Homeowner Ruth Paloma Rivera stands for a photograph on the roof of her newly purchased house in … [+]
© 2016 Bloomberg Finance LP
Housing is a difficult topic. It requires money to acquire land, clear zoning commissions, build structures, and have ongoing places to live. Outside of public housing, which hasn’t been a universal success in experience, all the work is left to private financing.
That means someone expects a profit, which comes from another’s pocket.
U.K.-based financial services firm Legal & General did a multi-part study looking at U.S. millennials and home ownership. The company, surveying 875 who did not currently own their own home, called it a “distant dream” for many.
A little more than half (56%) said trying to buy where they currently lived was hard or extremely hard. Half weren’t even trying to save for a down payment, frequently because they weren’t making enough with student debt and other obligations.
That should be no surprise. There’s been a chronic shortage in home building since the Great Recession in 2008: Terrific to push up prices but not good if you want people to start building equity and reducing their dependence on others.
In September 2020, I wrote a piece showing why it was hard to make ends meet even when inflation was low. One of the boulders on the backs of so many people was, and is, housing costs. With healthcare and higher education, the three are components of inflation, each rising significantly faster than the overall number.
Housing, though, is in a class by itself. Not because of the growth rate, which has been unusually high during this pandemic time, but for an available out. Or because you grow your net worth. If you move and cash in eventually, you still have to buy another place, and as experts say, especially if you’re older, you may no longer be able to afford a place where you’ve been.
If you own your own home, there are many costs involved, including the monthly mortgage. But a 15- or 20- or 30-year conventional loan is a regular fixed payment that doesn’t rise when the lender wants to juice …….