The road to Meagan Walsh’s dream house wound through the room she grew up in.
Like many Millennials, Walsh graduated from college without a job and burdened by student debt. But the 25-year-old’s fortunes took a positive turn when she moved back in with her parents in Bethlehem, Pa., and found work.
“Originally, it was their idea, and I kind of rolled with it,” she says, later admitting she “didn’t have another option.”
Walsh parlayed her two-year stay with her parents into a home of her own. With no rent to pay and minimal expenses like car insurance and cell phone bills, she began saving most of the money she made, initially at her first gig at a social media startup and then at her current job as a leasing agent for a property management company.
“I was banking 75% to 80% of my paycheck,” she says, even after paying $250 each month for student loans amassed at the University of Delaware. She was able to save a 20% down payment of $28,000 to buy a four-bedroom, cape cod-style home in July 2016 for $140,000.
“It’s cute,” says Walsh, who also had enough cash to restore the hardwood floors and “splurge” on a quartz kitchen countertop.
Walsh’s personal finance success story shows that while returning home to mom and dad might not be “Plan A” for most young Americans — and can sometimes be perceived negatively and as a short-term setback — it can also be an effective way for cash-strapped Millennials to boost savings quickly. Not to mention a viable way to speed up the process of buying a house, building equity in that home and living independently.
It’s also part of a larger trend of Millennials finally starting to get active in the real estate market. After the 2008 financial crisis, many Millennials returned home to live with their parents or shared expenses with roommates. Now, Millennials 36 and younger represent the nation’s largest share of home buyers at 34%, according to the National Association of Realtors.
Saving a 20% down payment is “a major hurdle for young adults trying to buy their first home,” according to a Bank of America Merrill Lynch report. It is even more challenging for Millennials given their high student debt loads. Outstanding student debt has reached $1.3 trillion, according to the New York Federal Reserve.
More than four out of 10 (43%) Millennials who have completed college said student debt caused them to “delay buying a home,” a TD Ameritrade survey found. And 27% of Millennials between 20-26 said education loans delayed them from “moving out of (their) parents’ home.”
SOURCE: Adam Shell