The younger generation of potential Gulf Shores homebuyers are finding barriers to homeownership almost overwhelming. The lack of affordable homes, student debt, and unemployment, are keeping many of these young would-be-buyers either renting, or living with parents.
This inability for young Gulf Shores homebuyers to get started as homeowners is taking some of the punch out of the housing recovery. Although "millennials," or 20- to 34-year-olds, are starting to find jobs and move out on their own, most are becoming renters, not buyers. Many are starting families, which adds expenses to the monthly budget that can't be allotted to a mortgage payment.
We're at a point now where young people are starting to move out of their parents' homes. But that's only just begun over the past year or so. When young people start moving out of their parents' homes, most will opt to rent first before they buy. The key thing about young adults is there still are a lot of barriers to homeownership.
It's not just the limited inventory on the lower end, it's saving for the down payment to qualify for the mortgage in the first place. It takes years of work to save enough for a down payment and qualify for a mortgage. And for young people who are just getting jobs now, they'll be renting for awhile before they will even qualify to buy.
Student Debt Preventing Most Young Adults From Becoming Gulf Shores Homebuyers
Student loan debt makes it harder to save for a down payment. What you might have been saving is instead going to pay back those student loans.
The new Qualified Mortgage rules take into account all of your debt (affecting) your ability to repay a loan. Student loan debt is yet another barrier to home ownership for young adults wanting to become Gulf Shores homebuyers.
The good news for the Gulf Shores housing market is that price gains are slowing down somewhat. In addition, the share of home foreclosures has gone way down as foreclosed homes have gone through the entire process and been sold off.
Potential Gulf Shores homebuyers still trying to decide if it's cheaper to buy than rent need to analyze their future situation carefully.
If you plan to stay put for seven years, itemize (your deductions) in the 25 percent (tax) bracket and get a mortgage of 4.5 percent, it's about 15 to 25 percent cheaper to buy than to rent in Gulf Shores . If you're not itemizing and you only stay put for five years, buying is more expensive than renting in most cases.
So your personal circumstances matter. How long you stay put. Whether you're itemizing. And also what mortgage you can get.
Check out some of our other articles and tips for Gulf Shores homebuyers by clicking the Gulf Shores Home Buying Tips link to your right under our Gulf Shores Real Estate Categories.