Why Are Millennials Still Struggling to Buy a Home?
Written by adminJuly 11, 2018 Here we are, a decade after the worst housing disaster in American history hit the economy. The economy is booming, there are a record number of jobs available, and unemployment claims are lower than they’ve been in 70 years.
Despite this, millennials are still struggling to make due. Riddled with student loan debt and making too little to take care of their bills, more kids are living at home longer than ever before.
According to a study from Zillow, nearly one-forth (or 23%) of millennials are still living with their parents. You might think this is a holdover from the Great Recession, but this number is actually higher than at any other point in the last decade.
Aaron Terrazas, an economist at Zillow, thinks the problem has more to do with the high cost of rent than anything else.
“As rents outpaced incomes over the past decade, young people turned to their families in large numbers to ease the housing cost crunch. But even as the labor market has improved, the family safety net has yet to unwind. Living with parents may allow young adults to pursue work or a passion that may not be especially lucrative, or save enough money for first and last month’s rent or a down payment on a home of their own.”
He makes a good point. The cost of rent has skyrocketed past the increase in wages, making it unaffordable to begin with. Add in the fact that millennials have the highest level of student debt than any other generation (62% of millennials have student debt), that makes it virtually impossible to start life on the right foot.
Danielle Hale, an economist for Realtor.com, agrees.
“Existing debt and lower down payments leave younger shoppers more exposed than others to the impact of rising mortgage rates and record-high home prices,” she said.
By comparison, only 9% of Gen Xers have student debt.
If you have large amounts of student debt, the odds of finding a home and moving on with your life aren’t in your favor. If you’re in this situation and unsure about how to take care of your student debt, give Financial Helpers a call! We’d love to hear from you to discuss your options.
There are government programs and strategies designed to help get you out of student debt faster and cheaper than just paying the bill. The government knows this is a major crisis, but no one knows how long the Trump Administration will keep certain programs in place.
He’s already attempted to target the help implemented by President Obama in a bid to cut government spending, but agreed to keep them for another year to get the most recent budget passed through.
According to the survey, 35% of millennials hope to make their first purchase within the next year, but 98% of those who are looking find themselves running into one obstacle after another, forcing them to push it off longer than they thought.
The biggest problem is the rising cost. If you have a lot of student debt you’re trying to pay back, and not fully employed, the struggle is going to be having enough for a down payment and finding the right home at a price you can afford.
“For millennials, the dream of homeownership is alive and well, but with prices going up and inventory continuing to shrink, this new generation of buyers are facing more obstacles than any other demographic,” says Trulia economist Cheryl Young. “With tight budgets and fewer choices on the market, most millennials are forced to make trade-offs and are more willing than other generations to give up home and neighborhood features in order to find their ideal home.”