84% of 18-to-34-Year-Olds Want To Own Homes

Wendell Cox — Tue, 22 May 2012 22:42:49 -0400

A survey by TD Bank indicates that 84 percent of people 18 to 34 years old intend to buy homes in the future. This runs counter to thinking that has been expressed by some, indicating that renting would become more popular in the future. Much of the "home ownership is dead or dying” comes from short sighted trend analysis in which home ownership data begins with the start of the housing bubble in the late 1990s. The latest data from the Bureau of the Census indicates that the home ownership rate in the first quarter was 65.4 percent, the lowest rate since 1997. In fact, however, before the housing bubble, homeownership hovered generally at 65 percent or below, after having increased strongly from 44 percent in 1940 to 61 percent in 1960. The increase in homeownership during the bubble was the result of profligate lending policies that were not sustainable. The decline from the artificially high housing bubble peak in no way diminishes the successful expansion of homeownership in the nation during the decades that reason prevailed in home lending.

Understanding the Egyptian Protests: Headwaters of the Arab Spring

Morley Winograd and Michael D. Hais — Fri, 03 Jun 2011 14:59:57 -0400

On Tuesday, January 25, 2011, the leaders of the Egyptian protest group, April 6 Youth Movement (A6Y), led hundreds of thousands of protesters chanting, “Bread, Freedom, Human Rights” into Cairo’s Tahrir Square. The events that followed completely surprised the economic elites gathering for the annual World Economic Forum meeting in Davos, Switzerland. Few put much stock in the importance of the actions of young people in Egypt until the protests overturned that country’s entrenched power structure in a matter of weeks.

Why were the leaders of the global economy so surprised by the events that have come to be known as the Arab Spring, and why did they feel so threatened by them? Why did the protester’s demands spread so quickly throughout the Arab world after decades of suppression by autocratic regimes?

The answer to these questions lies in an understanding of the complex interaction between technological and generational change, fueled by a hunger for a better future, that continues to be the underlying source of the institutional instability and that will reshape the entire region. In a new Kindle Single, Headwaters of the Arab Spring, NDN fellows Morley Winograd and Mike Hais explain how these intertwined forces are destined to undermine institutions and leaders in every corner of the world.

MILLENNIAL PERSPECTIVE: Education Economics

Rachelle Yeung — Wed, 27 Jan 2010 00:24:00 -0500

Almost three years ago, shortly after graduating from college, Jeffrey Rogers found himself with a degree and no job. The economy had just taken a dramatic turn for the worse and he was struggling to get by.

“He was literally living off peanut butter and jelly sandwiches,” said Kathryn Rogers, his younger sister and a first-year graduate student at Chapman University in Southern California.

Jeffrey went to their father for help in a last-ditch effort to meet his monthly living expenses, but his Dad refused. “He definitely is into tough love," said Kathryn. “He said, ‘He’ll make ends meet in one way or another...' [his] attitude is, ‘Once you graduate, you’re cut off’.”

Jeffrey ended up borrowing money from friends to pay rent for the next six months. But Kathryn is grateful for her father’s “tough love”. She believes it has strongly contributed to her own sense of financial responsibility. While her parents paid her rent and tuition, with the help of an academic scholarship during her four years of undergraduate studies, she was in charge of everything else. “I paid for food, I paid for gas, I paid for activities, I paid for my sorority,” she said.

Kathryn has always had a job since the age of 16. Being aware of how much things actually cost has helped her keep her budget balanced now that she is on her own. But not having that awareness is a huge problem for many college students. “If you’ve always had everything given to you, you wouldn’t think about [cost of things] because it wouldn’t be an issue,” she said.

A majority of Kathryn’s student acquaintances don’t know the basics of personal finances. “You talk to people our age, they’re 18 and they have $12,000 in credit card debt or they don’t know how to pay bills or how to do their taxes,” she said.

Kathryn believes a financial management class in high school should be mandatory. “If your parents don’t teach you, where are you supposed to learn?” she asks.

