Is it Time to Give Up on Homeownership?
Has a generation been scared into a life of renting?
June 7, 2012 - 2:45 pm
‘A Recipe For Frustration’
“They’ve seen what their parents are dealing with, what their brothers and sisters are dealing with, in terms of being saddled with home values that are less than what was paid for,” says Paul Conway, a former chief of staff for the U.S. Department of Labor who is now president of Generation Opportunity, a think tank specializing in the economics of Generation Y.
Sociologist Katherine Newman, who chronicles some of the struggles in her book The Accordion Family: Boomerang Kids, Anxious Parents, and the Private Toll of Global Competition, agrees with Conway that we may be witnessing the creation of a generation of renters.
“I’m hoping that the Millennial Generation doesn’t set its sights on homeownership as a benchmark of economic stability, because it’s going to be out of reach for so many of them that it will just be a recipe for frustration,” she says.
Homeownership among millennials has been on a gradual but steady decline, according to the latest available U.S. Census Bureau data.
Even with big drops in housing prices and interest rates, getting a mortgage has become a lot harder since the heady days of “no income, no assets” loans that fueled the housing boom of the early 2000s. Most lenders now require a rock-steady source of income and a substantial down payment before they will even look at potential borrowers. And many millennials won’t be able to reach that steep threshold.