Photo: Flickr / Todd Dwyer
Single ladies may be flooding the housing market, but the majority of millennials are still reluctant to set foot in a real estate agent’s office. Economists are calling them the “Lost Generation.”At one time, Blake Hennessy, 27, toyed with the idea of buying a condo he could flip for profit. But when the med student learned that his landlord paid much less for the place than it had been listed for years ago, he was out.
“When I saw that, I said, ‘Forget it. It’s just too scary,” he told Bloomberg Businessweek. He’s been renting the unit ever since.
Hennessy’s reaction to the post-housing crisis market isn’t uncommon. Many millennials—people aged 25 to 34—are put off by the high price tag of homeownership as much as they refuse to be constrained by the house itself.
BusinessWeek points out there are three major factors holding back millennials from investing in a home: soaring student loan debt, stagnant wages, and the fact that home prices, low as they are, still exceed take-home pay.
The median price for a single-family home in the Northeast was $250,000 two months ago, according to a report by the National Association of Realtors. Yet most millennials start their career with salaries around $30,000.
“There is a staggering difference between the average cost of a home compared to the average salary of millennials,” Ben Sporazetti, a Rutgers professor told BusinessWeek. “What we need is job growth.”
But until the jobs market improves, students won’t have sufficient means to pay off their mountains of student loan debt. Since 2003, student loan debt has nearly tripled, up from $293 billion to $904 billion, reports BI’s Mandi Woodruff. And since lawmakers have yet to allow these loans to be discharged in bankruptcy, getting out of them is nearly impossible.
Just ask former students like 36-year-old Nick Keith, who remains $142,000 in debt after graduating from culinary school: “My life has become a daily swim in a tar pit with very little hope of ever getting out,” he told Your Money back in March.
He and other millenials may want to settle down eventually, but for now, he says, owning a home is the last thing on his mind.