Apartment List’s Millennial Homeownership Report highlights the plight of millennials struggling to buy a home.
According to the latest data from the Census Bureau, millennials have finally reached a significant milestone: more than half own their homes. For a generation whose identity has been shaped by a tumultuous relationship with the housing market, homeownership has been a lofty goal, growing exceedingly expensive and competitive compared to when their parents were coming of age. But today the median millennial is a homeowner, with the latest millennial homeownership rate standing at 51.5 percent.
While millennials crossed the 50-percent threshold in 2022, generation X is on the cusp of reaching 70 percent. 77 percent of the silent generation owns their homes, but their homeownership rate is slowly declining as they age into their 80s and 90s and some members move in with younger relatives or into assisted living facilities. Baby boomers, born into the suburbs that emerged rapidly after World War II, maintain the nation’s highest homeownership rate today at 78 percent.
Millennial Homeownership Trails Previous Generations
Plans to Buy and Rent
ApartmentList notes that 74% will rent because they cannot afford a home.
Of those who want to buy, two-thirds have no dedicated down payment savings, and only 15 percent have saved over $10,000.
Priced Out Two Ways
Prices are finally dropping in every major market. However, those declines are small compared to the recent runup.
For discussion, please see Home Prices Are Falling Everywhere, But Not as Fast as They Rose
Not only are prices absurdly high, interest rates are well above 6.0 percent.
Killer Combination Trap
The combination of rising home prices and rising interest rates makes buying a home today one of the least affordable times in history.
Inventory is low and will stay low because few want to trade in a sub-3 percent mortgage for a 6.5 percent mortgage. Many who own their own home are effectively trapped in that home.
Buying a home means buying furniture, new carpet, new cabinets, landscaping, appliances etc. Housing will slow the economy for years to come.
Dilemma of Fed’s Making
The Fed and Congress share responsibility for this set of circumstances. Congress sent out three rounds of fiscal stimulus to fight the Covid pandemic.
The third and biggest round of stimulus was under Biden, and it was totally unwarranted as the economy was already recovering.
The biggest portion of the blame goes to the Fed for recklessly continuing QE despite massive signs of raging inflation.
Amazingly, the Fed wanted to make up for lack of past inflation. Not so amazingly, the Fed has never apologized or even admitted its errors.
Fed Minutes Now Predict a Recession This Year Along With Higher Unemployment
Looking ahead, the Fed is still signaling higher interest rates while admitting it is hiking smack into a recession.
Please note Fed Minutes Now Predict a Recession This Year Along With Higher Unemployment
Also note 70 Percent of Americans are Financially Stressed, 58 Percent Live Paycheck to Paycheck
Meanwhile, President Biden is doing everything humanely possible with regulations, energy mandates, and support for unions to create more inflation.
The dilemma for the Fed, and it’s a huge one, is that credit conditions are very deflationary, but the economic policies of this administration coupled with trade wars everywhere are very inflationary.
This post originated at MishTalk.Com
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The increase in remote work should ease housing constraints.Older generations had to drive until they qualified for a mortgage. Accept a long commute in exchange for an affordable home. Now we fly to a different city or region to buy the place we want.
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