Making Sense of Our Economy’s Most Confusing Area - InvestingChannel

Making Sense of Our Economy’s Most Confusing Area

Proprietary Data Insights

Top Real Estate ETF Searches This Month

#1Vanguard Real Estate Index Fund5,381
#2Real Estate Select Sector SPDR Fund2,777
#3iShares U.S. Real Estate ETF1,877
#4VanEck Vectors Mortgage REIT Income ETF1,137
#5Schwab US REIT ETF886
#ad A Daily Stock Pick With Professional Analysis

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

  • In a recent Bank of America survey, millennials between 31 and 41 years old were three times more likely to buy a home rather than rent an apartment. 
  • Among all millennials, roughly 45% said they anticipate buying a home in the suburbs and they’ll do it within the next two years. 

The takeaway: millennials are bullish on home ownership? 

On less positive notes: 

  • A recent survey found that just 23% of people considered home ownership “at least somewhat possible” in January of this year, compared to 30% in January 2021. 
  • In a separate assessment of 1,000 renters by real estate research and brokerage firm, HomeBay, 66% of apartment dwellers expressed “hopelessness” over buying a home. Instead, they’re chasing other money goals, such as being debt-free (71%), having a comfortable retirement (66%) or buying a car (59%). 

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.

Want to get content like this directly to your inbox? Then we urge you to sign up for our newsletter here

Related posts

Advisors in Focus- January 6, 2021

Gavin Maguire

Advisors in Focus- February 15, 2021

Gavin Maguire

Advisors in Focus- February 22, 2021

Gavin Maguire

Advisors in Focus- February 28, 2021

Gavin Maguire

Advisors in Focus- March 18, 2021

Gavin Maguire

Advisors in Focus- March 21, 2021

Gavin Maguire