Authored by Alex Deluce via NIRP Umbrella blog,
After three decades of extensive money printing, debt accumulation and devastating financial bubbles millennials are experiencing what it feels like to never leave the parents’ nest egg. With The Fed's prolonged zero interest rate policy boosting housing prices back to near 2007 levels, young people simply can’t afford to buy a home.
In fact, roughly three million potential first-time homebuyers have been shut out of the real estate market over the last decade. Across all age groups, the US homeownership rate is 63.6% which is near its lowest level in more than five decades. Adding to that, the homeownership rate for Americans under the age of thirty five is hardly half the national number, at just 34.3%. This as well is near its record low.
Leading up to the 2007 subprime mortgage crisis, homeownership rates soared in the United States. But thanks to tight lending standards and shortages of affordable housing in many areas, it simply has made it extremely hard for young people to become buyers of real estate.
Alongside tight lending, many young people face:
- Student loan debt
- Rising rents
- Underemployed
- Unable to put savings aside
- Facing little income growth
This has made it difficult for young people to put money towards a down payment.
However, there is a little bit of room for optimism as 85% of the housing markets expansion between 2014-2016 were first-time buyers and in 2016 there were two million, representing a 15% increase from the year before. Signaling that first-time buyers are coming back to the market. However, 78% of the first-time buyers are using low down payment loans versus the historical average of 73% according to Genworth.
How will things look in a tight monetary environment? Hopefully, time will tell.
via http://ift.tt/2teK9AI Tyler Durden