The Real Estate Market: Millennials’ worst nightmare (and what to do about it)

Okay, it’s not just millennials. I’m biased towards “my people” on this one. However, I am going to stand my ground on the idea that millennials, gen z and whatever they call the ones coming up behind them are in more danger of financial instability than any generation since the great depression. I would also argue that our position is made worse by the fact that we can clearly see what’s coming. In 1929, the young adults and teens had nothing but expectations of a bountiful future. Today, we’re watching a wildfire raging through our future, HOPEFULLY in slow motion.

Millennial’s Real Estate Dreams…

We’re watching a wildfire raging through our future, HOPEFULLY in slow motion.

This problem is so systemic in nature that it is necessary to break it down into more digestible chunks. For my argument, we’re going to focus specifically on the housing market.

The fact is, for most young Americans and even for many not-so-young ones, the decisions made by our leaders and our collective society over the last 4-5 decades have resulted in objective disaster. Yes, there is always personal responsibility to consider, but that doesn’t account for everything. We’re in a juxtaposition where homeownership is considerably more difficult to step into than ever before while simultaneously being far more important than ever before. And the worst part is that we (collectively) brought this upon ourselves.

If (BIG IF) you happen to be someone who became a homeowner prior to the interest rate hikes of the post-COVID era, things might feel okay right now. If you’re not in that group, you better buckle up because it’s going to be a fuckin’ rough ride. And I want to call out this isn’t only broken down by generational lines. There are plenty of boomers and silent generation folks out there that have had a rough go of it. Most of the people impacted by the ‘08 crisis were in these groups. That being said, the largest divide between these groups is silent gen, boomers, and some gen x on one side with the rest of gen x, millennials and gen z on the other (plus everyone coming after gen z).

I would argue that this duality, the one where major segments of our population feel relatively safe and secure while others feel a rapidly growing sense of despair, is akin to a dysfunctional family. There is clearly a problem, but talking about it makes it real and gives it power, so we don’t do that here. The kids intuitively know something isn’t right, but they see the adults pretending like everything is fine.

By the way, what this actually does for a child is tell them that there is something wrong with them (and this is not helped by older generations talking shit about the younger ones). When a child feels dissonance between the reality of what they are experiencing emotionally and what the adults are doing/saying it is an inherent fact that the child is not receiving what they need emotionally (this is called attunement). This is a basic need for human development on par with food, water, shelter, etc. If the child isn’t getting what they need, they’re left with two possibilities: there is something wrong with this family, or there is something wrong with them. If the family is the problem the obvious answer is to leave and find a place where you can get what you need. But a child can’t do that. The brain determines it is more productive/safer/sustainable to identify the child itself as the problem, because at least that way the child has some power over the situation (changing its behavior via experimenting with acting out, misbehaving, shutting down, etc. in an attempt to get more of that attunement they need). Tangent over.

I believe that we’re all aware of the problem. Depending on our socioeconomic situation the problem we’re picking up on is either negligible (something we can ignore) or it is paramount (just about a life or death situation). For one cohort, it is someone else’s problem. For the others the problem is, essentially, the end of America. That may seem hyperbolic, but it doesn’t feel that way.

The reason? It’s because the way the second group sees this problem is a little more complex. It isn’t just a problem about housing affordability (and wage stagnation, and inflation, and corporations not paying taxes, etc.). It’s a problem about housing affordability and a problem about the other group, which is half of society - the half that just so happens to be in positions of leadership and power - not seeming to care about housing affordability. There is a Valles Marineris between the two groups (if you don’t click the link, Valles Marineris is a series of canyons on the surface of Mars that is 10x longer, 20x wider and 5x deeper than the Grand Canyon).

Valles Marineris is a series of canyons on the surface of Mars that is 10x longer, 20x wider and 5x deeper than the Grand Canyon

You know what I’m describing here? This is a class war set in a class-based society. I don’t necessarily think there’s anything wrong with that if the starting conditions and the opportunities available to individuals are generally similar. The problem is… they’re not. Even if conditions and opportunity were similar across the board at this moment in time (they aren’t), no one can deny that they are dramatically worse today than they were 30, 40, 50 years ago (go read this book if you don’t believe me).

