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Why fewer young adults are able to invest in homeownership

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FILE PHOTO: An “Open House” sign outside of a home in Washington, DC, US, on Sunday, Nov. 19, 2023. 

Nathan Howard | Bloomberg | Getty Images

When Maryland Governor Wes Moore was 8 years old, his mother told him she wanted to send him to military school to correct his behavior.

Yet it wasn’t until he was 13 that she finally did send him to a military school in Pennsylvania. He ran away five times in the first four days.

“That place ended up really helping me change my life,” said Moore while speaking about retirement security at a BlackRock conference in Washington, D.C., on March 12.

One obstacle — the tuition costs — prevented his mother from sending him sooner, he said.

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Moore was able to attend the school thanks to help from his grandparents, who borrowed against the home they bought when they immigrated to the U.S., to help pay for the first year’s tuition.

“They ended up sacrificing part of their American dream so I could achieve my own,” Moore said.

“That’s what housing helps provide,” Moore said. “It’s not just shelter. It’s security; it’s an investment. It’s a chance you can tap into something if an emergency happens. It’s a chance that you now have an asset that you can hold onto, and you can pass off to future generations.”

After retirement funds, housing generally represents the second-most-valuable asset people have, Moore said.

Some now less likely to own homes than in 1980

Yet achieving that homeownership status can feel unattainable to prospective first-time buyers in today’s economy.

Around 30% of young Maryland residents are thinking of leaving the state because of high housing costs, Moore said.

Both renters and homeowners across the U.S. are struggling with high housing costs, according to a 2024 report from the Joint Center for Housing Studies of Harvard University. The number of cost-burdened renters — meaning those who spend more than 30% of their income on rent and utilities — climbed to an all-time high in 2022. At the same time, millions of prospective homebuyers have been priced out by high home prices and interest rates.

Many hopeful first-time home buyers may feel that it was easier for their parents and grandparents’ generations to reach home ownership status.

Research shows those feelings are justified.

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Since 1980, median home prices have increased much faster than median household incomes, according to recent research from the Urban Institute.

Across the country, today’s 35- to 44-years olds — who are in their critical homebuying years — are less likely to be homeowners than in 1980, according to the research.

For that age cohort, the homeownership rate has dropped by more than 10% compared to 45 years ago, the Urban Institute found. Because today’s 35- to 44-year-olds are also forming households at a lower rate, that number is likely understated, according to the research.

Ultimately, that can have lasting impacts on their ability to build wealth, said Jun Zhu, a non-resident fellow at the Urban Institute’s Housing Finance Policy Center.

“When you have a house, when the house appreciates, you’re going to earn home equity,” Zhu said. “Earning home equity is actually a very important way to earn wealth.”

Those 35- to 44-year-olds who are in lower income quartiles have seen the biggest declines in homeownership compared to their peers. That is driven in part by the fact that people who are married are more likely to be homeowners, while lower-income individuals are less likely to be married.

Education is also a factor in widening the homeownership gap, according to the Urban Institute, as a smaller share of heads of households who have the lowest incomes are getting college degrees.

Racial divide in homeownership rates persists

Separate research from the National Association of Realtors also points to a racial divide with regard to housing affordability.

In 2023, the latest data available, the Black homeownership rate of 44.7% saw the greatest year-over-year increase among racial groups but was still well behind the white homeownership rate of 72.4%. Other groups fell in between, with Asians having a 63.4% and Hispanics having a 51% homeownership rate.

Strong wage growth and younger generations reaching prime home buying age contributed to the increase in Black homeownership in 2023, said Nadia Evangelou, senior economist and director of real estate research at the National Association of Realtors.

Yet the Black homeownership rate has stayed below 50% over the past decade, Evangelou said, which means most continue to rent instead of owning. That ultimately limits their ability to grow their net worth and accumulate wealth.  

Policy changes could make it easier for Americans to buy their first home. That could include providing educational opportunities for low-income households, offering down payment assistance and encouraging housing production by reducing zoning restrictions or other regulatory barriers, according to the Urban Institute.

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House GOP tax bill calls for $30,000 ‘SALT’ deduction cap

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Chairman Jason Smith (R-MO) speaks during a House Committee on Ways and Means in the Longworth House Office Building on April 30, 2024 in Washington, D.C.

