Millennial dilemma: Owning a house
Some of my peers in the city already own a condominium unit or are paying mortgage for it. In the best-case scenario, they pay while they reside in their units. Most of the others are saving up to pay a deposit. Almost all of them look forward to having a single-detached dwelling as a permanent residence once they have families.
I have always felt insecure about this, as I have not begun “investing” on a home. Over the past decade since I moved to the city for work and school, I have been moving from one lease to another. On a government salary, with rent and residence expenses taking up almost half of my monthly budget, there really is not much left after bills and recreation. I did not grow up in a home where fiscal responsibility was a premium value, so I did not have much in the way of savings either.
But one thing I am certain of is that I am not alone in my insecurity.
My generation has been raised mostly by the Boomer generation. ur parents or teachers were born after World War II. They were probably brought up by their own parents who suffered economic difficulties, so they became pretty obsessed with property ownership. Add to this the American Dream promoted by a mostly Western media and the vestiges of a colonial education.
So it was that governments encouraged home ownership and gave tax incentives and subsidies for mortgages, only for those governments to suffer recession in the late 2000s due to mortgages not being paid.
Is property ownership still the way to go for us illennials?
My friends are competing against each other. An article in The Economist compared the housing economies of Britain and Switzerland and showed that in Britain, where 60-70 percent of people own houses, the prices of houses have increased by almost 350 percent since 1970. In Switzerland, where only 38 percent own houses, prices have increased only by 70 percent in the same period. This is simple supply and demand at work. As more of my peers buy or get mortgages for condominiums and houses, they make it harder for the others to get on the property ladder.
And millennials are, on average, poorer than our Boomer counterparts. Just 60 percent of us are considered middle-class, compared to 70 percent of the Boomer generation when they were in their 20s. This is according to an Organization for Economic Cooperation and Development (OECD) report published last year. Yes, the OECD is mostly based on data from developed countries, but I think it is representative enough of the global trend.
So if we are poorer, why are we still spending like the last generation?
We millennials and our younger siblings from Gen Z are faced with larger problems and with fewer resources to address them.
Consider climate change. The Boomers did not have it looming before them, or were not aware of it, so their drive for economic development was not conscious of the environmental effects. We already know this, so any development will always be under the shadow of our collective conscience.
Buying a home, or worse, building one, has a significant output in carbon emissions that we seem to forget in our quest to get on the property ladder. Each lot in a subdivision would have been space for trees to sequester carbon from the atmosphere. Each condominium unit registered in one’s name is equivalent to tons of carbon emissions, also in their name. Every brick of a building was made and transported using fossil fuels.
We have always looked down on renting as throwing away money. But paying millions on a condominium unit built to last only for 40 years — is that much different? Paying a landowner for the temporary use of their property only for the period when it is needed is not throwing away money. One merely pays the cost of depriving the owner of the use of their property for a certain period, minus the overhead cost of interest payments and maintenance as one would in a mortgage arrangement.
What is the difference then? Inheritance? Yes, with ownership, one has a legacy to turn over to their progeny. When I die, if I had lived in rented spaces all my life, I would have no property to will to my child. But is that so sad if, instead of paying for interest under a mortgage, I put that money toward better education for them? When they have grown with a good education under their belt, that would maybe afford them a career far from where they were raised, and they would have nothing burdening them. No need to wait for a good deal to dispose of property that has depreciated anyway.
Moreover, it is the height of hypocrisy to worry about leaving a good home for one’s child if in the process of securing that home, we leave behind a dying planet and dwindling resources. Money paying for interest in a mortgage, or for maintaining a depreciating house, could go toward investing in solar panels in a rented home, or contributing toward a fund for reforestation, or research on renewable energy.
Perhaps a better inheritance is a solid education, a sustainable economy, and a living planet. Our true home is a cool Earth, and not one single-detached dwelling. No man is an island.
The Economist article I mentioned above also looked at home ownership in the most developed countries based on the United Nations’ human development index (HDI). Romania has 96 percent home ownership and ranks 52nd on the HDI. Switzerland has 38 percent home ownership and ranks second.
As I dwell on my insecurity of not having begun paying for a home, I cannot help but wonder what my generation’s home ownership would be like, and its implications on human development in the Philippines.
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Gino Leocadio S. Paje, 29, is an underbar working in the environment sector.
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