I wrote several whole paragraphs here about who is to blame for this and then decided I don’t want this post to be about pointing fingers. What I want it to be about is helping those who don’t feel the acute pain of this problem to increase in empathy, and helping those who do feel the acute pain move further towards the belief that there is hope for us.

For those of you needing empathy, there’s only one tried and true method that I’m aware of: go find someone feeling the pain of our situation and make the decision that you’re going to try to understand their position and identify with what they may be feeling. Empathy doesn’t come by ignoring, and it doesn’t come by accident.

For those of us needing hope. Well, I tend to struggle here. I’m a part of this group (working to escape it) which means that I feel the hopelessness at times. All I really have to offer here is my experience. It centers around homeownership.

I have trauma around this because my family lost a house to foreclosure when I was little. I lived through 2008 (I was 20) and saw widespread devastation (the same devastation that swept through my family as a kid). This somewhat normalized my childhood experience, but it also made mortgage and homeownership that much more daunting. I also had a major lack of knowledge around the process of purchasing a home.

In 2013 I had a friend that purchased a house. He was a couple years younger than me, but he worked for a mortgage company, made good money, and took the opportunity to buy a small place. A few years later he sold that place and pocketed ~$85,000. I was floored by this. Through conversations he helped me understand that even as an hourly wage earner there were probably some government loans out there specifically intended to help people like me get into a home and stop paying rent.

Fast forward a few years and I was selling a 4 plex (mini apartment property with 4 units) that I had purchased with an FHA loan (on my hourly wage) and lived in for 2+ years. I had rented out the other 3 units the entire time, which paid my mortgage and allowed me to save a decent amount of cash. I’ve since purchased a single family home where I live with my wife and our two pugs.

I tell that story to hone-in on one specific detail: I had no idea that the pathway to homeownership was actually something I could manage. I had always thought it was some distant thing way out in the distance, something for future Dave to deal with. I had to start asking questions and exploring options in order to know what was truly possible. I knew I didn’t want to rent forever, always worrying about rent increases or not being able to renew a lease. I just never thought there was another way for me.

Unfortunately, things are harder today. That’s what all that other stuff above ^ was about. It is harder today to purchase a home, and it is only going to get harder. But it is not impossible. There is always a path to homeownership. My argument is that, other than getting lucky or being in a good sales job, I believe owning a home is the last pathway to upward socioeconomic mobility. If you don’t have one or more of those three things, I believe you’re most likely stuck where you’re at and that your kids will also be stuck where you’re at.

If any of this resonates with you, I urge you to actively seek out what fell into my lap: someone I trusted that could explain the nuances of mortgages and homeownership to me. You have to know the state of the playing field (the market), where you fall (credit score, income, debt, etc.) and what options exist. You may not like the information you receive at first, but you will know what needs to change. Having these conversations will allow you to focus your attention on the areas that need improvement rather than sitting with the anxiety of an unrecognized problem.

Here’s the good news all wrapped up in a little bow:

For most people, getting into a position where purchasing a home is a reality can be accomplished within a year.

That’s it. Twelve months. One Thanksgiving, One quarter of a presidential term. One birthday. One trip around the sun.

Not really that far off.

I’m sure I’m biased here but I want to restate my opinion. If you’re not a trust fund kid or someone with a sales gig that doles out fat commission checks, homeownership might be the only way to really make significant, multi-generational impacts for you and your family. That’s just the state of our country today.

This may seem like an escapist mentality. That’s because it is. But fixing our society and economy is a job for all of us. I cannot participate in the recovery effort if I don’t know the way out myself.

Find someone to talk to. You don’t have to actually do business with them, but do what you can to find out what your options are.

If I’m that person, use the button below to reach out. If not, please don’t stop looking for the right person until you know exactly how you can own your own home and start the process of changing your future.