It doesn’t matter if eggs got a little bit cheaper or wages rose 1% more than inflation when home prices went up $100,000+ and interest rates went up by 4%.
A home with a $1,500 monthly payment in 2020 would have a $4,000 payment today. Nobody got a raise that big except billionaires.
Few milestones in life mean as much to the American dream as owning a home. And millennials have encountered the kind of trouble totally befitting their generation, which largely graduated into the teeth of the disastrous post-2008 job market. Just as they entered peak homebuying and household formation age, housing affordability is at 40-year lows, and mortgage rates are near 40-year highs.
The anxiety this generation feels about the prospect of never owning their own home affects their entire perception of their finances and the economy, says Moody’s chief economist Mark Zandi.
“If they feel like they’re locked out of owning a home, it colors their perceptions about everything else going on in their financial lives,” Zandi says.
Millennials have long been dogged by a brutal housing market. They faced not one but two cataclysmic economic events—the Great Financial Crisis in 2008 and the pandemic in 2020. Both left them reeling financially and struggling to afford a home. The Great Recession decimated the real estate market as the economy nearly collapsed under the weight of tenuous mortgage-backed securities. The pandemic brought with it a remote-work boom that caused millions of city dwellers to flee to the suburbs, sending housing prices soaring.
A failure to address the affordability crisis plaguing housing in the U.S. will mean young people, who “already feel disenfranchised,” according to Zandi, will lose faith in the economy and take their frustrations out on President Joe Biden come Election Day. (Fortune was speaking to Zandi in the context of his team’s analysis that predicted the 2024 election outcome based on economic outcomes.)
https://twitter.com/1200616796295847936/status/1861021265114677263
h/t fiveguysoneprius
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