Generation Rent

 NPR documents the collapse in home ownership rates among young people in America.  As noted in my post below, young people seeing parents, friends and siblings struggle with homes that are underwater are naturally loathe to buy a home and take on the mortgage debt.  This shows the longer run costs to society of bubbles.  Namely, the bursting of a bubble changes individual perception of the risk of a particular investment.

The Taylors aren't alone. The economic hammer has fallen especially hard on 20somethings — part of the so-called Millennial Generation or Gen Y born roughly between 1975 and 1995. Plagued by high unemployment, many have had to delay careers, marriage and having children. And the idea of owning a home is more often being put off or written off entirely.

In a nation where homeownership is part of the American dream, a generation of renters could alter communities where they live and redefine the idea of middle-class success.

'A Recipe For Frustration'

"They've seen what their parents are dealing with, what their brothers and sisters are dealing with, in terms of being saddled with home values that are less than what was paid for," says Paul Conway, a former chief of staff for the U.S. Department of Labor who is now president of Generation Opportunity, a think tank specializing in the economics of Generation Y.

Sociologist Katherine Newman, who chronicles some of the struggles in her book The Accordion Family: Boomerang Kids, Anxious Parents, and the Private Toll of Global Competition, agrees with Conway that we may be witnessing the creation of a generation of renters.

"I'm hoping that the Millennial Generation doesn't set its sights on homeownership as a benchmark of economic stability, because it's going to be out of reach for so many of them that it will just be a recipe for frustration," she says.