5 ways the hip-hop generation destroys home ownership dreams

The Hip-Hop generation wants "the fabulous life" but finds difficulty to creating and maintaining a plan to have it.
The hip-hop generation wants “the fabulous life” but finds difficulty in creating and maintaining a plan to have it.

I used to hear my dad say renting was completely ineffective. I never understood that. Then I started paying my own rent.

I now see what he means.

Millennials, or the hip-hop generation, are individuals between the ages 18-29, actually have an interest in owning a home, but a variety of personal and financial troubles seem to be getting in the way. The absence of young adults from the housing market continues to stifle the home owner rate, which dropped to 64.8 percent in the first quarter of the year, compared to 65.2 percent in Q1 2013, according to the U.S. Census Bureau. Here are 7 ways the hip-hop generation is lessening their chances of one day owning a home:

1) Low (or no) credit.

According to a report from Experian, millennials have the lowest credit scores. The average VantageScore (a national scoring model) credit score for millennials is 628, compared with 735 for the Greatest Generation (your grandparent’s generation), 700 for Baby Boomers and 653 for Generation X. Young adults tend to have a high utilization rate on their credit cards, an average debt of $23,332 and high incidences of late payments — these are results are YOLOing; an often misunderstood phrase and tendency. It may be a good idea to utilize creditkarma.com, which offers free credit scores and monitoring to stay on top of credit health.

2) Student loans.

Sometimes they’re inevitable, but boy are they a cause of stress. People with student loan debt also have more education, which should payoff in higher incomes in the future and make them great mortgage applicants, but starting out it’s rough. Having more student loan debt makes it harder to get a mortgage, and paying loan installments each month makes it more difficult to save for a down payment. New mortgage regulations, set into motion by the Dodd-Frank Act, require that borrowers have no more than a 43 percent debt-to-income ratio (with debt encompassing monthly housing costs and debt payments, including those on student loans). That ceiling may also restrict first-time buyers.

3) Spending instead of saving.

See: spend



4) Delaying marriage.

The median age of first marriage is about 27 for women and 29 for men, according to the U.S. Census Bureau. In 1950, it was about 21 for women and 24 for men. People tend to be marrying and having kids later in life, which means spending more years renting apartments and living in metropolitan areas. No one’s in a rush to get to the ‘burbs. Ironically, marriage can actually help clean up your money act.

5) Poor planning.

Currently, most of us are living month-to-month. When you’re living month-to-month, it can be difficult to forecast yearly planning for home ownership. The long-term financial planning is really hurting our generation — if purchasing a home within the next five to 10 years is the goal, saving must begin now. Having a savings account is the first step and consistently increasing the saving amount as income grows is the only way to building a comfortable financial nest egg.

What do you do to increase your likelihood of home ownership?

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