It’s not just high rent and student loans keeping millennials from buying homes

You may have heard millennials are buying homes at a lower rate than previous generations did at the same age.

There are a number of theories about why this is happening. One is the idea that a handful of financial blockers are preventing some millennials from taking out mortgages.

The high cost of rent and growing student loan debt in the U.S. certainly could be eating up money that millennials would otherwise be saving for their first home. But Randy Shaw, director of the Tenderloin Housing Clinic in San Francisco, offers up yet another potential blocker: baby boomers and the NIMBY, or not in my backyard, policies they support.

In his book “Generation Priced Out: Who Gets to Live in the New Urban America,” Shaw argues that baby boomers are using their power in local government and homeowner associations to block the development of new, affordable homes that could lower the value of their own properties.

This is causing housing shortages in some of the country’s largest coastal cities — like San Francisco and Seattle — and raising the cost of living there for younger generations, Shaw said in a City Lab interview this month.

Want to learn more?

• What’s the background?
• Why does this matter?
• How could this impact you?
• What can you do?

What’s the background?

Young adults often prefer to live in big cities. But the housing markets in those cities are so expensive that many millennials can barely afford rent — let alone save money for a down payment on a home.

Many people might assume high rent costs in large cities are a given since urban areas are simply more expensive than their suburban and rural counterparts. But Shaw paints a picture of baby boomers who are so focused on increasing or maintaining the value of their homes in urban areas that they are blocking younger generations from entering the market.

Through a web of local zoning laws and land-use restrictions, developers are blocked from building more homes as city populations grow.

And, as the law of supply and demand plays out, this boosts the value of homes often owned by baby boomers, sometimes far beyond the price range that most young workers can afford.

Why does this matter?

The generational homeownership divide between baby boomers and millennials could be stifling economic growth.

The lack of affordable homes is pushing many millennials away from the big cities and into less-expensive neighborhoods. This could be putting a crimp on the economy. One study estimated that housing regulations lowered aggregate U.S. growth by 36% from 1964 to 2009.

How could this impact you?

If you’re living in a big city that suffers from a housing shortage, you might have noticed high rent prices in your neighborhood. This could prevent you from living in a nice part of town, or might force you to find roommates who can help split the cost.

Because of this, many millennials might find it difficult to imagine being able to afford a first home. The more money you spend on rent, after all, the less money you’ll be able to save for a down payment.

This realization could lead you to a fork in the road: Either leave the city you love to buy a home you can afford somewhere else, or put off your dream of homeownership.

What can you do?

Start by making your voice heard at city council meetings.

Millennials have “become a real presence at city council meetings, which have long been dominated by boomer opponents of housing,” Shaw told City Lab.

Shaw advocates for what’s known as “inclusionary zoning” laws that promote the development of new, affordable homes in big cities.

Beyond that, you can support nonprofit organizations that purchase apartment buildings in neighborhoods where rent prices are rising and then turn them into affordable housing units.