Young people can’t Afford Homes
CNN Tells Us, Young People can’t Afford Homes Even Though more Young People have Homes now than when Trump was in the White House, CEPR, Dean Baker
Major media outlets continually push the theme that young people can’t buy homes even though a larger share of households headed by someone under age 35 own homes today than when Donald Trump was in the White House. CNN pushed its entry into the contest for the best “Death of the American Dream” piece last week, with an article headlined “What Broke the American Dream for Millennials.”
CNN hoped to get extra credit for this segment about student loan debt burdens:
“I think a lot of Millennials were forced into saying, ‘you need a four-year degree in order to be successful,’” says Rachael, who is 33. “At 18, you’re signing up to be $100,000 in debt before you even really know how to make the best decisions for yourself. I think we need to change that narrative.”
This quote was really impressive for two reasons. First, almost no one borrows $100,000 to get a bachelors degree. The average amount borrowed to get four-year degree at a public university was $32,637, so CNN’s authority here is giving readers a number that is more than three times the average.
AB: Dean does not make a differentiation between private and public colleges. Best bet, go public. After a decade, it will make no or little difference once you prove yourself. Dean is right on in interest rate impact.
The other reason the quote is impressive is that they are telling us that “we need to change that narrative” [on student loan debt.] This is impressive because we actually did change the narrative, which CNN’s reporters would know if they had access to government web sites.
Under President Biden’s income-driven repayment plan, a single person earning less than $32,800 a year would pay nothing towards their loan. If their income rose to $40,000, they would pay $60 a month and at $50,000 a year they would pay $143 a month. Many borrowers would have their loans forgiven after being in the program for ten years.
CNN’s competitors for the award include the Washington Post’s entry “Millennials have found a way to buy houses: Living with mom and dad,” the New York Times entry “American Dream Deferred: Why Housing Prices May Pose a Problem for Biden,” as well as two earlier entries from the NYT: ‘It’s Never Our Time’: First-Time Home Buyers Face a Brutal Market,” and “Older, White and Wealthy Home Buyers Are Pushing Others Out of the Market.”
For those interested in the realities of the housing market, homeownership rates for people under age 35 are actually above their pre-pandemic level as shown below.
Source: Census Bureau, Table 6
Homeownership rates are also higher for Blacks, Hispanics, and households with less than the median income. But you would have to have access to the Census Bureau’s website to have this information.
To be clear, if interest rates stay high, the homeownership rate for the young and other disadvantaged groups is likely to fall, but few are expecting that we will continue to see high mortgage rates.
What broke the American Dream for Millennials, CNN Business, Allison Morrow
USA held a monopoly on manufacturing after WWII. Unions extorted wages far beyond the value of labor. They enjoyed a higher standard of living than they earned. Consequently manufacturing emigrated to Asia. The gravy train has left the station. US labor is not better than the $2/hour labor of India, China, South America, Africa. US lived in tar paper shacks and clapboard homes before WWII. That is what they earn and deserve today. Until the housing regulations permit building such they will be living in tents on the sidewalk and camper trailers.
George:
You wish to go back to the time of no Social Security when you had to sell apples on the street as an old person to achieve some money to survive. Babyboomers are the last to understand this only because their parents survived similar consequences as children during the Great Depression. They are also the ones who abuse its understanding. You conflate Labor with Overhead. Separate beings.
Direct Labor in a product is far smaller than Overhead and Materials. Companies go to Asia to avoid the Overhead of being in the US. Overhead which they should pay a tax on when the product is sold in the US.
@Bill,
Not to hijack the thread, but other reasons to ship manufacturing overseas are (1) weaker protections for worker health and safety and (2) weaker environmental laws for the disposal of toxics. No patriotic American would advocate for the return of unregulated sweat shops and pollution. Not to put too fine a point on it, but “my way or the highway” was the approach Stalin took to Ukranian farmers in the 1930s. It’s called the “holodomor.” Nearly 4 million people died.
Joel:
Which is Overhead. The Labor portion of manufacturing is small in comparison to Overhead and a separate cost. What you name is what companies and George, Jamie, etc. are trying to avoid. When we broke it out for companies, it became obvious to them. If you wish to eliminate these costs, improve throughput of manufacturing so there is lesser labor.
Of course, there were the silly parts of too much inventory or bottle necks in manufacturing. This is what I consulted in and wrote in reports to places like Caterpillar.
Joel:
Been busy writing so I was off on a tangent.
In lesser nations, not European; I guess what you say is true. Perhaps Brazil. However, if you get too far out, you lose in transportation costs and costs of inventory sitting around both in transit and at the plant. ~5-6 weeks to go from China plant to the US Plant. That is a lot of inventory. Even if you cut it to weekly shipments, it is costly.
@Bill,
“if you get too far out, you lose in transportation costs and costs of inventory sitting around both in transit and at the plant.”
Depends. I just ordered a pair of glasses through Zenni Optical. The glasses are made in China and shipped by FedEx. I’m told in 7-10 days, but too soon for me to confirm yet.
Joel:
I do not believe it is cost worthy to ship a 40-foot container by air. I could order glasses from China also. I won’t do so. Your cost is less but then I value my local optometrist and his ability to obtain glasses locally within the same period of time. The same frames are available. The same pair is probably made in China but frames kept locally and lens made to the specifications. one eye is different than the other.
I (we) am (are) not really talking about a one-off as we are about containers and container ships. Went as high as $10,000 in 2021/22 and ~ $4,000 now and too high. I suspect much of the price increase during the pandemic was due to over ordering. Companies seem to think a larger order will get you quicker service. Hence a backlog. It did not work in 2008, before 2008, or the pandemic, or now. Also the backlog at LA and Long Beach was mishandled. Biden stepped in and ordered OT which was the right thing to do. Why the companies did not do it, surprises me. Profit taking as prices increased. Thieves . . .
Hmmm. Maybe young people should look into living in shipping containers.
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Today’s Homeowner – December 22, 2023