Top 5 Reasons Millennials Choose Luxury Apartments Over Home Ownership15 Aug 2015, by Life, Moving in
Is it better to rent or to own? For years, conventional wisdom taught that home ownership was the key to financial stability. To luxury-minded Millennials, however, the white picket fence and a 30-year mortgage is their parent’s dream – not theirs.
Before we get too far into this article, we want to make it clear that we are not saying that the classic American dream of home ownership is a mistake. Both renting and owning an apartment or home have their financial advantages. Still, there are many other factors at play, including flexibility, costs, lifestyle, future plans and more, which help explain the recent Census Bureau statistic that home ownership among 25-34 year olds has declined nearly 10% since 2006.
Here are a few ways in which renting an apartment has some distinct advantages over owning a home:
- Knowing your Fixed Costs: Renters are able to budget more efficiently since they are only concerned with the cost of rent and utilities, and they aren’t concerned with unexpected repairs, which are the landlord’s responsibility (more on that later). For homeowners, some variable-rate mortgages can increase substantially if mortgage rates go up, and that’s just the start. Taxes and HOA fees are alsosubject to change, and by change we generally mean upwards, often substantially.
- Less Long Term Debt. This is a biggie, especially with the high
student loan balances that Millennials are increasingly facing. Modern luxury apartment leases cost less monthly than the debt service on a home mortgage for similar square footage and trim level. And that’s not all. Your landlord has already installed the quartz counters and stainless-steel appliances for you, so there’s no costly trips to home stores running up your credit cards either. The bottom line? Apartment dwellers have less long-term debt and more in their monthly budget available to pay down that debt.
- Save on Repair and Maintenance Costs: If something needs to be fixed or maintained in your apartment it’s not your problem. Having a landlord responsible to fix or replace anything that breaks saves you time, aggravation and money. In the winter months, you won’t have to do any shoveling or pay to have your driveway plowed either.
- Save Money on Utilities: Ask any new homeowner what their biggest surprises are, and utilities will be near or at the top of the list. Homes are usually bigger, meaning you are heating and cooling a much bigger area.
Also, houses throw in a lot of factors – garages, outdoor lighting, more windows and doors, etc. that can added to higher utility bills. Finally, first-time home buyers are usually purchasing an older existing home that might not have the best insulation or modern, energy-efficient appliances. By contrast, modern luxury apartments typically are required by building codes to be well insulated and include have energy-efficient furnaces, air conditioning and appliances. Luxury apartments also typically have common areas that are heated and lit by the landlord, rather than the tenant. Because utilities are an ongoing (monthly) expense, lower costs can quickly add up to big savings – leaving you with more money in your pocket.
- Geographical Flexibility: When you rent an apartment or townhouse you sign a one-year lease agreement. It’s only a one year commitment, not a 15 or 30 year obligation to one location. Life is busy. Work, travel, relationships and activities are constantly changing, and an annual apartment lease is often a better living arrangement.