Housing, Homeowners InsuranceAsk any talking heads on the financial shows and you’ll get as many answers as there are heads about why those pesky kids aren’t buying homes. Ask a Millennial and you’re going to get a whole lot of sarcastic answers. However, the breakdown of reasons why they’re not buying is far from simple, having to do with memories of the Recession and emotions as much as their own troubled finances that are complicated by multiple factors.

High Expectations

Cheery forecasts for Millennials entering the housing market are generally greeted with optimism from everyone but the Millennials themselves. It’s not that Millennials don’t want to buy homes. It’s not that they’re a generation of slackers who’d rather rent. It’s also not that they’re waiting to buy before they have a family. It’s that the economic deck is stacked against them, and it’s harming the economy in more ways than one, with homeownership falling to a 48 year low. While everyone is waving the quarterly jobs report around, nobody’s talking about the aftermath of the 2008 crash that saw the real estate bubble burst, student loan debt go through the roof, and both job creation and wages go stagnant. Home prices are also rising faster than wages with mortgage rates expected to jump this year.

Old Economy Steve

Millennials’ disenchantment with the system has origins in the Recession, their lack of faith in institutions, and distrust of the representatives of those institutions in embodied in the meme of Old Economy Steve. A lot of the Gen Xers who graduated college after Black Monday 1987 probably remember him, too. Simplistic world views and simplistic solutions have torpedoed many a holiday dinner, and even if he’s retired now, he’s still spouting off simplistic fixes that have little to do with the reality that a grad student working at Starbucks has to face.

Simply put, for Millennials to throw down for a home, the following things need to happen.

  1. More jobs with better wages.
  2. Steady employment.
  3. Career advancement made possible by retiring older workers.
  4. Student loan forgiveness or write-downs.
  5. The opportunity to save money for down payments.
  6. Low fixed rate mortgages and tax credits for first time homebuyers.

Mistrust of the Man

There are also indications that this low homeownership percentage may be a cultural shift instead of a temporary hitch in the market. When people can’t see a future, they are reluctant to invest in it. This home buying malaise may be an unforeseen reaction to the housing bubble and the resulting mortgage crisis and bank failures. Millennials are deeply mistrusting of institutions that previous generations of Americans took to be as solid as the Statue of Liberty. It may be that the answer for the Millennials’ ambivalence is to revisit those institutions and rework them into more accountable, ethical, and open entities. Only by opening up the future will Millennials be able to see a way forward, a way out of debt and crappy jobs, and into financial security and a new home.