Home Sweet … Rental? Why Would-be Buyers Are Scarce

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ThinkstockPhotos-459317409If you reluctantly renewed your lease again this year, you’re not alone.

A new report from Zillow finds that Americans are now renting for an average of six years before purchasing a first home. That’s up from 2.6 years in the 1970s.

So what’s changed?

Not the American dream.

Millennials still want to buy a house, says Svenja Gudell, chief economist at Zillow, but she notes that with rental rates rising, would-be buyers have a hard time saving for a down payment.

And before they can start house hunting, many Millennials also have student loans to pay and careers to get into gear—even as wage growth stagnates.

These financial challenges explain why many would-be buyers are deferring those picket-fence dreams, causing the rate of U.S. homeownership to dip to a 48-year low of 63.4%.

When the time does come to pop open the champagne, buyers are likely to be older (33) and to take on a bigger financial burden than in the past. The median price of a first home is $140,238, nearly 2.6 times the buyer’s income, up from 1.7 in the 1970s.

As homeownership becomes a higher stakes game, it can get stressful just thinking about navigating the process for the first time.

That’s where we come in with this nine-step checklist to help you prepare for purchasing your new home sweet home.