Lack of Home Ownership Among Millennials

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A 2013 article written by Joel Stein in Time Magazine examines Millennials and the stereotypes surrounding them. Stein begins with the usual criticisms: the generation born between 1980 and 2000 are selfish, think of themselves first, aren’t motivated and are gradually ruining the culture their parents and grandparents worked so hard for.

This sounds like the typical rant of each older generation against each younger one, except for one thing: Stein employs legitimate research statistics: he shows narcissistic personality disorder was 58 percent higher in 2009 than 1982; and he suggests that because Millennials received so many participation trophies as children, they expect to be promoted in their jobs every two years, regardless
of performance. Speaking of jobs, the average Millennial will have seven or more by the time they turn 25. Statistics show they are unmotivated: In 1992 80 percent of people under 23 wanted more workplace responsibility; in 2002, that had dropped to 60 percent. Much of the blame is placed on parents, who, in an effort to raise their children’s self-esteem, created narcissistic monsters. Another part is technology, where the socioeconomic playing field has been firmly levelled and where Millennials can and often do retreat.

But do all these statistics show an accurate picture of those born in that 20-year period? Even Stein says no. This generation is more wary, thinks before they act, and is more inclusive of those with differences. They have closer relationships with their parents than most individuals born in years before them, and the accolades continue.

Millennials as "good" or "bad" may be disputed, but one thing is certain: They have an immeasurable effect on the culture in which they live, and one of those areas is home ownership. Stories from both Marketwatch and Business Insider state that all the common indexes of home-buying for the age group indicate that home-ownership in the age range is way down from the generation before them, and, according to Marketwatch, Millennials are waiting up to seven years longer, on average, to purchase homes.

Part of the reason, according to Business Insider, is that lifestyles have changed. The number of individuals living with a partner has dropped from 80 percent in 1967 to 55 percent now. And couples are starting families later. Scientific advances have addressed some of the problems of childbirth for women in their 40s, allowing Millennials to delay putting down roots -- the current generation spends more on house rent than mortgages.

However, by far, the largest factor in the reduction of home ownership by Millennials is debt in general, and specifically debt from student loans. Studies indicate that students and former students currently owe more than 1.5 trillion dollars in student loans -- 35 percent of all non-housing debt nationally -- and paying that money back is a massive hindrance to individuals trying to save enough money for a decent down payment on a home.

Marketwatch shows that the median down-payment for a home for first-time buyers, the majority of whom are Millennials, was five percent of the home’s price – down from six percent last year. And a recent study shows that of 2,203 student-loan borrowers surveyed, 83 percent said that student-loan debt has delayed the purchase of their first home, with the percentage even higher for older Millennials and those $70,000 or more in debt for student loans.

Respondents have suggested their student-loan debt prevents them from saving and feeling financially secure; 52 percent said the student-loan debt disqualifies them from further loans because of the imbalanced income-to-debt ratio.

This trend has far-reaching implications for the economy. Home-buyers ultimately affect not only those that build, service or develop homes, but also the financial institutions that lend money to them. However, for the Millennials, who are in large numbers renting or living with family, the trend is unlikely to change unless something is done about the staggering debt owed for a college education overall.

ABOUT THE AUTHOR: Thomas M. Fesenmyer
Thomas M. Fesenmyer is an Ohio bankruptcy and debt settlement attorney at Fesenmyer Cousino Weinzimmer, where his goal for all clients is asset protection and debt elimination.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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