Shrinking Middle Class & Low Millennial Homeownership Signs of Problems?
There are a couple of news items this week that together could point to some near term problems for housing and home prices. First, let’s be clear that poor housing market and home price news isn’t necessarily bad news for investors.
Millennial Home ownership Levels at New Lows
The Millennial generation is really a bit of a nebulous age group. However, most people would consider this group in their 20s to early 30s in age. In the first quarter of 2014, home ownership among this group dropped to the lowest point since records have been kept. The recent report shows that home ownership among Americans 35 years old or younger declined to 36.2 percent. That’s down from 36.8% in 2013, and the lowest since 1982 when records were started. During this same period, homeowner ship among all ages dropped to 64.8 percent. This is the lowest level since 1995.
There are several factors cited for the low ownership of Millennials:
• Massive student debt: Student debt has been rising in recent years to staggering levels. The rising cost of an education and liberal lending with government guarantees is contributing to a worsening of this problem. They simply cannot afford a mortgage with their loan payments.
• A really poor labor market: Even though they are better off with a college degree, the wage levels between non-degree and college graduates isn’t as large as before, mostly because the degree job seekers are accepting lower paying jobs just to be employed in a rough market. In March of 2014, unemployment level of those in the 20 to 24 age group was 12.4%.
Shrinking Middle Class
American incomes are shrinking, and it’s not good for real estate. With real estate being the single largest purchase most people ever make, it’s going to be one of the first to be avoided when they aren’t happy with their financial situation. Most Americans now view themselves as slipping out of the middle class.
Though this trend began in the 1970s, it has accelerated since the housing and mortgage crash. In 2008, surveys showed that 53% of Americans considered themselves middle class. In the latest survey that number dropped to 44 percent.
• In 1970, about 65% of Americans lived in middle class neighborhoods compared with 42% today.
• The Census Bureau defines middle class as those families making between $40,000 and $80,000 a year.
• Median household income has been declining steadily over the last five years, down from $55,627 in 2007 to $51,017 in 2012.
There are a couple of news items this week that together could point to some near term problems for housing and home prices. First, let’s be clear that poor housing market and home price news isn’t necessarily bad news for investors.
Millennial Home ownership Levels at New Lows
The Millennial generation is really a bit of a nebulous age group. However, most people would consider this group in their 20s to early 30s in age. In the first quarter of 2014, home ownership among this group dropped to the lowest point since records have been kept. The recent report shows that home ownership among Americans 35 years old or younger declined to 36.2 percent. That’s down from 36.8% in 2013, and the lowest since 1982 when records were started. During this same period, homeowner ship among all ages dropped to 64.8 percent. This is the lowest level since 1995.
There are several factors cited for the low ownership of Millennials:
• Massive student debt: Student debt has been rising in recent years to staggering levels. The rising cost of an education and liberal lending with government guarantees is contributing to a worsening of this problem. They simply cannot afford a mortgage with their loan payments.
• A really poor labor market: Even though they are better off with a college degree, the wage levels between non-degree and college graduates isn’t as large as before, mostly because the degree job seekers are accepting lower paying jobs just to be employed in a rough market. In March of 2014, unemployment level of those in the 20 to 24 age group was 12.4%.
Shrinking Middle Class
American incomes are shrinking, and it’s not good for real estate. With real estate being the single largest purchase most people ever make, it’s going to be one of the first to be avoided when they aren’t happy with their financial situation. Most Americans now view themselves as slipping out of the middle class.
Though this trend began in the 1970s, it has accelerated since the housing and mortgage crash. In 2008, surveys showed that 53% of Americans considered themselves middle class. In the latest survey that number dropped to 44 percent.
• In 1970, about 65% of Americans lived in middle class neighborhoods compared with 42% today.
• The Census Bureau defines middle class as those families making between $40,000 and $80,000 a year.
• Median household income has been declining steadily over the last five years, down from $55,627 in 2007 to $51,017 in 2012.