Nothing stays the same as time flies away. The same goes for our children and grandchildren. Looking back at our parents and grandparents and their lives so far, we see a lot of differences. One of the major difference we’ve notice is the problem of housing.
Housing Has Drastically Changed in Time
Young people are having a very difficult time to find a place of their own. The costs for getting a property and even renting one has increased tremendously in comparison to what their grandparents paid for their homes.
And what are they paying for? For smaller houses or flats in crowded areas that are very far from their jobs and must commute. Adults between 18 and 36 are spending more than a third of their income on rent or about 12% on mortgages, while their grandparents used to pay in the 60s-70s about 5-10% of their income.
A Housing Catastrophe
The Conservative minister David Willetts warned us about this catastrophe in his research at Resolution Foundation thinktank. He said that the 30-year-olds have half the chance their parents had to buy their own home.
The previous generation needed to only save money for three years to get a deposit. Today, a young family must save for 19 years to afford it. David Willetts stated that there must be a way to ‘open up the route to home ownership again’ and that there must be something we can do about the younger adult that ‘have horror stories of bad landlords’.
It is worrying, because not many can afford to actually buy a place of their own, so they end up renting places until they get old. Getting a mortgage is very difficult after the age of 40 and people get stuck renting and facing either eviction or rising rents.
The Past and The Present: Buying a House
Today people will spend a lot more on a house that is smaller and further away from their jobs, compared to what their parents or grandparents could afford.
Spending about 23% of your earnings on housing is a horrifying number, when looking at what parents used to spend: 17% and the grandparents spent only 7%.
Their parents could in their 30s to buy a house, whereas the millennials have to wait until their 40s, and as we said earlier, it’s a bit too late to get a mortgage at that age.
One of the author of the report, Lindsey Judge, stated that this catastrophe has been developing for about 50 years until the present, but those who are hurt by it are the millennials. Add this to how it makes them feel spending a huge amount of their income on housing in exchange for ‘lower quality, longer commutes and less security’, and it will surely bring everyone’s moral and financial status to the ground.
For more details on how the housing catastrophe is compared with the older generations, check the original article here. Article reproduced with the permission of www.buddyloans.com