After only a few months, Chris Swanson is sick of shopping for houses in what the 39-year-old calls a “dumpster fire” of a market for first-time buyers like himself.
Though he has a steady job and has paid off his student loans, it feels like he’s two decades too late: He missed out on rock-bottom interest rates, and homes are far more expensive. Landing on the one property that will fit his needs and his budget is daunting enough, but there’s also pressure to move fast. “I’m in that weird position,” said Swanson, a marketing professional from Mentor, Ohio.
Homeownership — the main driver of wealth for most Americans — is out of reach for large swaths of the population. But the pinch is most pronounced for millennials, who are buying homes at a slower pace than those before them. Baby boomers, in fact, represented the largest share of home buyers this year — a spot millennials had held since 2014 — according to research by the National Association of Realtors.
“Boomers are absolutely in the driver’s seat,” said Jessica Lautz, deputy chief economist at NAR, because they have built up home equity and can pay in cash. “Unfortunately, that has pushed many millennials to the sidelines.”
Those born between 1981 to 1996 have been called the “unluckiest generation.” Since entering the workforce, they’ve experienced the slowest economic growth of any age group. They’ve also been weighed down by student debt and child-care costs, Lautz said.
Rising interest rates and persistently high asking prices have further eroded their buying power. The median U.S. home sold for $416,100 in the second quarter of 2023, a 26 percent jump since early 2020, Federal Reserve data show. Median sales prices were significantly higher in the Northeast ($789,600) and the West ($547,900).
Meanwhile, the average 30-year, fixed-rate mortgage is now hovering near 7 percent, nearly three times the 2.6 percent recorded in early 2021.
As a result, first-time home buyers are older, with a median age of 36, Lautz said. That’s the oldest since NAR started keeping track in 1981, when it was 29. As the age climbed, she noted, the share of first-time home buyers sank to “historic lows.”
The high interest rates are “a real burden on young people who don’t have the high salaries of old folks like me,” said Joe Gyourko, 67, a professor of real estate at the University of Pennsylvania Wharton School. “You can’t get around it, and you’ve got to make a decision: Do I value the house enough?”
My dad, a boomer, passed away a few weeks ago and I can understand why he got a reverse mortgage. He had cancer and knew he was going to die, and he did it to guarantee that my mom has a place to live for the rest of her life since she’ll be surviving on only social security and some pensions. But it sucks that that wealth will disappear at that point and us kids won’t inherit it. That’s ok, we don’t feel entitled to it, but that is definitely one way that houses are being snapped up by companies and not somehow transferring to individuals.
Your family does understand that medical debt, especially the medical debt of a deceased person, is an unsecured debt that cannot be effectively collected on. Right?
The hospital might call and say “you owe us”, but the Estate Lawyer who cost 700 dollars earned his retainer by saying “Dont contact my client again” (a legally binding interaction) and then working out the logistics of putting the real assets in the heir’s name while dispelling the rest of the unsecured debt (credit cards. bar tabs. whatever qualifies as unsecured debt)…
I’m sorry you lost your dad, but his last offering was what sounded like a logical solution but actually just screwed over his family and siphoned money to bad people…
That’s rough. Is there any way to reverse the damage done?
Don’t think so, not if the reverse mortgage is a done deal and the medical debt is paid.
In general, hospital collectors will come at you sounding all intimidating, but will usually just waive off the debt or settle for a ridiculously low figure. Even if that doesn’t happen, mom could have filed for bankruptcy. If you already have the house, you dont need to worry about your credit for the next 7 years. right?
But once you sink all of your liquid and real assets into the unsecured debt, the liquid and real assets are gone.