Close to 40 percent of consumers in the Millennial demographic, or those aged 18 to 34, would postpone or cancel a wedding or honeymoon just so that they would have enough money to buy a home.
This was revealed in a recent survey by Redfin, as the real estate brokerage firm said in its report that 38 percent of young American consumers do not mind putting off marriage or a honeymoon in an effort to have enough in their funds for a home purchase. That does not necessarily mean that these unmarried Millennials will totally forego marriage even if they buy a home together, but it does appear as if making down payments is now more important than saying “I do” to one another. This was backed up by Los Angeles-based Redfin agent Lindsay Milkovich, who had recently assisted two unmarried Millennial couples in buying a home. She observed that it “just seemed more practical” for her customers to focus on buying a home “instead of (holding) a big party.”
Another Redfin agent, Chicago-based Clayton Jirak, seconded Milkovich’s observations, saying that he too has a lot of young customers who do not want to get married yet, if only to be able to afford their homes.
According to Jirak, such a strategy “is becoming a popular option for couples who are prioritizing homeownership over marriage.” Redfin also cited statistics from TheKnot.com, which show that it cost an average of $29,858 in 2014 for couples to get married in the United States – this average cost does not include the average expenses spent by couples on honeymoon.
Aside from saving up for housing expenses, there are other things that may concern Millennials, things that may be more complicated than the possibility of divorce. For one, de-coupling after being part homeowner with somebody else could be a very messy process. “Breaking up is hard to do, but splitting financial assets makes it even harder, especially considering the fees and closing costs that are associated with buying and selling a home, which, if done too soon, can wipe out all the equity accumulated,” advised Nela Richardson, Redfin chief economist “A house for most people is a long-term asset, which it should be if you are looking for a return on your investment.”
Redfin also took the opportunity to advise Millennials on how mortgage payments work throughout the life of loan. In the first few years, said Redfin, monthly payments mostly go toward the loan’s interest, as opposed to its principal – in other words, consumers are not paying down their mortgage debt as much as they are paying off interest. Payments that go against the principal, however, combine with home price appreciation to help consumers build equity.
Using a simple example, Redfin pointed out that given a $300,000 mortgage, only one third or so would go toward principal in the loan’s first two to three years, with more of the monthly payment going directly to principal over the remaining life of loan.
The Redfin survey was conducted by third-party firm Harris Poll, and ran from December 8 through 10, 2014, with 2,021 adults aged 18 or older taking the survey.