Another sign of the broken asset economy: young adults priced out of the housing market
by David Atkins
The modern economy has many unsustainable trends: rising energy costs, declining wages, rising unemployment, rampant financialization, absurd student loan debts, growing inequality and many others. The housing market is also unsustainable and broken.
Some older homeowners bought in prior to the housing boom and are now “wealthy” because of the highly inflated values of the property they bought cheap; some are underwater in homes they purchased at or near the height of the market. Inventory is low, and what does come on the market–often through the misery of foreclosure–is quickly snapped up in cash by the fortunate few who are wealthy or happened to buy in early. Younger buyers, meanwhile, are increasingly priced out of the market.
Young, first-time buyers are struggling to purchase a home. With low inventories of homes for sale, young first-timers are finding themselves competing against other bidders who are willing to pay cash. Meanwhile, many young buyers are having trouble qualifying for a loan, often due to high student loan debt.
Overall, young buyers have been left out of the housing recovery more than any other age group, according to a new USA Today analysis. The home ownership rate for 25 to 34 year olds has gone from 46.7 percent in 2006 to 29.7 percent in 2011 — a decline of 17 percentage points. As comparison, the 45-54 age group has seen home ownership rates fall 3.8 percent.
National home ownership rates during the same timeframe has fallen 2.7 percentage points — from 67.3 percent to 64.6 percent, USA Today reports.
“There’s been no situation as devastating as this, and it’s probably taken a greater toll on the younger generation,” says Budge Huskey, CEO of residential brokerage Coldwell Banker. “They’ve seen other friends or acquaintances that may have even gone through a foreclosure. There’s a psychological aspect of the impact of the recession that goes beyond the mere finances.”
Keep in mind that policymakers are as we speak attempting to inflate the value of real estate, even as current prices make the traditional American Dream an unrealistic fantasy for most young adults.
The economy is broken, and none of the asset inflaters in government are even aware enough of the basic problems to even attempt a fix.
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