The Story

The American Dream of homeownership has become a virtual nightmare for an entire generation priced out of the market.  The situation is dire:

House prices rose 18.8% in 2021, the biggest increase in 34 years of data and substantially ahead of 2020's 10.4% gain.

Rental prices across America have soared over the past year, with some cities experiencing average price hikes of up to 40%.

Most members of the Millennial and Gen Z generations do want to own a home someday, or even right now.  Their biggest roadblock is affordability.

Over the past 2 years, house prices in the US have witnessed an unprecedented increase.  In many areas, house prices have increased over 40% in this period, on an already healthy base.  Meanwhile, private equity and other platforms (mostly backed by private equity) are buying up inventory and competing against families with all cash offers...ultimately winning bids and pushing this generation into a long-term rental outlook. 

This phenomenon has effects all across the economy and in society as a whole- profound effects.  It comes at a time of massive change in other sectors as well- including what is deemed the “Great Resignation” which signifies the abandonment of many “office” jobs brought about by the Covid pandemic, the rise of Gig work, and the rise of economic instability among millennials and recent college graduates.  The Millennial generation, numbering 85 million, is embarking on their prime home-buying season of life but finds itself facing extremely high prices, rising interest rates and an industry that does not understand its mindset.

Nearly three-quarters of Americans say owning a home is a higher measure of achievement than having a successful career, raising a family or earning a college degree, according to a new survey. But affordability remains a challenge for many of them.”

- New York Times, June 2022

This generation has a different ethic of life and carry different expectations:
Digital natives, they have grown up in a mobile-first, sharing economy rich, decentralized finance enthralled world. Their mental models are different.
The notion of a “30-year mortgage” with all this implies (The same house for 30 years as an example) is alien to the travel-forward, flexible, order-in, work-from-home, follow your heart generation.
This trend has been seen in the investment world with Millennials favoring crypto investing and meme stocks over traditional “blue-chips” and eschewing investment advisors for self-run, “Robinhood-style” investing.

Against this backdrop, the $7 trillion increase in the value (and therefore price) of houses since 2020, coupled with perennial dearth of housing inventory and new housing coming online, is a bad omen for the future of the “American Dream” of homeownership for tens of millions of Americans. More than that, it creates the situation whereby the unity and strength of communities are at risk, creating a transient population without the ability to “invest” in the local.

This state of affairs suggests a stark reality:  Those who don’t own homes currently are largely priced out of homeownership and vast swaths of those who do own homes have not been able to improve their lives with their increased equity. The comforting thought that generations of parents have had- that their kids would live better than they did—is no longer present.  We are in the midst of a generational set-back, flipping the normal generational advancement on its head.  But there is a way out.  There are ways to regain the dream and to set the river straight again.

Welcome to Rook.