Do Today's Home-Buyers Have It Worse Than Their Parents Did?

This guest post is by “Aloha” Tony Kawaguchi 

Everyone watches the housing market for their own reasons; home-owners like to see how much their neighbors sell for because it gives them an idea of how much their own home is worth, while investors are always looking for a drop in prices to take advantage of. For young adults, meanwhile, they are generally looking for an opportunity to get into the market and buy their first home. As a realtor, however, I can tell you that I often hear from young home-buyers that they find home ownership to be an increasingly unattainable goal to achieve, either because of the post-2008 economic slowdown, relatively robust home prices, unmanageable private debt loads, or some combination of all 3. Most acute in the descriptions of these young, aspiring home-buyers is the feeling that their parents' generation had it easier than they do. While the post-2008 economy has definitely stalled many young peoples' careers, I am old enough to have lived through a few other economic downturns, like the early '80s recession and the dot-com bubble burst, both of which took a toll on their respective generations as well.

All of this got me thinking: do young folks today really have it harder than we did 20 or 30 years ago? With home ownership in mind, I decided to do the serious legwork and find out the answer to that question by combing through over 30 years of government and real estate industry statistics. Needless to say, this was a tough question to answer, and I needed to look at everything from housing prices and mortgage rates to household incomes and debt ratios. The conclusions I reached were quite intriguing, and should prove interesting to not only realtors and mortgage specialists, but home-owners and property investors as well. To put it in concise terms, the cost of a house today is definitely higher than it was in 1979, even accounting for inflation; on the other hand, mortgage rates are far lower today than they were back then, which effectively cancels out some of the higher prices. Furthermore, young adults today are carrying more personal debt than ever before (often from college), which means many of them have to balance student debt payments with mortgage payments - so those without debt are in a truly enviable position. What all this means is that while homes today are slightly more expensive than they were for the last generation, by taking advantage of low interest rates and not overextending themselves with their student loans, young adults can still buy in and live up the American dream. For full details, check out the infographic, which I put together based on my research.

About the Author

"Aloha" Tony Kawaguchi is a licensed real estate agent from Hawaii. With years of experience in the industry, he consistently tops the sales charts for homes on Oahu. Curious about how the affordability of homes has changed in America over the years, he researched and produced the popular Home Buying: You vs Your Parents infographic.