Millenials, those aged loosely from 18 – 35 years old depending on who you ask, seem to avoid being home owners when compared to previous generations. And not only are they buying houses less, but the proportion which still lives with their parents is much bigger. If you put attention to some media outlets (e.g. here) there seems to be a myth going around that millennials just don’t like owning anything. However that could not be further from the truth.
Financially speaking, millennials have hit hard times when it comes to house affordability. According to two sources, the House Affordability Index is over 200. To understand just how ridiculous that is, the other highest point HAI has been in the last century was roughly 100 years ago when it was at 120. You can see it for yourself in this graph
While this graph is for American housing prices, you can see this other graph from a different source where it shows the same trend
Basically, houses cost roughly twice as much as they used to for the previous generation. It’s interesting to see how for the previous generations a house that today costs $200’000, it used to cost only $110’000. This also means that if before you had to save up for 5 years to get a house, today you need to save for almost 10 years.
Housing is more expensive today. However that’s only part of the problem. The surge in student loans has also hit millennials:
Student loans have grown 5 times since the 90s. That means that the average student is now graduating from college with 5 times the debt than it used to.
Hopefully you now understand why millennials are not exactly prepared to shell out hundreds of thousands of dollars to buy a house. The data is quite concerning, the millennials are having a hard time. Not only is the American dream dead, but it might even be an American nightmare for some. If this wasn’t enough, income disparity in the US has also risen
Were the US to continue this trend, it will soon be higher than it’s southern neighbor’s. So not only do millennials have to pay twice for a house while having 5 times more student debt, but also the means to achieve wealth are growing scarcer.
For these reasons I believe that millennials are not home owners not because of volition but because of poverty. To end on a better note though, increasingly more jobs in the US are white-collar jobs.
Author: Andres Paez
Tech’er, writer, programmer, life enthusiast.