Dr. Housing Bubble argues young Americans may not be able to achieve the American ideal of owning a home:
Many young Americans will be accustomed to paying their student debt and rents on a monthly basis while these income streams go into banks, many that own their property. Not a bad situation if the market wasn’t rigged by banks where preference is given to large money and low rates matter little when the Fed has set a fuse to Wall Street to buy out large portions of real estate in the market. Of course many will try to pretend that this is some sort of free market. The housing market is fully subsidized and juiced to the gills and while this is going on, a younger generation gets older and their dreams of homeownership move further and further away. At least they can bunk with mom and dad and enjoy stories of those beautiful golden real estate handcuffs.
There are several interesting assumptions going on here:
1. Homeownership is the better long-term option for the country and for individuals over renting or living with family. This is tied to ideas about independence and achieving the American Dream as opposed to renters or those who live with family who can’t be self-reliant and don’t care as much about their property.
2. Younger Americans should aspire to homeownership. They may not as much in the future as owning home creates a significant financial obligation, may prevent the mobility needed to chase jobs or other opportunities, and may not be as exciting as other consumer options (new technologies, entertainment/cultural/travel options, etc.).
3. The difficult economy where a majority of Americans can’t make significant financial progress will necessarily continue and limit the number of people who can buy homes (and the number of new homes that are built). We’ll have to wait and see how this turns out. If anything, this all reinforces how big the housing bubble was in the mid-2000s.