Let's talk about a topic that's got younger Americans feeling frustrated and angry: the struggle to achieve financial stability and homeownership. It's a crisis that's been brewing for years, and it's time to shine a light on it.
Almost every young couple I know, whether in their 20s, 30s, or even 40s, has had a similar argument with their parents before tying the knot. The parents suggest opening a wedding registry, but the couple politely declines, explaining that they don't expect gifts and already have the essentials. They've been living together for years, and their small rented apartment is already bursting at the seams.
The couple suggests that guests who wish to give a gift could contribute to a honeymoon fund or even help with a down payment on a house. But this idea doesn't sit well with the parents, who argue that asking for cash is inappropriate and puts people in an awkward position. The young couple clarifies that they're not asking for cash, just offering an option for those who want to celebrate their special day.
The argument escalates, and the parents, determined to have their way, eventually win. As a compromise, the couple reluctantly agrees to include a house fund on the registry, hidden among niche cookware items. And if they're feeling particularly sneaky, they might even rig the registry with unattractive gifts to make the house fund seem more appealing!
Despite the lovely wedding and the potential china set, the reality is that nearly half of US millennials are still renting and dreaming of homeownership. The housing market remains stubbornly expensive, and the median age of first-time homebuyers has risen to 40, with costs twice as high as they were for their parents in the 1980s.
The situation is dire, and it's not just about the financial strain. Homeownership is deeply tied to wealth creation in the US, and the wealth gap between renters and owners has never been wider. Those who already own are getting richer, while others are being left behind. It's a recipe for economic disaster, as people spend more, work less, and take on riskier investments when homeownership feels out of reach.
This is the reality for many millennials and Gen Zers, who came of age during a financial crisis, global recession, and a pandemic. While we're not starving, our adult lives have been marked by stagnant wages, inflation, and a sense of national decline. It's no wonder we feel cynical and pessimistic, and some of us are turning to more radical political ideologies.
Economists predict that millennials will reach retirement with significantly lower homeownership rates than their parents' generation. This attitude of 'financial nihilism' is understandable when you consider the years of hard work with little progress towards financial goals. It's a tempting thought to 'quiet quit' and indulge in a lavish vacation, but it's a risky path that could lead to economic ruin.
American baby boomers, born between 1946 and 1964, are the richest cohort in history, yet they've left their children a world that's economically worse off. Why are we still being shamed for not meeting the milestones of a bygone era? Why do younger Americans seem to be the only ones hearing the economic alarms?
Tucker Carlson, the right-wing commentator, made a prescient point in a speech at a conservative conference. He argued that the health of the economy should be measured by something simpler than GDP: can young people afford houses with full-time jobs in their late 20s or early 30s? The answer, he said, is a resounding no.
Carlson's words struck a chord, and they made me reflect on my own family's journey. My parents bought their first home in 1985, when my mother was 29 and my father was 31. They were able to purchase an apartment below market rate and sold it for a profit just two years later. They moved to the suburbs, bought a fixer-upper, and even managed to renovate a fishing cottage as a summer house.
My parents' story is not representative of everyone's, but it highlights the opportunities that were available to their generation. They had dual incomes, were adventurous with real estate, and worked hard to save. They were able to build wealth and achieve financial stability.
Today, at 35, owning a home seems like a distant dream for me. I've done everything my elders advised: good grades, part-time jobs, a good university education, and a full-time career. Yet, like many millennials, I rent, spending a significant portion of my income on rent each year.
Our diligent rent payments build no equity, and the money we've spent on rent is gone forever. We have nice things, but even cutting back on indulgences wouldn't make a significant difference in our financial situation. This is the paradox of modern life: living is expensive, and the staples of life are frustratingly costly.
Baby boomers are often the target of resentment, with hundreds of thousands of people complaining about them on Reddit forums. But at the heart of this ire is the mismanagement of our national inheritance. Boomers have been described as thieves of posterity, economic bullies, and a generation of sociopaths who rigged the system in their favor.
While boomers were often good stewards of their own prosperity, they voted for tax cuts for themselves, contributing to a ballooning national debt. They protected their own retirement benefits while slashing public works. The result is that millennials now face higher education costs, more student debt, and overextended social security and Medicare programs.
The law that each generation would do better than the one before has collapsed. In 1989, an American aged 35 to 44 had almost 75% of the wealth of someone aged 65 to 74. In 2022, that wealth gap had widened significantly.
The homeownership crisis is a perfect example of this disparity. Older people are reluctant to sell their homes, and they often lobby against the construction of new housing that might reduce the value of their properties. This creates a mismatch between stagnant incomes and ever-rising prices.
My cousin Matt, who lives in New York, bought an apartment a few years ago when he was 35. It was a third-floor walk-up in Brooklyn, and he and his wife paid a staggering $900,000. They consider themselves lucky, but they had to rush to sign their mortgage when interest rates were low.
Matt and his wife paid for their down payment themselves, without family help. They had savings, well-paid corporate jobs, and no student debt. Yet, they still felt they barely made it across the line.
The 'great wealth transfer' is often talked about, but economists believe it's been overstated. Intergenerational transfers largely benefit the extremely rich, and the median inheritance is not life-transforming. Many boomers plan to live life to the fullest and leave little to their heirs, and some are concerned about the impact of financial security on their children's work ethic.
The biggest issue is that these inheritances, if they come at all, will arrive too late for millennials and Gen Zers. People need the money when they're forming households and raising families. Getting it in their 60s or 70s is not as useful.
The generation after millennials, Gen Z, may already wish they had a fraction of the economic security that millennials have. They're facing a glut of entry-level jobs in industries like tech and finance, and AI-related job losses are anticipated. When you don't have income or wealth, you turn to credit, and many Gen Zers are maxing out their credit cards.
It's a difficult situation, and it's hard to feel optimistic right now. But the US economy is incredibly resilient, and there's hope that the slowing of population growth will eventually make housing more affordable. In the meantime, younger Americans continue to struggle, and the argument over financial stability and homeownership rages on.
