Editor’s Note: Annika Olson is the assistant director of policy research at the Institute for Urban Policy Research and Analysis at The University of Texas at Austin and a Public Voices Fellow of The OpEd Project. The views expressed here are hers. View more opinion on CNN.
Picture this: you’re driving around, furiously checking the GPS on your phone clipped to the air vent and pulling over at various points to check the laptop next to you, which is linked to your phone’s hotspot. You’re checking locations, addresses, prices, market fluctuations… all in hope of one thing.
Landing a house.
This has been my life for the past few months in Austin, Texas. Before work at 7 a.m., I check new listings that may have come on the market. “Check on Thursdays,” real estate agents say. “That is when the best realtors will post. The house will be up for the weekend and gone by Sunday evening.”
They are right. I look at a house one day, and the next day a little red icon says “pending.” Some say “contingent,” which I had to Google. In short, I’m toast. The current real estate market is absolutely bonkers, and it is time that the federal government make moves to increase affordable housing.
The Austin market, like many others around the country, is hot, like, really hot. This is the second year in a row Austin has been named the nation’s top housing market by Zillow, with Elon Musk proclaiming that Austin will be the biggest “boomtown” the country has seen in half a century.
That’s tough for me to hear. I’ve scrimped and saved for years, working for AmeriCorps for $1,000 a month and doing everything I could to build up my credit score and savings account so I could buy a house. But with inventory so low, it barely seems possible.
My research – including talking to people my age – shows that millennials, are getting shut out of the housing market in large, ever-growing cities. Nearly 70% of millennials, according to a 2019 study from the rental platform Apartment List, say they cannot afford a house due to rising prices, and a recent study by the Federal Reserve Bank of St. Louis Center for Household Financial Stability found that millennials have almost 35% less wealth than would have been predicted from the experience of earlier generations at the same ages.
Most millennials are renters, and nearly half of people 18 to 34 are rent-burdened – meaning 30% or more of their income goes to rent.
A recent Unison report showed that nationwide it takes nearly 15 years to save up for a 20% down payment on a median-priced home if you have a median income. In Los Angeles, someone must save for 43 years; in New York City and Miami, it’s 36 years; and San Diego, 31.
Basically, at 26 at my median-income job, I’ll be 69 when I have enough money for a down payment in LA, or, I could head for San Diego when I’m 57.
That is not OK. We, as a country, need to find a way to allow young people a slice of the pie, an opportunity to grow their wealth and invest in something that is important for their future. The thought of letting young people reach middle to old age without an important stake in the economy is scary to think about.
We know that one of the best methods for building and sustaining wealth, especially intergenerational wealth, is home ownership. For low and middle-income people, nearly 50% of their net worth is attained from the equity in their homes.
But, if we can’t even get the house, that is not possible.
It is past time that the federal government – which has largely avoided this discussion – step in. There was a comprehensive affordable housing plan at the start of 2018 from Massachusetts Sen. Elizabeth Warren proposing the construction of three million new housing units, a down-payment assistance program, and limits on investor purchases of single-family homes.
These are the type of policies we need. The center point of the plan is the American Housing and Economic Mobility Act, which would’ve invested about $500 billion over 10 years to build and preserve units for lower-income buyers. This was one of the most aggressive housing plans we’ve seen nationally, and something that truly could work.
The bill was reintroduced in the Senate in March of 2019, read twice, and is sitting with the Committee on Finance. The bill should be reintroduced and passed along with others that would increase affordable housing and provide more opportunity for potential homebuyers. Our younger generation needs more affordable housing.
The pandemic has impacted millennials especially hard. Having already lived through the Great Recession of 2008 – suffering with high unemployment and high debt – they are living through a second economic disaster amid the Covid-19 pandemic.
Bouncing back from this financial insecurity includes the chance to have a piece of the American dream – to own a home.