HereÕ the impact rising home prices have on Millennials

It’s not the 70s anymore

Millennials are struggling to save enough money for a home since prices are rising faster than their pay. Per The Washington Post:

To put this in perspective, the article references a Zillow (Z) report that found in the 1970s, new homebuyers found homes that cost about 1.7 times their annual pay.

Today, the typical first-time homebuyer purchases a home that costs 2.6 times his or her annual income.

Consider, the typical home purchased by first-time homebuyers cost a median $140,000 between 2010 and 2013, up from an inflation adjusted $87,300 in the 1970s, the study found. Meanwhile, the median income for first-time homebuyers was $54,000 in 2013, about the same as it was in the 1970s, Zillow found.

People have to strive for more expensive homes today than they did in the past because home prices have appreciated over time while wages have stayed mostly flat, says Svenja Gudell, chief economist for Zillow. “We’re seeing that first-time home buyers are renting for longer,” Gudell says. “Homes are more expensive so it takes them a while to get to that stage in their life.”

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