How do current housing market dynamics affect the financial prospects of millennials?

The housing market has undergone a dramatic transformation that negatively impacts millennials. Historical measures of affordability have changed significantly, limiting accessibility for younger generations. In the past, potential homebuyers could purchase homes for about three and a half times their salary, while current prices often exceed eight to ten times income.

This escalation in housing prices means that millennials are unable to secure stable living conditions, resulting in:

• A decrease in home ownership rates, which dropped from 50% in 1983 to around 32% now.
• Increased reliance on cohabitation with others, which went from 85% of 30-year-olds living alone in 1983 to 64% today.
• Declining marriage and birth rates as financial burdens make traditional familial structures more challenging to pursue.
• The perception of homes as critical assets for wealth creation, despite the reality that they often act more as lifestyle banks than true financial investments.

This shift significantly alters the path toward financial independence for millennials, demonstrating that home ownership is less attainable and may not yield the financial benefits expected.