Vox, October 10,2018: Millennials prioritize owning a home over getting married or having kids
According to a new study by Bank of America released on Wednesday, 72 percent of millennials consider being able to own a home a “top priority” — more than traveling (61 percent), getting married (50 percent), or having children (40 percent). Millennials may be killing the housing market, but it’s not because they don’t want homes of their own.
Even if millennials are putting off having kids to buy a home, a host of structural factors are getting in their way. High rent prices, student loan debt, and the toll of the 2008 financial crisis are all keeping young people from buying property. Generally speaking, young people prefer to live in cities, where both rents and property values are higher. This means they have less money left over that can be used for a down payment — and 53 percent of those polled said they’re waiting to buy until they have enough money saved up.
The average student loan debt in the US is $32,731, according to the Federal Reserve — and the collective student debt carried by all Americans hovers around $1.5 trillion. These high debt levels prevent millennials from purchasing homes, even if they really want to. A 2017 study by the National Association of Realtors (NAR) and American Student Assistance found that student debt delays millennial homeownership for seven years.
Even if the economy has largely recovered from the 2008 financial crisis, young people haven’t. Materially speaking, the Great Recession widened the wealth gap between millennials and preceding generations. One Morgan Stanley analyst told Business Insider that the financial crisis left an entire generation with a “significant psychological scar.” They’re scared of losing their jobs. They’re terrified of the stock market. And this feeling of financial precarity, coupled with a less than ideal financial reality, is keeping young people from buying houses.
For recession-scarred millennials, though, the idea of buying a house with less-than-perfect credit or a small down payment may not sound like the smartest financial decision. After all, the people who took out subprime mortgages in the years leading up to the 2008 financial crisis were evicted from their homes; the banks that approved those mortgages were ultimately fine. And for those who can’t scrape together enough money for a down payment of any kind — or who are too scared of another financial crisis to take out a mortgage when they don’t have enough money saved up or have a lower credit score — putting off other major milestones is seemingly the answer.
Millennials aren’t intentionally killing homeownership, or marriage, or having kids; they just don’t feel like they can afford it.
