The High Cost of a Home Is Turning American Millennials Into the New Serfs

[applegrove]

Last edited Sat Feb 4, 2017, 09:02 PM - Edit history (1)

by Joel Kotkin at the Daily Beast

http://www.thedailybeast.com/articles/2017/02/04/the-high-cost-of-a-home-is-turning-american-millennials-into-the-new-serfs.html

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It’s time for millennials to demand politicians abandon the policies that have enriched the wealthy and stolen their future. That means removing barriers to lots of new housing in cities and, crucially, embracing Frank Lloyd Wright’s notion of Broadacre Cities, with expansive development along the periphery.

These new suburbs, like the Levittowns of the past, could improve people’s lives, while using new technology and home-based work to make them more environmentally sustainable. They could, as some suggest, develop the kind of urban amenities, notably town centers, that may be more important to millennials than earlier generations. One thing that hasn’t changed is the demand for affordable single-family homes and townhomes. But the supply is diminishing—those under $200,000 make up barely one out of five new homes.

There are some reasons for hope. The soon-to-develop tsunami of redundant retail space will open up millions of square feet for new homes. A move to prefabricated homes, already common in Europe and Japan, could help reduce costs. Certainly there’s potential demand at the right price—ones that young people can reasonably aspire to and then build lives in.

The alternative is to travel back to serfdom and a society sharply divided between a small owner class and many more permanent rent payers. By then, the American dream will be reduced to a nostalgic throwback in an increasingly feudalized country.


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[jmg257]

1. Interesting...wonder what affects this had on the election...

The problems facing millennials include an economy where job growth has been largely in service and part-time employment, producing lower incomes; the Census bureau estimates they earn, even with a full-time job, $2,000 less in real dollars than the same age group made in 1980. More millennials, notes a recent White House report, face far longer period of unemployment and suffer low rates of labor participation. More than 20 percent of people 18 to 34 live in poverty, up from 14 percent in 1980.

They are also saddled with ever more college debt, with around half of students borrowing for their education during the 2013-14 school year, up from around 30 percent in the mid-1990s. All this at a time when the returns on education seem to be dropping: A millennial with both a college degree and college debt, according to a recent analysis of Federal Reserve data, earns about the same as a boomer without a degree did at the same age.

Since 2004, homeownership rates for people under 35 have dropped by 21 percent, easily outpacing the 15 percent fall among those 35 to 44; the boomers’ rate remained largely unchanged.


In some markets, high rents and weak millennial incomes make it all but impossible to raise a down payment (PDF). According to Zillow, for workers between 22 and 34, rent costs now claim upward of 45 percent of income in Los Angeles, San Francisco, New York, and Miami, compared to less than 30 percent of income in metropolitan areas like Dallas-Fort Worth and Houston. The costs of purchasing a house are even more lopsided: In Los Angeles and the Bay Area, a monthly mortgage takes, on average, close to 40 percent of income, compared to 15 percent nationally.