Will Generation Y Live The American Dream Of Buying A New Home?

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Will Generation Y Live The American Dream Of Buying A New Home?

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June 06, 2012

Since the real estate meltdown happened in the 2007/2008 time frame, many families across America have seen their home prices plummet far from the original purchase price they paid, even with home improvements. Others that bought properties in the mid to late 90's saw a spectacular run of home price growth only to see many of those gains wiped away over the past four years. With much of the home ownership across America dispersed between the baby boomers and generation X, there is a looming question around whether Generation Y will even want to own a home in the future. Is this actually still an American Dream or merely something that has turned into a Nightmare On Elm Street? Here are three reasons why Generation Y may not be a major purchaser of new homes over the next decade despite the incredibly low mortgage interest rates we are seeing today.

  1. Heavy Student Debt - Many people in the 20's are still saddled with a large student debt payment. This student debt payment in conjunction with the lower than expected incomes entering the current job market creates a debt to income ratio which makes it difficult for these folks to afford the monthly payment + the cost of home ownership. Since student debt rates on Stafford Loans could return to 6.8% creating even more pressure on paying basic bills, this is one reason it will take longer for Generation Y to enter the home ownership market.
  2. Job Instability - Many people in their 20's are uncertain about their job stability within both large and small organizations. They are finding it emotionally difficult to think about swallowing down a 30 year mortgage when they do not know whether career growth will be steady at their current corporation. This is coupled with the fact that corporations and non-profits alike are slowing down the rate of overall income growth.
  3. Change Of Money Mindset To 'Lighten My Backpack' - Many people in their 20's are creating a new money mindset that 'less is more'. Home ownership can have a heavy baggage effect if a Generation Y couple wants to do some overseas travel or see their job future changing from city to city before they create some permanent roots. Early age home ownership is not within the core philosophy of Generation Y'ers like it was for their predecessors.

If you ask most real estate sales professionals what is happening within the business, they will always tell you homes are moving and things are picking up. The generation Y couples that I see buying homes today are entering at a much lower price point which is really good. However, many of them are not willing to stretch themselves outside of their potential incomes and are cognizant that waiting may make more sense than an impulse purchase the first time a big cash windfall hits their bank account.

Written by:

Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®

Co-CEO and Founder of oXYGen Financial, Inc - The Leaders in Gen X & Y Financial Advice and Services

Visit to www.oxygenfinancial.net to request a free consultation with the leading financial experts for people in their 20's, 30's, and 40's in the country.

Securities and Investment Advisory Services offered through NFP Advisor Services, LLC (NFPAS), Member FINRA/SIPC. Oxygen Financial is not affiliated with NFPAS. NFPAS does not provide tax or legal advice. This site is published for residents of the United States only. Registered Representatives and Investment Advisor Representatives of NFP Advisor Services, LLC (NFPAS) may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact NFPAS Compliance Department at 512-697-6000. PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. NFP Advisor Services, LLC makes no representation as to the completeness or accuracy of information provided at these web sites. Nor is NFP Advisor Services, LLC liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

This site is published for residents of the United States only. Registered Representatives of Kestra IS and Investment Advisor Representatives of Kestra AS may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact Kestra IS Compliance Department at 737-443-7101.

PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. Kestra IS and Kestra AS makes no representation as to the completeness or accuracy of information provided at these web sites. Nor is Kestra IS and Kestra AS liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to.