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SALT LAKE CITY — Not long ago, Matt and Kendal Reynolds were faced with a tough decision.
The two working students were living in an apartment in Sandy, making ends meet. But they started to question whether it was worth paying $950 a month for a space they couldn't call their own.
"We were tired of paying rent. We were just tired of knowing that you'd never get equity out of it," said Matt Reynolds, a self-described do-it-yourself buff. "I was a little frustrated when something broke in our apartment. I was more than able to fix it, but it wasn't my job. I didn't feel like putting my money into it because I wasn't going to get any equity out of it."
Then their landlord told them their rent would go up by $200 a month if they chose to renew their lease in May. The couple realized if they stayed in the apartment while finishing graduate school, they would end up paying between $25,000 and $40,000 with no chance of getting any of it back.
"That was the big thing that threw us over the edge," Reynolds said.
Fast forward two months. The Reynoldses, both under age 30, now own a home in Millcreek, and Matt Reynolds is taping air ducts in preparation to refinish a hardwood floor they found under old carpet.
"Actually having any equity I put into something later turning into profit instead of me making some other apartment a little bit better, it's nice," he said.
Whether it's for equity, space for a family or other reasons, Utah's millennials are becoming homeowners more frequently than young adults outside the state. In fact, Utah has the second-highest percentage of homeownership in the nation among 18- to 34-year-olds, according to a Utah Foundation report released Tuesday.
About 41 percent of Utah millennials own a home, a rate 11 percent ahead of the national average and just behind that of Minnesota. But Utah's rate is even higher for families. Married couples are 8 percent more likely to own a house, adding another 2 percent for every child they have, according to the report.
"A lot of it just comes out of the fact that we get married younger and we have children younger, and if you are married or if you do have kids, your likelihood of being a homeowner just increases," said Mallory Bateman, research analyst for the Utah Foundation. "Since we have younger people doing that, that's going to impact our millennial group being homeowners."
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Millennials the largest generational group in Utah — since 2000
Millennials are expected to overtake Baby Boomers this year as the largest generational group in the nation, but a new report says that millennials are already the biggest group right here in Utah — and have been since the year 2000.While the same is largely true for older generations, the report confirms an ongoing trend that's well-known in Utah.
"Traditionally, we've had a higher preference for owner-occupied housing than the nation for a lot of years," said James Wood, director of the University of Utah's Bureau of Economics and Business Research. "A lot of it goes back to demographics. I think we've been able to build out, so you have a lot of single-family development in the suburbs. That can be attractive to young families."
Rental properties are becoming increasingly popular in the state, too, especially in urban areas. Currently in Salt Lake County, there are more than 5,000 apartment units under construction, with another 2,500 units in Utah County, according to Wood.
Bateman said she hopes the report will help policymakers keep in mind that Utah families are adding demand for both traditional homes and multifamily apartments.
"You can't really paint everybody with a broad brush, and there are going to be differences within each generation that need to be recognized," she said. "We're not all going to be super urban people. All the older people are not going to want to live in small towns. So we need to kind of pay attention to those nuances."
Currently, 59 percent of young adults are still renters, with 19 percent living with parents. But the report shows significant changes for millennials the older they get. Eighty-two percent of Utahns ages 18 to 24 rent, while only 48 percent of 25- to 34-year-olds rent.
Laura Seitz/Deseret News
The report identifies several key hurdles slowing the transition for aspiring homeowners from paying rent to buying a house. Of the millennials in that group, 51 percent said inadequate income was the biggest preventing factor. Twelve percent said they didn't want to stay permanently where they lived, and 11 percent said nonstudent loan debt was an issue.
Only 4 percent said student loans were keeping them from buying a house, and those with student debt were almost 16 percent more likely to be interested in homeownership than those without, the report states.
Last week, the Utah System of Higher Education released a report highlighting what some say is an aversion among college students to taking out loans, and that Utah's average student debt load was 21 percent less than the national average. Utah's tuition rates, while having risen significantly in recent years, are still among the lowest in the country.
We were tired of paying rent. We were just tired of knowing that you'd never get equity out of it. I was a little frustrated when something broke in our apartment. I was more than able to fix it, but it wasn't my job. I didn't feel like putting my money into it because I wasn't going to get any equity out of it.
–Matt Reynolds
"That might give you a little bit more flexibility to save (money)," Bateman said.
Student costs aside, owning a home remains a priority for many students who anticipate better employment after college, according to Christopher Collard, research analyst for the Utah Foundation.
"People who actually did have student debt were more likely to want to get into a home," Collard said. "The people who will go out and get a college degree, they're making that investment in their education. … We think it might show more long-term planning."
Even when planning to buy a home, there are other costs that are easy for first-time homebuyers to overlook, according to Reynolds.
"It's not like you buy the house, you put down your down payment and then things just kind of run smoothly. There's always small things, like buying a lawn mower. That's $300," he said. "I think there's a lot of costs that people know will exist. They just didn't factor in how expensive they would be."
Survey respondents in the Utah Foundation report varied in the types of communities they prefer to live in. Millennials favored neighborhoods close to a mix of businesses and amenities, while Generation X, baby boomers and the silent generation all prefer mixed-income communities.
Regardless of where millennials hope to live, where they actually end up mostly comes down to what they can afford, according to Wood.
"We all have preferences. I'd like a better car, but I can't afford it," he said. "You've got to bring cost into the equation." Email: mjacobsen@deseretnews.com Twitter: MorganEJacobsen
