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rfmcdonaldContinuing this blog's intermittant theme fo unaffordable urban real estate, Bloomberg's Victoria Stilwell and Wei Lu document how home buying is out of reach for young adults in many American urban centres.
The biggest disparities are on the West Coast. Take the three Californian hubs of San Francisco, San Jose (the heart of Silicon Valley), and Los Angeles (where a developer is trying to sell one of the biggest homes in U.S. history for a record $500 million). The typical young adult in those cities doesn't even make half of what's needed to afford a home.
That makes places such as New York, where millennials have an earnings gap of just $6,550, seem relatively affordable. But remember that New York's metropolitan statistical region includes places that are outside of the high-priced housing market in and around Manhattan, where $374,350 (the median home value for the metro area) wouldn't even buy you a kitchen.
Almost 80 percent of New York's millennials reside in three counties: New York County, Queens County and Kings County, where Manhattan, Queens and Brooklyn respectively are located. Using the average median home value for those three boroughs ($749,596) and the 2015 estimated earnings for millennials living there ($49,193), the affordability gap comes out to a whopping $52,262.
Furthermore, Bloomberg's calculations assume that millennials have already saved up the 20 percent they'd need for a down payment, which is a problem in itself. Families where the head of household was under 35 years old had a median net worth of $10,400 in 2013, according to the Federal Reserve's Survey of Consumer Finances.
