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Making Sense of Our Economy’s Most Confusing Area
As it turns out we can probably only agree that today’s housing market is confusing. The group you fall into – forever renter, trapped homeowner, actively seeking shelter – depends, more than ever, on the strength of your personal financial situation. This is the antithesis of the American dream, which, at its core, has always been about widespread and relatively accessible home ownership.
So the data that’s out there these days on the subject of home ownership is difficult, if not impossible to make sense of. However, it makes for great conversation among people – like us and presumably you – who care about these things. So when you bring up some of these insights over coffee with friends, be sure to tell them you saw it in The Juice.
The takeaway: millennials are bullish on home ownership?
On less positive notes:
The takeaway: Among millennials – and across age groups for that matter – it’s only the most financially well off among us who feel good about and can successfully pull the trigger on home ownership these days.
This tells us something else. That, for large swaths of the population, there’s a new and changing definition of the American dream.
Home ownership no longer acts as the foundation of the American dream for people who see it as increasingly impossible. Rather, maximizing cash flow – indicated by the desire to focus on retirement savings and not take on debt – represents at least part of the new American dream for folks inevitably priced out of the real estate market.
The Bottom Line: While you can argue that the death of home ownership as the end all and be all of the American dream sucks, there is a silver lining.
It takes a ton of money to not only get, but service a mortgage (and home) in 2023. While conditions might eventually improve, we’re unlikely to go back to the days when home ownership was in reach for a large chunk of the population. The bright side is that, along with dying dreams of buying a home, comes an end to people stretching themselves financially to achieve that goal.
Generally, when you stretch yourself, you’re short on free cash flow at the end of the month. If you run consistent personal budget surpluses, you can likely take that cash and do other worthwhile things with it, such as pay down debt, save for retirement and buy other nice things not quite as big ticket as a house.
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