with their lack of planning than it does with the fault of actually owning a home. Buying a home should really be done with the expectation of being a long-term plan. This isn't any sort of shortcut to wealth; this isn't any sort of short-term plan to automatically being a good investment. There are dozens of factors to take into consideration anytime you're buying something, and especially with such a large purchase like this, it should not be bought without a lot of careful consideration, foresight, thought, and investigation to make sure that this is really the best move for you to make.

So, with that said, you guys, thank you so much for watching. I really appreciate it! If you guys want to scoop up some avocado toast Society merch, link to that in the description. Also, if you haven't already, gently tap that like button. Make sure you tap the like button, tap the subscribe button, and tap the notification bell, because for some reason, YouTube hasn't been sending out notifications lately. So, just tap the bell so it encourages them to do so. Also, feel free to add me on Instagram; I post pretty much daily, so if you want to be a part of it there, feel free to add me on there. Thank you again for watching, and until next time!