Millennials are often told that buying a house is a pipe dream, but is it really that bad? (Image source: The Lazy Artist Gallery)
By Marco Krantis | @KrantisMarco
I hear about it all the time. The housing market is borderline unattainable for young people in the future looking to buy, specifically Gen Y.
Every time, however, when people have brought it up, they have provided no evidence that is the case.
So, let’s investigate. Is it really that bad? And if so, why?
All doom and gloom
Compared to 2001, homeownership is down 11 per cent for 18 to 39-year-olds.
People still living at home is on the rise with a 43 per cent increase in men and 27 per cent increase for women since 2001.
Oh, wow! How come?
Income and house value aren’t rising together. In 1975, it took nine years to save for a down payment. Currently, it now takes roughly 14 years to save up, (based on an American median income).
In the big cities across the world, that number is far greater. In Los Angeles, it would take 43 years to save for a down payment; San Francisco, 40 and New York, 36.
The public opinion
The lofty challenges in the market have not dwindled optimism for potential first home buyers, however.
According to an OTR poll, 75 per cent of respondents believed that owning a home one day is extremely likely.
Adelaide isn’t a big city, we’ll be right…
Jobs, especially high paying ones, are in major cities. According to Forbes, 69 per cent of knowledge-based jobs were based in cities, with that number expected to grow.
As labour is to be shifted to automation, and the big cities contain higher education levels, in a decade big cities will be the hubs for jobs, if they aren’t already.
People seeking better job prospects will move to bigger cities where those opportunities are available. In turn, raising the market value for suburban areas within them.
A person looking to sell their house can place a lofty price tag on it, knowing that with the influx of people coming into the state, they will be desperate to find a suitable living environment.
Maybe renting will be better, right?
Renting is easier to achieve for young people, not necessarily better. When you retire, your income will fall drastically. Retirees’ one reliability is their home, a backbone for income if need be.
If retirees rented, it would put them in more risk of financial difficulty if they were to fall on hard times.
Pensions and supers are sometimes a minimal thing, with people having to budget every week. Throwing rent into that will make things very difficult for them to sustain later.
Buy farther from the city
You can. Especially in Adelaide, buying in a market an hour from the city is realistic. However, after a while, you may be sick of the constant and far travel.
Also, young people may not be located near their families, as their parents may be located within or near the city.
Young people will most often look to start a family. Once they do, it will be constantly tough.
Living far away from their families will put added pressure on young parents.
Far travel will be an obstacle to getting help whenever you need it, putting another obstacle in your way of being happy in your home…
Hold on! I know young people that have bought into the market – within Adelaide!
Buying is possible, yet not easy. It requires strict saving and budgeting once you start paying that mortgage.
That stringent saving will also be for a standard house on the market, lofty dreams need to be met with realistic expectations.
The likelihood of buying that dream house will come very far down the line, or maybe not at all.
A home is a home
A home is a home. It is getting tougher for our generation to buy, and the past generations had an advantage we don’t.
Yet, it’s what you do with what you have. A lot of people don’t even have the opportunity to buy a house, something we take for granted every day.
Patience and smart saving are key to one day accomplish the dream of purchasing that first home…