Millennials being squeezed out of Housing Market

Millennials being squeezed out of Housing Market

Once upon a time it was easy to qualify for a mortgage; all you had to do was scratch X on the signature line and have a pulse. Now things have changed, banks have moved to the other extreme of the spectrum, demanding an incredible amount of information and making lending standards so stringent that most are doomed to be denied.

Millennials are also constrained by a terrible Job market, high levels of student and very little Job Security; all these factors simply make a tough job even tougher.Millenials are waiting longer to get married and have children; in some cases, they are putting off having children simply because they cannot afford to.  Rents are surging so much that it’s forcing many to share an apartment or move in with their parent’s

“The mortgage industry is poised to experience a monumental shift as more millennial homebuyers begin to enter the market,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae, a mortgage software, and data company. “There are roughly 87 million would-be homebuyers in the millennial generation and 91 percent of them say they intend to own a home one day. Lenders must prepare today to meet their needs.”

“After more than a decade of growing concentration, we see that the millennial trend of increased downtown living has peaked out and is now beginning a decline,” Myers wrote. “This is a dramatic human interest story with great implications for cities and real estate investments.” Full Story

Bankers are nicely creating demand; when you deny someone from getting something, the simple act of denying them creates the desire to own this something even though they might not have wanted to own it in the 1st place. If you place obstacles long enough, you create a psychological need that even the person might not be aware of. In other words, once the barrier is removed, individuals who considered themselves sane will end up doing insane things. If we are correct, the bankers are planning on some way to lend money to the masses to create another massive bubble. The most likely option is the housing market since the American dream concept has been very well marketed and indoctrinated in the psyche of at least 80% of the populace.   The American dream is to own a house or at least make it look like you own one.  Most people forget that the house is not theirs until the mortgage is paid in full; until that point, they are nothing but glorified renters.

Simple Game Plan 

Buying a home is not all it’s made to be; when you have a mortgage, you are nothing but a glorified renter until you pay the last cent.  A better option would be to live 1-2 standards below your means, cut the things in your life that are not necessary and put all this extra money to work in the stock market.   Wait for strong pullbacks to deploy new capital in the markets and focus on companies that have exciting products or high growth rates.   With a little effort, you can easily earn over 10% a year and this money will grow into a far larger nest egg, then if you committed to owning a house.

The idea should be to focus on getting rid of your debt; millennials racked up all these student loans due to sheer stupidity. If they had lived within their means, they would not have had to face such problems. Surprisingly many still continue to indulge in luxuries they do not need even though they owe mountains of money to creditors.  Hence, they deserve no mercy.  They made their bed and they should sleep on it. Simple common sense rules can have then back on the right track in a relatively short period.  However, sacrifices need to make and crap that they don’t need has to be cut out.

Other Articles of Interest:

Problem is Fractional Reserve Banking-we don’t need Gold Standard (15 May)

BBC Global 30 Index Signals Dow Industrial Index will trend higher (11 May)

Stock Market Bull not ready to buckle (4 May)

Fear mongers are parasites that profit from your fear (2 May)

Gold Bugs think & stop listening to Fear mongers  (1 May)

Fear mongers are parasites that profit from your fear   (27 April)

  • incommunicato

    Totally agree with your assessment on home ownership that you mention in the second to last paragraph. I’ve mentioned this to a number of people, myself—they all seem to think I’m crazy. I guess too many have been indoctrinated with the belief that home ownership is the holy grail of financial independence.

  • Tactical Investor

    Always remember that when the majority don’t agree with you, the odds are high that you are doing the right thing. This Pavlovian brain washing. the media and the education system has brain washed everyone into being good robots. The masses sadly are destined to always be on the wrong side of any investment. Congrats on coming to this conclusion on your won.

  • LiesareTruth

    This article is misleading at best. Historically you needed a 20% down payment on the purchase of a home, and interest rates (adjusted for inflation, real interest rates) are some of the lowest now as they have ever been. However, since the 1970’s, home prices have increased at a rate 7x that of average salaries. For my parents generation (Boomers) a house was the best investment they ever made (depending on market, they don’t live in Detroit!) I’m a 27 yr old male 3-years post college, gainfully employed. I’ve been paying rent each month down the drain and saving up for a down payment on a house because I don’t want to live in an apartment complex forever and I want to acquire an income producing asset. What about the equity you build in the home while paying the mortgage? What about the tax write-off you get on the interest of the loan? With a good credit score now I can qualify for a 3.5% interest loan, 5-10% down and pay a mortgage the equivalent of a rent check while building equity in a property of my own, which I plan to own for a long time as rental property in the future. You’d be crazy to pay rent for an indefinite period of time if you have the option for a mortgage at the same monthly expenditure.