Why Millennials Are Waiting So Long to Buy Their First Homes
They may finally be moving out of their parents’ basements, but don’t expect those boomerang kids to be taking out a mortgage any time soon.
Today’s first-time homebuyer rents for an average of six years before buying his or her first home, according to a new analysis by Zillow. Time spent renting has been marching mostly upward since the 1970s, when first-time buyers rented for just 2.6 years before purchasing a home.
Today’s first-time buyers are also more likely to be single and older (with an average age of 32.5) than previous generations.
“Millennials are delaying all kinds of major life decisions, like getting married and having kids, so it makes sense that they would also delay buying a home,” Zillow Chief Economist Svenja Gudell said in a statement.
Related: Found Your Dream Home? 7 Tips for Getting the Best Deal
Part of the reason for that delay could be that homes cost much more than they did decades ago. Today’s homebuyer makes roughly the same amount of money in inflation-adjusted terms as a buyer in the 1970s, but the homes that they’re purchasing are about 60 percent more expensive.
There are other roadblocks for first-timers. Limited inventory and strong competition make the home buying process difficult for property virgins and student debt can make it tougher to get a mortgage.
Those six years spent renting aren’t coming cheap, either. In 2013, almost half of all renters were spending more than 30 percent of their income on housing, with more than a quarter sending half their income to their landlord every month, according to the “State of the Nation’s Housing 2015” report issued in June by the Harvard Joint Center for Housing Studies. That makes it pretty tough to save for a down payment.
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Tweet of the Day: The Black Hole of Big Pharma
Billionaire John D. Arnold, a former energy trader and hedge fund manager turned philanthropist with a focus on health care, says Big Pharma appears to have a powerful hold on members of Congress.
Arnold pointed out that PhRMA, the main pharmaceutical industry lobbying group, had revenues of $459 million in 2018, and that total lobbying on behalf of the sector probably came to about $1 billion last year. “I guess $1 bil each year is an intractable force in our political system,” he concluded.
Warren’s Taxes Could Add Up to More Than 100%
The Wall Street Journal’s Richard Rubin says Elizabeth Warren’s proposed taxes could claim more than 100% of income for some wealthy investors. Here’s an example Rubin discussed Friday:
“Consider a billionaire with a $1,000 investment who earns a 6% return, or $60, received as a capital gain, dividend or interest. If all of Ms. Warren’s taxes are implemented, he could owe 58.2% of that, or $35 in federal tax. Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60. The result: taxes as high as $95 on income of $60 for a combined tax rate of 158%.”
In Rubin’s back-of-the-envelope analysis, an investor worth $2 billion would need to achieve a return of more than 10% in order to see any net gain after taxes. Rubin notes that actual tax bills would likely vary considerably depending on things like location, rates of return, and as-yet-undefined policy details. But tax rates exceeding 100% would not be unusual, especially for billionaires.
Biden Proposes $1.3 Trillion Infrastructure Plan
Joe Biden on Thursday put out a $1.3 trillion infrastructure proposal. The 10-year “Plan to Invest in Middle Class Competitiveness” calls for investments to revitalize the nation’s roads, highways and bridges, speed the adoption of electric vehicles, launch a “second great railroad revolution” and make U.S. airports the best in the world.
“The infrastructure plan Joe Biden released Thursday morning is heavy on high-speed rail, transit, biking and other items that Barack Obama championed during his presidency — along with a complete lack of specifics on how he plans to pay for it all,” Politico’s Tanya Snyder wrote. Biden’s campaign site says that every cent of the $1.3 trillion would be paid for by reversing the 2017 corporate tax cuts, closing tax loopholes, cracking down on tax evasion and ending fossil-fuel subsidies.
Read more about Biden’s plan at Politico.
Number of the Day: 18 Million
There were 18 million military veterans in the United States in 2018, according to the Census Bureau. That figure includes 485,000 World War II vets, 1.3 million who served in the Korean War, 6.4 million from the Vietnam War era, 3.8 million from the first Gulf War and another 3.8 million since 9/11. We join with the rest of the country today in thanking them for their service.
Chart of the Day: Dem Candidates Face Their Own Tax Plans
Democratic presidential candidates are proposing a variety of new taxes to pay for their preferred social programs. Bloomberg’s Laura Davison and Misyrlena Egkolfopoulou took a look at how the top four candidates would fare under their own tax proposals.
