Buying a home is the quintessential American Dream. This has been proven throughout history, and holds true to this day. And with most millennials now moving up and dominating today’s workforce and economy, it’s expected that they will also take over the bulk of the US housing market in 2021.
San Francisco provides the perfect lifestyle for this forward thinking and tech-driven generation. No other place can keep up with millennials more than the City by the Bay, with its booming tech industry, renowned bars and restaurants, culturally diverse communities, and vibrant arts and music scene.
However, millennials also face bigger economic obstacles in buying a house compared to older generations. Many are saddled with student debts, stagnant wages, auto loans, and credit card debts while having to navigate higher home prices and tighter lending standards. On top of that, the general tendency to delay marriages and the high preference for properties in higher-priced urban areas like San Francisco all contribute to this generation’s struggles in the real estate market.
If you’re a millennial, buying a house or a condo in the Bay Area may seem difficult, but it’s not at all impossible. With careful planning and strategizing, you can build your savings and buy your dream home in San Francisco at the perfect time.
Growing your savings the smart way
Building up your savings has less to do with how you keep your money than how and where you spend it. With this in mind, here are a few tips to take note of:
Pay off your debts
Debts are the main obstacles in saving up for a home. You should prioritize paying off any student or credit loans before looking into a significant purchase, such as a home. If you take too long in discharging your debts, it can lead to significant setbacks in your real estate journey.
If you have lately received a substantial gain in your income, perhaps it’s the right time to crunch the numbers and see if you can comfortably afford paying off both a mortgage and your outstanding debts.
Set up a separate account for your down payment savings
One of the things to prepare for in buying a home is the down payment. While there are loans that require very low – and even zero – down payment, it’s advisable to pay as much as you can upfront to reduce your monthly mortgage dues and increase your outright equity. In addition, you also need to prepare for closing costs and other home buying expenses, such as new furniture and appliances.
Develop the habit of setting aside a fixed amount from your monthly income for your home savings. Discipline is key. It may also help to arrange for an automatic transfer from your salary account to your savings account to make sure you don’t deviate from your goals.
Consider alternative investments
Look into putting your savings in alternative investment options that yield higher returns, such as certificates of deposit (CD), which often come with higher interest rates than regular savings accounts. You may also consider putting part of your earnings in a high-yield account or a similar scheme.
Cut back on expenses
- Shopping: Sometimes you need to treat yourself, but you can do so in a cost-effective way. Signing up for loyalty programs can give you customer rewards, which can help you save money in the long run.
- Entertainment: If you already have subscriptions to streaming apps like Netflix, Hulu, or Amazon Prime Video, cancel your probably expensive cable subscription. You might also want to give up that expensive gym membership, and keep dining out to a minimum.
- Reduce waste: Always reduce, reuse, and recycle any household items. Not only is it great for your finances, it also helps the environment.
- Rent: Try to find ways to pay less for your rent, such as moving in with a roommate or with your partner.
Research and Negotiate
Building up your savings is only half the battle. Buying a house in the Bay Area is a huge investment, and without proper planning, you could end up spending more than you expected. To make the best financial decisions in your real estate journey, keep the following in mind:
- Plan your budget
Look into San Francisco homes for sale and be aware of all the expenses involved in a home purchase. You should factor them in your total savings goal. When you’re ready to make the big move, get preapproved before going home shopping. This will give you a good idea of how much home you can realistically afford.
- Look for the right mortgage options: Your choice of mortgage can have a significant impact in the long run. Have a realistic picture of your present and future earnings to find out which mortgage option is right for you. Shop for mortgages – while the difference in terms may be slight, they can add up to a significant amount over time.
- Consider your options objectively: Never rush into a closing a sale. It’s crucial to review your options with experts who have in-depth knowledge of the local housing market.
Team Hatvany specializes in finding the best Bay Area homes and condos for sale that match clients’ budgets and preferences. Start your home buying journey in this vibrant metropolis by calling the team at 415.710.6462, or sending a message at team(at)teamhatvany(dotted)com.