Why many millennials forgo owning their own home


Housing is a difficult subject. It takes money to acquire land, clear zoning commissions, build structures and have permanent places to live. Apart from social housing, which has not been a universal success in the experiment, all the work is left to private financing.

It means that someone expects a profit, which comes from the pocket of another.

UK-based financial services firm Legal & General has completed a multi-part study on American Millennials and Homeownership. The company, which surveyed 875 people who do not currently own their own homes, called it a “distant dream” for many.

Just over half (56%) said trying to buy where they currently live was difficult or extremely difficult. Half weren’t even trying to save for a down payment, often because they weren’t earning enough on student debt and other obligations.

This shouldn’t come as a surprise. There has been a chronic shortage in housing construction since the Great Recession of 2008: great for pushing up prices, but not good if you want people to start building equity and reducing their reliance on it. -views of others.

In September 2020, I wrote an article showing why it was hard to make ends meet even when inflation was low. One of the rocks on the backs of so many was, and is, the cost of housing. Along with health care and higher education, all three are components of inflation, each increasing significantly faster than the overall number.

The accommodation, however, is in a class of its own. Not because of the growth rate, which has been exceptionally high during this pandemic period, but for an available outlet. Or because you are increasing your net worth. If you move out and end up cashing in, you will always have to buy another place and, as experts say, especially if you are older, you may not be able to afford a place you used to be.

If you own your own home, there are many costs involved, including the monthly mortgage. But a conventional 15, 20, or 30-year loan is a regular fixed payment that doesn’t increase when the lender wants to increase their income, and that is perhaps the most important reason for owning a home. You step off an acceleration treadmill. As long as you are not a homeowner, you are subject to rents which can increase, and as is the case now, at rates well in excess of inflation. You never move forward and must continue to make raising rents a priority.

According to the Census Bureau, in the second quarter of 2021, the homeownership rate was 75.4% for those aged 55 to 64, while for those 35 to 44 it was 61.3%. Under 35, it was 37.8%. In 2002, the rate for ages 30 to 34 was 54.9%, for ages 35 to 39 it was 65.2% and for ages 40 to 44 it was 71.7%.

Millennials are already financially behind. They weren’t the first to come of age in a major recession, but it lasted a decade rather than two or three years. The conditions to let them catch up are not on the horizon. As one of the reports notes, “In real terms, wages do not keep up with daily costs and, as we will soon see, rising house prices far exceed wage increases. ”

Our company allows policies and terms that expand the class of tenants. For those who own a property, the news is excellent. As people in the industry point out, people need a place to live, so they may not have a choice to be price sensitive. It is an upward transfer of wealth, the one type of transfer that so often goes without comment because it seems to be the natural form of things.

Perhaps it is, and I wouldn’t suggest Marxist Communism as a solution, given the history of its implementation. The unscrupulous and rapturous people at the top will not act any differently because of a theoretical system. But pushing people more and more into positions where they will never get out is a decision to structure unrest and eventual economic disaster, as no dynamic economy can exist despite the dependence of more and more numbers. reduced to wealthy.

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