Millennials haven’t just entered into the workforce, they are completely changing just about every market across the globe. Not all of these changes are for the better, however.
Young professionals are finding it harder to maneuver through the later and important stages of life due to massive student loan debt, difficult housing and vehicle markets, and just plain bad luck.
Cars for Millennials
Back in 2016, the U.S. set a record for automobile sales: selling 17.6 million cars and trucks across the country. Just two short years after that, though, the auto market forecast much higher costs and millennials are having paying the price.
According to CNBC, new-car shoppers can expect to shell out both higher initial costs for a new vehicle, as well as an increased interest rate.
The average price for a new vehicle now stands at $34,423, compared with $31,078 from five years ago. Additionally, interest rates are currently at 5.7%, compared with 4.4% from five years ago.
There are plenty of contributing factors to these higher automotive prices, but a mix of climbing interest rates and longer loans are most noteworthy. The average auto loan length is now 69.5 months versus 65.7 months from five years ago. The longer the loan, the more money spent in interest.
“This is pretty much across the board,” said Matt Jones, senior consumer advice editor at Edmunds.com. “When you put those three things together, people are going to be paying a lot more.”
“We’re telling people to have a second and third choice,” Jones added. “What if the interest rate is better on them? If you can save money over the years of your loan, maybe your backup choice is actually a better option.”
Homes for Millennials
Of all the people on the market for a new home, approximately 32% of them are first-time buyers. Owning a home is just about everyone’s dream across the country, but that dream is so unobtainable for those with significant debt. Approximately 83% of people between the ages of 22 and 35 with student debt who have yet to purchase a home blame their educational loans.
Years ago, young people were able to get out of college — with far less debt — and get a beautiful home. That’s not the case anymore.
There are about 45 million Americans carrying student debt and the average borrower owes more than $30,000. And nearly a fifth of those people have student debts totaling more than $100,000.
“You have these competing influences of greater access to education versus reduced ability to buy a home because of student loan debt,” said Jonathan Spader, a senior research associate at the Joint Center for Housing Studies at Harvard University.
Some of the main factors to this major housing issue for millennials involve debt-to-income ratios, poor credit scores, and extremely expensive down payments.