Like so many millennials these days, Charles Bryant has been having a rough go of things in recent years. The 39-year-old New York native had a good job as a hotel manager in Delaware, but things changed quickly when the pandemic hit.
“I was one of those guys that had a five-year, 10-year plan,” Bryant recently told Fortune. “I wanted to be at a certain place.” Unfortunately, those plans dissolved when he had to take a pay cut and eventually made the hard decision to leave his hotel job. “The pandemic halted all the positive momentum I had built professionally in the 10 years prior,” he said.
After searching for new opportunities, Bryant finally found a job as an operations manager for a major retailer, a position that has helped him through these trying times. But while he may have avoided the worst, his life is still far from where he wants it to be. He has $42,000 in student debt and lives with his parents, an arrangement of necessity given the skyrocketing price of homes.
In a lot of ways, Bryant’s story reflects some growing trends. Many young people have had to change course in recent years; many are saddled with student debt, and many are living with their parents. Indeed, roughly 58 percent of 18-24 year-olds were living with their parents in 2021, as well as roughly 17 percent of 25-34 year-olds.
The reason for the trend is not hard to pin down. “A staggering 70 percent of Americans between the ages of 23 and 40 who want to buy a home say they can't afford to,” writes Peter Rex in a recent Newsweekcolumn, “and those who can are doing so at a later age than their parents.” In all, only 43 percent of millennials are currently home-owners. And with house prices up nearly 120 percent since 1965 (adjusting for inflation), that number will likely remain low for quite some time.
Getting to the Root of the Problem
So why are housing prices so high? It’s a question that everyone is asking, but few seem to have a good answer for.
Some blame greed, but that argument really doesn’t hold water. People haven’t suddenly become more greedy than they were a few decades ago. Another explanation is that money printing from the Federal Reserve is causing inflation, and that is certainly part of the problem. The Fed’s purchases of Mortgage-Backed Securities in particular may be inflating housing prices above what they would otherwise be. But with housing prices ballooning so quickly, inflation likely doesn’t account for the lion’s share of the price-hikes.
What does account for it is good-old supply and demand. Simply put, the primary reason housing prices are soaring is because the supply is being limited while the demand is growing.
Read the rest of the piece at: FEE.org.
Patrick Carroll is the Managing Editor at the Foundation for Economic Education.
Photo: by Brett and Sue Coulstock, under CC BY 3.0