By: Hellen Zaboulani
There is more bad news for millennials. It seems that mounting student debt and overwhelming financial liabilities are standing between millennials and the American Dream. For now, homeownership seems out of the picture for most Generation Y adults, which is now made up of roughly 22- to 37-year-olds.
As reported by the NY Post, only about one third of US millennials under 35 owned a home at the end of last year, resigning the remaining two thirds to being renters. Despite a small improvement, the trend continues, leaving the rate of homeownership among millennials to be considerably lower than that of Generations Xers or baby boomers, or any other previous generation when they were in that age group. And this is all while unemployment in the US is historically low at 3.7 percent, and the overall economy is growing. Analysts fear that should a recession hit, the rate will fall further or even plunge.
“I see this phenomenon in my practice on a nearly daily basis,” said Gary DeVicci, managing director of advisory services at CPI Companies in NJ. “Millennials are often forced to move back home to save money and/or to reduce debt, so they can get ahead with their financial lives, which means buying a home of their own — the cornerstone of the American dream.”
A new study by LendEDU, found that close to 25 percent of millennials complain about low income. Also, 26 percent of millennials who are not yet homeowners identify a lack of savings to be a problem; 17 percent blame poor credit; 10 percent cite “overwhelming” student loan debt; 5 percent blame “overwhelming” credit card debt; and 6 percent blame other debt.
“I would love to own a home but I face what many other millennials are facing — the cost of mortgages and homeownership is beyond our means right now,” said Steven Olikara, founder and president of the nonpartisan advocacy group Millennial Action Project.
“It is really tough,” continued Olikara, a college graduate, single and in his late 20s, who lives in a rental. “I see too many of my friends who’ve had to put their dream on hold because of too much debt, or because they do not have enough income.”
A shocking study by the Northwestern Mutual 2018 Planning & Progress revealed that last year the average millennial had roughly $36,000 in personal debt, excluding home mortgages. Total student debt stands above $1.5 trillion and continues to swell.
Olikara, speaking for the Millennial Action Project, suggested that we need to “embrace further flexible versions of college and dramatically improve vocational and other job training programs.” He added, “The last recession, and the burden of student and other millennial debt, have shifted the conversation. The economic challenges faced by millennials is a problem for the entire nation — everyone benefits if millennials do well.”
