Millennials are breaking all the wrong records. When will we catch a break?

09 Aug 2019

Last month, I wrote an article on the student debt crisis, political depression and eco-anxiety — debilitating stressors for millennials like myself.

According to a new study conducted by global credit-reporting agency Experian, we can add another stressor to that ever-growing list: record-breaking mortgage debt.

“Millennials’ mortgage growth tops nearly all generations,” reported an Experian blog post that summarised the findings. “With many millennials now well into their 30s, they are on a quick pace to hold more average mortgage debt than any of their peers.”

Fast facts about the millennial mortgage debt crisis:

As of Q1 2019, millennials hold, on average, US$222,211 in mortgage debt — an astounding five percent increase from Q1 2018.
Millennials living in Washington, D.C. have the highest average debt at US$450,985.
Hawaii, California, Massachusetts and Washington complete the list of the top five states with the highest average mortgage debt.

If you’re hoping to buy a house in the US, set your sights on West Virginia or Puerto Rico, where the combined average mortgage debt for millennials is US$129,807. Indiana, Arkansas and Ohio complete the list with a combined average mortgage debt of US$145,962.

When will millennials buy homes?

Type the phrase “when will millennials” into Google, and the second result is “when will millennials buy homes?”

Google’s first answer to that question is a Forbes article whose headline reads, “When Will Millennials Buy Homes — If Ever?”

That article, written by Russ Krivor, CEO of Sovereign Properties in New York City, answers the question with a refreshingly balanced insight:

“[Millennials] are going to want smart homes, smaller spaces that are well appointed and innovative builder/community maintenance options so they can focus on things more important than yard work (after all, this is the generation tasked with finding the answers to climate change, water shortages, income inequality, wars, mass violence, animal abuse and every kind of intolerance).”

Want to Hire Millennials? Better Help Repay Student Debt – Bloomberg https://t.co/1vxgE9mP8J

— John P. Hyland (@JohnPHyland20) August 8, 2019

Krivor’s answer is right on the money. Millennials don’t want the same huge homes with sprawling lawns as their parents. We recognise the threat of climate change. We’re making real efforts to transform our lifestyles and reduce our carbon footprint.

Krivor asserts that “millennials will dive into the single-family home market — and they will transform it.”

In our current economic and sociopolitical climate, one can only hope he’s right.

Breaking all the wrong records

Search “millennial debt” on Google and you’ll also find a slew of depressing headlines:

Bloomberg reported in February that US$1 trillion is owed in total millennial debt, most of which is student loan debt. As a result, young people aged 19 to 29 are slashing their spending.

Yet the Bloomberg report seems to reiterate that record-breaking debt is concerning for all the wrong reasons:

“Policy makers have recognized that lower spending limits economic growth. As a result, a number of policies to boost younger adults’ spending such as forgiving student debt have entered the political arena, according to Richard Curtin, director of the University of Michigan consumer survey.”

This suggests that student loan debt forgiveness and similar legislation aim to increase our spending; not to improve our quality of life, not to aid in the seemingly unwinnable fight against climate change — but to increase our spending and boost economic growth.

We have less than 11 years to prevent the most catastrophic effects of climate change. Economic experts and even the UN agree that economic growth is the wrong answer to the climate change question.

Indeed, economic growth is the last thing we need if we have a hope of reversing even a fraction of the damage we’ve wrought on this planet.

Bloomberg reported in February that American millennials owe more than US$1 trillion in total debt. Source: NeONBRAND/Unsplash

Where do we go from here?

This is a question I ask often in my work on millennial debt and climate change.

Now more than ever, millennials must plan each stage of their lives carefully, and anticipate to reach each milestone much later than their parents.

Step one: go to college and study a subject with high employability.
Step two: find a job in an industry that pays a living wage.
Step three: figure out how to pay off student loan debt.
Step four: perhaps find a partner, get married, start a family.
Step five: buy a home.

Such decisions are more of a dichotomy than the news makes them out to be. It’s not a question of when we’ll be able to pay off our student loans — it’s a question of if. (Remember the graduate I interviewed in my last article who said they owed US$49,000 after paying US$6,000 on a US$48,000 bill?)

It’s not a question of when we’ll be able to buy a house — it’s a question of if. For this millennial, whose student debt is also creeping up toward the US$50,000 mark, buying a house has never once crossed my mind as a viable option.

The sad truth is that I expect to rent for most, if not all my life, and I married much younger than the average millennial. Statistically speaking, my husband and I have more of a fighting chance at this than other millennials. Still, I’m not sure owning a home will ever be financially feasible for us.

Depending on where you live, when you crunch the numbers, buying a home works out to be about the same, cost-wise, as renting. But if you rent, you’re not in debt and you owe no interest. If you miss a rent payment, you can (usually) make arrangements with your landlord.

If you miss even one mortgage payment, your credit score can drop as much as 110 points. You’ll have to pay late fees, and you risk going into collection or defaulting.

And besides, the entire idea of owning a home is capitalistic and, frankly, self-important. What will happen to our homes when we get too old to maintain them? Or if we don’t have a family to bequeath them to? They just go right back on the market, which begs the question: what’s the point?

I realise these views are highly subjective. Even so, hundreds of thousands of frustrated millennials face the same problems: stagnating wages, steady inflation, and skyrocketing debt, all against a backdrop of climate change catastrophe. The last thing we need on that list is yet another bright red, triple-digit figure.