Millennials want to buy homes, but many can’t afford to do so.
USA Today reports challenges presented by the current housing market to first-time buyers have put millennials, nationally, on a prolonged path to the American dream.
The culprits are many. High rents in some cities make it difficult, if not impossible, for some millennials to save for the recommended 20% down payment. They’re also are grappling with high levels of student loan debt.
Some experts even blame the housing crisis and the Great Recession, which forced many Americans into foreclosure.
“People who didn’t lose their homes found themselves with negative equity—owing more to their lender than a fair market price. When homeowners feel like they are drowning, they tend to stay put,” USA Today reports.
This leads to not enough affordable supply to meet the demand, the newspaper says.
“The biggest single impediment right now is affordable housing, finding homes that are affordable to millennials,” says Svenja Gudell, chief economist with homebuying site Zillow, pointing to the fact that, as of March, inventory was down nearly 6% nationally compared with this time last year.
The newspaper also notes that homeownership tends to reverberate throughout the economy in other ways. For example, homeowners performing renovations on their houses take trips to Home Depot and Lowes or buy new furniture.
“The National Association of Realtors estimates that every two home sales create one job, and that as of 2014 each home sale at the median led to more than $72,000 in economic impact, accounting for factors such as moving expenses, new furniture and the fact that income earned by housing professionals on a home sale gets recirculated back into the economy,” USA Today writes.
Instead, homeownership rates for people under 35 are on the decline.
“Long term, homeownership is a key part of household wealth creation,” says Jonathan Smoke, chief economist for Realtor.com. “If young people are not getting into homeownership at the same stage, it’s going to put them further behind from a wealth and retirement perspective.”