Catie Robbins, a senior screenwriting major at Chapman, agrees. “Your parents figure you’re going to learn along the way. But then you always feel so much guilt and disappointment when you’re not being responsible with your money. It’d be nice if there was more guidance available.”

Robbins has taken out student loans and receives financial aid, which helps her parents pay for her tuition. But they also take care of her rent, food, and other necessities.

“Basically I don’t have to pay for anything. But it’s scary because they only send me enough money for my food and lodging, so I can’t buy anything else,” she said. “If you want to do fun, random stuff or if you go overboard on your food expenditures, you can be very poor. It’s fine – it’s just kind of sad to be dependent on my parents.”

Robbins looks forward to graduating and getting a job. But right now her financial aid package limits the amount of money she can make from employment to $2,000 a year, which she said she can easily earn during the summer. “As soon as I make that much, I have to quit,” she said. She points out that, counter-intuitive as it is, students are given financial aid because they don’t have enough money, but then are stopped from earning more because of the aid they receive.

There is also a certain irony in being given dreams and goals during college, and then being unable to fulfill them because of the financial burden of college.

“Originally, I had all these ideas for traveling,” said Robbins, who has studied abroad. “But you definitely can’t just take off after school and be youthful and pursue all these silly things. You have to be responsible. I am kind of excited to finally be free and living on my own, and not having to ask my parents for money,” she added.

While financial aid is limiting for some students, and asking your parents for money is never easy, it is definitely a preferable alternative to being entirely dependent on student loans. That’s the situation in which junior Dave Casey finds himself.

Without the minimum required 2.0 GPA, Casey was not eligible for federal student aid this semester. Taking out loans was his only option for staying in college. Currently, he owes about $60,000 with two more years of school to go. He is paying a monthly $187 in interest alone.

“I could have gone to the University of Rhode Island for $6,000 a year,” said Casey, a native of Warwick, R.I. “But I didn’t want to. I was willing to pay because I wanted to go off, I wanted to experience something else, I wanted to be surrounded by a different environment, different people. And I think that’s how you really learn.”

Casey’s father helps him out with rent, and he works over 20 hours a week at a local restaurant. “What stresses me out is that my mother is on food stamps, and I have no money to give her,” said Casey, whose parents are divorced. “I can’t [help], because I’m in a hole myself. Do I send hundreds of dollars a month back to my mom, or do I pay off these loans and then turn to help her? Either way there’s not enough money to go around.” Like Kathryn Rogers and Robbins, Casey’s only hope is to get a steady job after he’s graduated and start paying off his mountainous debt.

“The only reason why I’m not freaking out hardcore about this is because I can’t comprehend it. Set $60,000 in front of me; I’d like to see it. It’s so abstract to me,” he said. “These loan agencies definitely benefit from our naiveté.”

Donald Booth, a professor of economics at Chapman and board member of Consumer Credit Counseling Service, thinks that technology is a major contributor to the lack of financial knowledge.

“The traditional way was the bill came to your house, you wrote a check, licked a stamp and mailed it back. Now you have automatic pay, it withdraws it from your account,” he said. “[People] don’t even know what they have in their checking account.”

The transition to so much financial activity online has been difficult for generations both young and old. “Don’t think it’s just students who don’t know how to manage money – it’s almost everybody,” he said.

Older people are naturally resistant to new technology because they like doing things the way they’re used to, according to Booth. On the other hand, there was no one to teach students to use the Internet as a financial tool.

So we’re basically in the banks’ pockets now, because people aren’t keeping track of the money they’re spending, how much they have, how much they owe. "And everything seems free. You almost never get turned down anytime you want to buy something. Until it catches up with you.”

Rachel Yeung is a senior at Chapman University in Orange County, California.

millennials

84% of 18-to-34-Year-Olds Want To Own Homes

Understanding the Egyptian Protests: Headwaters of the Arab Spring

MILLENNIAL PERSPECTIVE: Education Economics