Americans in their 20s and 30s are sighing at the soaring housing prices in the country. The Wall Street Journal (WSJ) reported on Sunday (local time) that the housing issue is delaying the marriages and childbirths of those who are economically vulnerable due to student loans and unemployment from COVID-19.
The WSJ pointed that it is becoming more and more difficult for the millennials to buy a home as the supply of starter homes is decreasing, because the preference for comfortable mid- to large-sized houses has grown with more time spent at home due to COVID-19.
In fact, small-sized starter homes under 130 square meters, which are what young Americans mostly buy as their first homes, are having a supply shortage while their prices are rising. The WSJ said that the housing supply shortage in the U.S. market has been worsening for five years and that the small housing supply is in the worst situation in the past 50 years, quoting Freddie Mac, a U.S.-based mortgage loan company. The number of newly built small houses per year was around 418,000 units in the late 1970s but there were only 65,000 new small houses built last year. Even in the 2000s when the supply of new homes increased thanks to the real estate market boom, the construction of small houses decreased consistently.
As young people will buy their first homes later in their lives, there are concerns that the asset polarization will worsen. According to the U.S. National Association of Realtors, the average year to buy starter homes rose from 30 in 2010 to 33 last year. According to the analysis of the Urban Institute, a U.S.-based research organization, those who bought their starter homes at the ages between 25 and 34 accumulated the median level of real estate assets until the age of early 60s, while those who bought their starter homes at the ages between 35 and 44 had an average of 72,000 dollars less in real estate assets than the median level.