Nearly six in 10 millennials say they would rather rent than buy a house, a decision that may cost them over $700,000 in the long term.
According to a survey by EliteDaily and Millennial Branding, the results of which were released recently, 59% chose renting over owning a house.
Only one in four said they were either very likely or completely likely to buy a house in the next five years, according to the poll which had 1,300 millennial respondents.
This trend can be seen in data from the Demand Institute, which shows that currently only about one in four millennials owns a home, from about one in three in the mid-1970s and early 1980s.
One reason is that more than six in 10 feel that they simply cannot afford it. Another is that millennials tend to marry and have children later, as these two factors often cause purchases of houses, explained Dan Schawbel, the founder of Millennial Branding.
Millennials are also a generation that do not like feeling stuck in a single place.
The decision to rent may be a costly one, considering that now is a good time to buy a house, but mostly if one plans on staying for five years or more.
A median home in the U.S. costs $190,000. With annual home price appreciation at around three percent, a millennial who buys an average home today and pays $19,000 down with a 30-year fixed mortgage rate at 4 percent would own a house with $426,000-value in 2045. This is higher than the $373,000 in payment, including mortgage, taxes, and insurance.
However, if the millennial chooses instead to pay this year a monthly rent of $1,312, the average fair market rent for a three-bedroom space nationwide, and his rent appreciates at 2.7 percent a year, he will end up paying almost $717,000 in rent over three decades, without owning an asset.
But Blomquist also warned: "If you can't afford it, don't buy."