While most millennials are preparing to buy their first home, those in Illinois are holding off on joining in the American Dream.
Country Financial’s latest Financial Security Index shows that 67% of renters ages 18-34 in Illinois said student loan debt is the biggest reason they do not want to purchase a home, compared with 9% of renters nationwide. Two out of every five Illinoisans (41%) estimate it would take at least one to three years to save for a down payment on a home. One-third of Illinoisans (36%) say saving for a down payment would take at least six years.
Manager of Financial Security at Country Financial Joe Buhrmann said the state’s de-funding of higher education has taken a toll.
“When you look at the Illinois state tuition cost, the average state tuition has continued to rise over the years,” Buhrmann said. “We’re seeing it up 74 to 110% over the last decade. The average Illinois millennial is graduating with about $29,000 in student debt. The MAP program has continued to have funding issues, whereas surrounding states such as Indiana, Missouri, Iowa, and Kentucky has attractive programs similar to the MAP program that funds aggressively to help students manage their debt better.”
The housing market itself may also be a deterrent. Low inventory (fewer homes on the market) continues to help drive up prices, including in the Bloomington-Normal market. The average price of a re-sold home in Bloomington-Normal is now $167,556, up 7.4 percent from a year ago. Prices are also up statewide too, according to Illinois Realtors.
“This is also a generation that has survived and seen firsthand the impacts of the housing prices back in 2008 and 2009,” Buhrmann said. “It makes me wonder if it’s a nagging concern in the back of their minds.”
Millennials have been slower to purchase homes compared to previous generations. One-third of millennials said they didn't have enough money saved for a down payment.
Buhrmann suggests millennials come up with a financial plan to pay off debt and save to purchase a home.
“Have different saving strategies and set aside money for a down payment,” Buhrmann said. “I always encourage people to set up a secondary savings account. Give it two or three years and you’ll have enough to put down on the house without going into a huge amount of debt.”
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