Avocado Toast: Trending Topic in FinanceSubmitted by Mission Financial Planning on May 17th, 2017
Avocado toast is the silly yet controversial topic of the month in the world of finance and social media. It started in Australia with millionaire and real estate mogul Tim Gurner commenting that if millennials gave up avocado toast (representing discretionary spending much like a Starbucks Latte has come to represent here) they could afford to buy houses. Word spread, and now the web is full of comments about Gurner’s observation. Singling out millennials for not buying houses, or suggesting that it’s purely a function of discretionary spending and poor money management isn’t looking at the bigger picture. I’m no statistician, but here are several charts on trends that I believe have more to do with millennial’s interest and ability to buy homes than Avocado Toast:
Nearly every age bracket has seen a decrease in home ownership. Maybe it has to do with the price of homes lately.
Maybe it has to do with the Student Debt Load college-educated millennials are carrying.
Or how long it would take to save for a down payment:
Homeownership often goes hand in hand with starting a family. This chart shows the proportion of first births to women aged 30–34 rose 28% (from 16.5% to 21.1%), and first births to women aged 35 and over rose 23% (from 7.4% to 9.1%). Maybe millennials are just waiting to have families AND to buy houses.
Or, maybe there are a number of reasons holding them back:
Millennial home ownership, or lack thereof, cannot be blamed on avocado toast, uninhibited spending and poor money management. IF millennials want to purchase homes, prices are higher than ever, incomes are down, they may be burdened with substantial student debt and higher living expenses, and the mortgage application process is arduous.
We also may want to factor in that millennials may not be as interested in home ownership as previous generations. Next time you have to mow the lawn or call a repair man, you might ask yourself "who can blame them"?