In an article in USA Today, called The Catch-22 Facing Young Homebuyers, Hadley Malcom explores the challenges facing millennials today in purchasing homes.
"Young buyers are caught in a quandary. Owning a home has many benefits, including tax breaks and the potential to build value, plus mortgage payments are often lower than rent for a comparable home -- especially over the long term. But in some cities, rent can be so high that it's difficult, if not impossible, to save the recommended 20% down payment."
This is a complex issue facing the current generation, one that reverberates through the economy. Fewer millennials buying homes prolongs their path towards the American Dream, wealth accumulation, and retirement, and also effects other industries such as home improvement, repair services, and more. If millennials aren't buying homes, they aren't buying furniture, investing in home improvement projects, and more.
"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 age, it's going to put them further behind from a wealth and retirement perspective." Not to mention the entire housing ecosystem, as Smoke refers to it, falls apart if the cycle of upgrading and then eventually downsizing homes ceases.
While there are many factors millennials are facing, like crushing student loan debt and high rental costs, experts point to the housing crisis and the Great Recession of recent years as the true culprits.
"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.
Most millennials have put off buying homes for now, they are left with no other options until the market and the economy change.