Invest in our next generation when it comes to homeownership
About 50 years ago, young university graduates would not have second-guessed their ability to afford to purchase a house. Despite education causing them to acquire debt, they rested assured that their advanced degrees would lead to higher paying jobs and thus put a decent, safe, and affordable roof over their heads.
This cannot be said for today’s millennials (aged 18-34). Over 47% of young adults today move back home to live with their parents, according to Pew Research. For most recent grads, moving back home is their only option to afford their advanced degrees.
With the price of education reaching an outlandishly high rate, many young adults must forego starting their independent lives until they pay off their debts. Even the recently announced loan forgiveness by the president only dents the deep bucket of debt many students acquire. Additionally, the job market is not supporting homeownership for younger people. Professions like education, nursing, and human services pay so little that young adults in some parts of the country have roommates or live with their parents while establishing their careers.
This was even more apparent during the 2020 COVID pandemic as unemployment rates and housing prices soared. Many young people moved back home to protect themselves from economic devastation. According to Pew Research, during the initial wave of COVID, 52% of recent college graduates moved home. These are similar rates that young adults experienced during the Great Depression.
Millennials bring new causes and passions to the table, they are the next generation of advocates, intellectuals, and engineers. Yet they are late to the table for long-term financial planning.
With home prices being the highest since 2008, only 48% of today’s young Americans can purchase a home, according to Forbes, which is about 30% lower than the baby boomers. The largest worry for these young people is affordability. For example, in Ventura County the average home costs $915,000. This means to meet the median living standard one must make well above $80,000 a year. Most entry-level positions for college graduates in California are $45,000 or less. It’s no surprise that over 55% of young Californians are living with their parents.
But the other solution is renting, and more people are renting than ever before. In fact, 34.4% are renting nationwide. Now you might say, isn’t renting still a good option for people? It seems like a way to gain independence. This is true. Renting, as a temporary option, makes sense before purchasing your permanent home. But renting is becoming the only option for millennials, and this has major consequences in terms of credit and retirement planning. Additionally, rental rates in Ventura County are far above the national average.
Through homeownership, people can earn equity, which allows them to borrow from their house in the event of a crisis or even use it for retirement. Having a mortgage and paying on time also helps improve credit scores. Today’s job market partnered with rising housing prices is halting and, in some cases, completely barricading young adults’ access to permanent housing and a solidified retirement plan.
So, what can be done to help this new generation of desiring homeowners? Well, businesses, organizations, schools, and hospitals could start by investing more in their employees to ensure they make a life-sustaining salary not based solely on rent but also housing prices. Federal, state, and local governments could invest more into affordable housing programs specifically aimed at assisting first-time homebuyers or recent college/trade school graduates. We, as a society, could pressure universities to lower tuition fees and advocate at the federal level to institute and fund additional debt forgiveness programs across the United States.
Homeownership can transform someone’s world. Homeownership also improves our economy. We must invest in our next generation and help them achieve homeownership before it is too late.
Ashlee Vyskocil attends the College of St. Benedict/Saint John’s University in St. Joseph, Minnesota, where she is majoring in political science and sociology. She completed a summer internship at Habitat for Humanity Ventura County.
This article originally appeared on Ventura County Star: Invest in our next generation when it comes to homeownership
