If you're both old enough to panic about your credit score and young enough to remember reading Harry Potter after school, you might be a millennial. Millennials are the adults who were born sometime between the early '80's and late '90's, who took to the Internet as the inventors of social media, and, now, put the "buyers" in the phrase "first-time homebuyers."

With record low mortgage rates and an economy coming out of a recession with a positive outlook, it would seem like an ideal time for this generation to begin snatching up those first homes and turning their rent money into a mortgage. However, Harvard University’s Joint Center for Housing Studies recently reported that homeownership rates among 25-34 year olds has decreased by eight percentage points between 2004 and 2013. 

Why are millennials into sticking with leases? Here are three factors that are keeping millennials in the "rent trap." 

1. Millennials are as confident in the economy as their parents and grandparents, but they aren't planning accordingly. 

According to recent study conducted by Bank of America, a whopping 80% of millennials believe that "they will be better off or the same as their parents." But, their saving habits don't necessarily line up with that concept. The number of millennials saving up for a house nearly matches the number of millennials saving up for a vacation.

2. Rent prices are increasing. 

53% of millennials are living paycheck-to-paycheck. That statistic alone speaks to the current number of first-time homebuyers. But, how does rent impact the savings plans of millennials? Real Estate Economy Watch writes:

"[A recent survey conducted by Freddie Mac] found that more than a third (38 percent) of renters who have lived in their home two years or more experienced a rent increase in the last two years. Seventy percent of those would like to buy a home but cannot afford to at this point. Half (51 percent) said that because of the rent increase they now have to put off their plans to purchase a home. Some 44 percent indicated they’d like to buy a home and have started looking."

Increasing rent rates prevent millennials from saving up the bare-minimum initial 3 percent that would enable them to purchase a first home. For example, a $125,000 home would require a savings of $4500. Of the 47% of millennials who don't live paycheck-to-paycheck, only 10% have more than $5,000 in savings, making the down payment on a very modest, entry-level home a challenge. 

3. Student debt, student debt, student debt. 

It's common knowledge that the more debt you have, the less likely you are to be approved for another loan. Forbes writes about a shift in the status quo of student loans and states, "Because high monthly student loan payments may cause some lenders to deny potential homeowners, some in the industry have called for a change. Currently, lenders use credit scores and income date to generate an approved or denied status."

The author describes the shift and projects, "Rather than using the simple algorithm of comparing credit score and income, some industry experts suggest creating a new approval system that takes student loan debt into account – student borrowing isn’t likely to slow down anytime soon, as the cost of higher education has continued to increase."

The rise higher education and debt are also swaying millennials to marry later, another reason why they are avoiding first-time home-ownership.

Know a millennial stuck in the renter's trap? We'd love to talk with them. Please send us an email or give us a call!