Failure to Launch. That’s a story for much of the millennial generation and generation Z. They’re getting married later and starting families later. Worst of all, many people in their 20s and 30s say they want a family, but simply can’t afford it. Some older folks are skeptical of this excuse. After all, even after adjusting for inflation. Millennials in their 30s have about as much wealth as Gen X did at the same age, and more than baby boomers did. Yes, college tuitions are up. But the average college graduate in 2021 has only about 6500 more in debt than did the average graduate 20 years ago. But you know, where life really is getting more expensive housing, and that is no small problem. rents have doubled in 20 years, while incomes have increased by only 1/3. Home prices have almost doubled and the end of low mortgage rates has made homeownership even less affordable. More precisely, we are seeing the disappearance of the starter home, the small affordable two to three bedroom home, either a single family house or a duplex. The baby boom was sparked in part by the mass construction of 1000 square foot colonials and Cape Cod’s. But nobody’s building those anymore. If we want to help young people start and grow families, and we should, then we need to ask how to make affordable starter homes a reality again, this involves deregulation and tax simplification. Both of these changes involve government builders who would build more housing if state and local governments allowed it. Many local governments set minimum sizes for lots effectively prohibiting a homeowner from subdividing her large lot and selling half of it to someone who could build his own house there. Some towns and counties prohibit or restrict duplexes. Also, many local governments impose overly strict building regulations that don’t add to safety but do add to cost such as bans on vinyl siding. These rules effectively ban low cost starter homes, the sort of place with a yard and a front stoop that newlyweds in their 20s can afford. The tax code sometimes makes it worse. Some tax breaks for homeowners, namely the state and local tax deduction and the mortgage interest deduction. drive up the price of homes. In the long run these tax breaks benefit homeowners but think about it. Adding to the upfront costs of a house creates a barrier to entry for new families. Also, counties and cities add high quote transfer taxes at the purchase of a home. These are basically a sneaky way for governments to get money. transfer taxes also make homes more expensive to buy. America is facing a crisis of family formation. A lot of the problem is cultural and spiritual, but some of it is economic. Governments at every level should help by getting rid of the regulations and tax policies that make it harder for a new family to buy a starter home
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Timothy Carney
Timothy Carney, Senior Fellow, American Enterprise Institute
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Oct 19, 2023
By Straight Arrow News
Millennials are marrying later, having children later and buying homes later than previous American generations — and that’s if they marry, have children or buy a home at all. Housing, which was once considered fair game on a single income, is now out of reach for even many dual-income couples.
While observers blame a range of factors, Straight Arrow News contributor Tim Carney reminds us to stay focused on the heart of the problem: the cost of housing itself. To resolve this, Carney advises a shift of practices and priorities in government policy at all levels.
“Failure to Launch.” That’s the story for much of the millennial generation and Generation Z. They’re getting married later and starting families later. Worst of all, many people in their 20s and 30s say they want a family but simply can’t afford it.
Some older folks are skeptical of this excuse. After all, even after adjusting for inflation, millennials in their 30s have about as much wealth as Gen X did at the same age and more than baby boomers did. Yes, college tuitions are up. But the average college graduate in 2021 has only about $6,500 more in debt than did the average graduate 20 years ago. But you know where life really is getting more expensive? Housing, and that is no small problem.
Rents have doubled in 20 years, while incomes have increased by only one-third. Home prices have almost doubled, and the end of low mortgage rates has made homeownership even less affordable. More precisely, we are seeing the disappearance of the starter home, the small, affordable, two-to-three-bedroom home, either a single-family house or a duplex. The baby boom was sparked in part by the mass construction of 1,000-square-foot colonials and Cape Cods, but nobody’s building those anymore.
If we want to help young people start and grow families, and we should, then we need to ask how to make affordable starter homes a reality again.
Failure to Launch. That’s a story for much of the millennial generation and generation Z. They’re getting married later and starting families later. Worst of all, many people in their 20s and 30s say they want a family, but simply can’t afford it. Some older folks are skeptical of this excuse. After all, even after adjusting for inflation. Millennials in their 30s have about as much wealth as Gen X did at the same age, and more than baby boomers did. Yes, college tuitions are up. But the average college graduate in 2021 has only about 6500 more in debt than did the average graduate 20 years ago. But you know, where life really is getting more expensive housing, and that is no small problem. rents have doubled in 20 years, while incomes have increased by only 1/3. Home prices have almost doubled and the end of low mortgage rates has made homeownership even less affordable. More precisely, we are seeing the disappearance of the starter home, the small affordable two to three bedroom home, either a single family house or a duplex. The baby boom was sparked in part by the mass construction of 1000 square foot colonials and Cape Cod’s. But nobody’s building those anymore. If we want to help young people start and grow families, and we should, then we need to ask how to make affordable starter homes a reality again, this involves deregulation and tax simplification. Both of these changes involve government builders who would build more housing if state and local governments allowed it. Many local governments set minimum sizes for lots effectively prohibiting a homeowner from subdividing her large lot and selling half of it to someone who could build his own house there. Some towns and counties prohibit or restrict duplexes. Also, many local governments impose overly strict building regulations that don’t add to safety but do add to cost such as bans on vinyl siding. These rules effectively ban low cost starter homes, the sort of place with a yard and a front stoop that newlyweds in their 20s can afford. The tax code sometimes makes it worse. Some tax breaks for homeowners, namely the state and local tax deduction and the mortgage interest deduction. drive up the price of homes. In the long run these tax breaks benefit homeowners but think about it. Adding to the upfront costs of a house creates a barrier to entry for new families. Also, counties and cities add high quote transfer taxes at the purchase of a home. These are basically a sneaky way for governments to get money. transfer taxes also make homes more expensive to buy. America is facing a crisis of family formation. A lot of the problem is cultural and spiritual, but some of it is economic. Governments at every level should help by getting rid of the regulations and tax policies that make it harder for a new family to buy a starter home
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The Biden administration recently announced an initiative to cap child care copay expenses for approximately 100,000 low-income working families in the United States. Instead of paying set fees, those families will pay 7% of whatever their total income is as a copay for the government-subsidized daycare program. The program also hopes to fully cover all…
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In 2007, Americans welcomed approximately 4.3 million babies. But following a decline in birth rates during the Great Recession, birth rates have not recovered. Over the past 15 years, the number of U.S. births has decreased annually, with the most recent 12-month period on record indicating only 3.6 million babies born. Straight Arrow News contributor…
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Inflation is still too high and Biden is still to blame
Democrats are busy celebrating a consistently strong economy under President Biden, citing shocking GDP growth and record-low unemployment. Republicans are responding to the celebration with concerns about rising living costs, housing unaffordability, and continuing inflation. Straight Arrow News contributor Tim Carney points out that many Americans feel left behind by “Bidenomics” and argues that they…
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American colleges and universities are among the very best in the world. They are also notoriously expensive, with many graduates working for decades to pay back their college loans. But for many new students and parents hoping to help their children pay for college, tuition just became even more expensive, thanks to a new federal…
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On Dec. 7, Hunter Biden was indicted on nine tax charges in California, relating to over $1.4 million in taxes owed between 2016 and 2019. While the back taxes have been settled, a potential conviction could result in a maximum 17-year prison sentence for the president’s son. On Dec. 13, House Republicans voted to formalize…
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