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It’s no secret that millennials and Gen Z are facing financial challenges when it comes to purchasing a home. But many older generations insist they had it harder when they were young. The data, however, paints a different picture.
Cost of living vs. pay: The cost of living has increased significantly since the 1970s, but wages haven’t kept up.
In 1970, the average American’s income was $24,600 annually (adjusted for inflation), and the consumer price index (CPI) was 38.8.
By 2000, the average annual income had increased to $38,700, but the CPI had more than quadrupled to 172.2.
Since then, wages have only increased by 80%, while the CPI has increased by over 500%. As a result, Gen Z’s money has 86% less buying power than baby boomers did at the same age.
Housing affordability: Home prices have risen dramatically over the past few years, making it difficult for many Americans to purchase a home.
The median home price in 2022 is nearly double that of 1970 (adjusted for inflation). This trend could be partly due to the rising CPI, but some argue that baby boomers are causing a supply issue by staying in their homes longer than other generations.
High housing costs and increasing interest rates have also led to higher rental costs. The median rent has increased by 150% since 1970, and spending so much on rent makes it difficult to save for a home.
Some savvy members of Gen Z (and others) are fighting back against housing affordability by making money from the one thing they cannot afford: Real Estate.
New companies have made it possible to buy shares of rental properties for as little as $100 and get paid out profits from rental income every quarter.
Rising tuition costs: College tuition rates, to much debate, have risen much faster than income rates over the past 50 years, contributing to one of the biggest debt crises in the U.S.
Many Gen Z and millennial college students go into debt to pay for college, only to graduate into a job market offering rates that fall short of the cost of goods and housing.
College degrees are also now more expected than they once were, with most employers requiring them.
Boomers were among a much smaller group of college-educated Americans, making their degrees more valuable in the job market.
Why the ‘good old days’ idea is wrong: Contrary to popular belief, the “good old days” were not necessarily better when it comes to affordability, either.
In the 1970s, the average American income had less buying power than it does today. However, home prices (and other goods) were far more affordable, and college degrees were less expected and less necessary.
Today, Gen Z faces a tougher financial road than previous generations.
They must pay unreasonably high rent while trying to save for homes that are becoming increasingly more expensive. They are also saddled with student loan debt and graduate into a saturated job market offering lower rates than the cost of goods and housing.
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Image and article originally from www.benzinga.com. Read the original article here.