Yesterday I wrote about the boomer retirement crisis and on the other end of the spectrum there is a millennial housing crisis. The Wall Street Journal has an article entitled, “Young Americans Are Getting Left Behind By Rising Home Prices, Stocks” and here is a key quote from the article.
For those looking to embark on the American dream today, it is further out of reach than ever. Home-buying affordability fell last year to the lowest level since 1985, according to a National Association of Realtors index. The median household now needs more than 40% of its income to cover payments on a median-priced home, according to the Federal Reserve Bank of Atlanta.
WSJ.com
What Are Solutions?
It seems boomers are ill prepared for retirement and broke and millennials are priced out of housing and struggling to get by which begs the question, what are the solutions?
For some, the solution appear to ban billionaires but I struggle to see how that would fix anything. Simply doing wealth transfers from “rich” people to “poor” people seems like a recipe to generate more lazy people that will sit around waiting for hand outs.
What Were My Solutions?
When I bought my first home, mortgage interest rates were 7.5% and my mortgage payment on my two story 5 bedroom house were about $1200/month. I paid down that mortgage as quickly as I could with bonuses I received at work and any extra cash I had around.
Ironically, property taxes, insurance and maintenance now cost more than my initial mortgage payment and it’s only because the house is paid off that it is easy to pay for those expenses.
The obvious solutions are to either earn more money or lower your expenses and housing expectations but I don’t think most people like those two options.
What About Moving Abroad?
Even though I think I may be okay in retirement, my wife and I are also considering moving abroad before everyone catches on and starts driving up the cost of living in those places. We already ruled out Spain but have plenty of other options to choose from at the moment. One of our kids is already living in Europe and he seems to be settling well so far.
Share The Wealth
Are you a broke boomer or millennial? If so what is your plan moving forward?