First-time buyers aren’t just acquiring property. They’re taking on a jurisdiction’s financial liabilities.
It’s no secret that younger Americans are not buying homes in the numbers previous generations did. These days, only 35 percent of households headed by people under the age of 35 own their houses or apartments, compared to 40 percent just 20 years ago. It’s easy (and valid) to say that younger people are put off by their lack of accumulated wealth. But even if the under-40s were flush with cash, they would have another good reason to avoid buying property in some of the country’s most densely populated areas: They also would be purchasing decades’ worth of pension and other long-term liabilities related to government workers.
Millennials face obvious financial hurdles in making six-figure purchases. They are less wealthy than their baby-boomer counterparts were at the same age. According to the Pew Research Center, millennials’ median net household worth in 2016 was $12,500 -- 40 percent less, in inflation-adjusted dollars, than the $20,700 that represented boomers’ wealth in the early 1980s.
But even if millennials had ample earnings to save and invest, they still would have to pause before making investments in the nation’s highest-valued property markets. Consider the broadly defined New York City area, including Connecticut and New Jersey. According to Zillow, the median listing price for a home in Connecticut as of this May was $329,900. In New Jersey, it was $339,000. In Westchester County, N.Y., a popular bedroom community just north of New York City, it was $699,000.