Buying a house should be one of the first things you do when it comes to establishing a life of your own or with a family. At least this is what the older generations have done. The newer generations do not always understand the need of buying a house to call your own because of the already established living arrangements they have. The problem lies with the economical situation of today’s world, there are so many millennials looking for jobs and salaries just aren’t keeping up with housing prices.
Related: Young Real Estate Investors
Why the Decline?
If we look at the prices of real estate in the last 5 years in the United States, then you can understand the struggle with affordability . Sure, mortgage rates are at their lowest point for years, which makes it easier to buy a house with mortgage payments, but is that enough to convince the younger generation into buying a house? The answer is no, because it is just not worth it for them to endure these payments according to them.
The problem with the younger generation is that some of them are not even renting properties. Surveys have shown that approximately 36% of people ages 18-35 are still living with their parents or guardians. This statistic is extremely worrying if you consider that is it increasing every year. The major reason for that happening is the low wages and high rentals in some of the most populated cities in the US. That causes the younger generation to stay put for now until they figure it all out or wait for better job opportunities to come along.
Young people in the age group between 18-35 are facing enormous challenges as soon as they finish their higher education. Attending a university or college is just too expensive for most young Americans. If a student has recently graduated with a student loan that exceeds the $50,000, then how are they expected to be able to afford rent or mortgages? It is extremely difficult to manage these debts before you start your professional life.
If we compare this to Canada for example, then you start noticing a vast difference in the lifestyle and the expectations in the younger generations in both countries. Canadians who are not able to provide for their higher education expenses are allowed free education. This allows them to graduate with small amount of debts that can be covered quickly.
Obsolete or Stalling
Although there’s a decline, buying a house is not becoming obsolete, that’s for sure. If you ask most of the younger generation, they all dream of owning their own home. It is not about them not wanting the opportunity of independence or becoming investors in the housing market but the problem is that they can’t afford it, or at least most of them can’t. Temporarily, the housing market will be on hold in terms of growth and expansion when it comes to the younger investors becoming a part of it. The solution to this problem has to come from the government because they should be giving more incentives for the younger generations to purchase property comfortably. How about giving them increased mortgages cuts if they have huge student loans? That gives them hope to start thinking about buying a house.
Related: The Millennial Effect on the Real Estate Market
The housing market will definitely depend on the ability of that age group to invest either by renting properties or purchasing them to give it the ability to reach new heights. Otherwise, it will be a case of inheritance of properties and that will take time, which can negatively affect the housing market.