Anna Moneymaker | Getty Images News | Getty Images

House Republicans are calling for a higher limit on the deduction for state and local taxes, known as SALT, as part of President Donald Trump‘s tax and spending package.

The House Ways and Means Committee, which oversees tax, released the full text of its portion of the bill on Monday afternoon. The SALT provision would raise the cap to $30,000 for those with a modified adjusted gross income of $400,000 or less.

However, the SALT deduction limit has been a sticking point in tax bill negotiations and the provision could still change significantly. The committee is scheduled to debate and vote on the legislation on Tuesday afternoon.    

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Enacted via the Tax Cuts and Jobs Act, or TCJA, of 2017, there’s a $10,000 limit on the federal deduction on state and local taxes, known as SALT, which will sunset after 2025 without action from Congress.

Currently, if you itemize tax breaks, you can’t deduct more than $10,000 in levies paid to state and local governments, including income and property taxes.

Raising the SALT cap has been a priority for certain lawmakers from high-tax states like California, New Jersey and New York. With a slim House Republican majority, those voices could impact negotiations.

While Trump enacted the $10,000 SALT cap in 2017, he reversed his position on the campaign trail last year, vowing to “get SALT back” if elected again. He has renewed calls for reform since being sworn into office.

Lawmakers have floated several updates, including a complete repeal, which seems unlikely with a tight budget and several competing priorities, experts say.

“It all has to come together in the context of the broader package,” but a higher SALT deduction limit could be possible, Garrett Watson, director of policy analysis at the Tax Foundation, told CNBC earlier this month.

Here’s who could be impacted.

How to claim the SALT deduction

When filing taxes, you choose the greater of the standard deduction or your itemized deductions, including SALT capped at $10,000, medical expenses above 7.5% of your adjusted gross income, charitable gifts and others.

Starting in 2018, the Tax Cuts and Jobs Act doubled the standard deduction, and it adjusts for inflation yearly. For 2025, the standard deduction is $15,000 for single filers and $30,000 for married couples filing jointly.

Because of the high threshold, the vast majority of filers — roughly 90%, according to the latest IRS data — use the standard deduction and don’t benefit from itemized tax breaks.

Typically, itemized deductions increase with income, and higher earners tend to owe more in state income and property taxes, according to Watson.

Who benefits from a higher SALT limit

Generally, higher earners would benefit most from raising the SALT deduction limit, experts say.

For example, an earlier proposal, which would remove the “marriage penalty” in federal income taxes, involves increasing the cap on the SALT deduction for married couples filing jointly from $10,000 to $20,000.

That would offer almost all the tax break to households making more than $200,000 per year, according to a January analysis from the Tax Policy Center.

“If you raise the cap, the people who benefit the most are going to be upper-middle income,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.

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Of course, upper-middle income looks different depending on where you live, he said.

Forty of the top 50 U.S. congressional districts impacted by the SALT limit are in California, Illinois, New Jersey or New York, a Bipartisan Policy Center analysis from before 2022 redistricting found.

If lawmakers repealed the cap completely, households making $430,000 or more would see nearly three-quarters of the benefit, according to a separate Tax Policy Center analysis from September.

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After UK, China trade deals, tariff rate still highest since 1934: Yale

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A cargo ship moors at the container terminal berth of Lianyungang Port for loading and unloading containers in Lianyungang City, Jiangsu Province, China, on May 9, 2025.

Nurphoto | Nurphoto | Getty Images

The tariff rate the U.S. puts on imports remains higher than any point since the 1930s, despite trade deals struck with China and the United Kingdom in recent days, according to a Yale Budget Lab report issued Monday.

The total U.S. average effective tariff rate is 17.8% — the highest since 1934 — even after accounting for these policy changes, according to the Yale Budget Lab.

That’s equivalent to an increase of 15.4 percentage points from the average effective tariff rate before Trump’s second term, the report said.

Current tariff policies in effect are expected to cost the average household $2,800 over the “short run,” according to the report. It doesn’t specify a time frame.

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Consumers will likely alter their buying

Prior to the China and U.K. trade pacts, consumers faced an overall average effective tariff rate of 28%, the highest since 1901, the Yale Budget Lab estimated in a prior analysis on April 15.

The estimated decline from that average tariff rate “is almost entirely due to the lower rates on Chinese imports — the US-UK trade deal has minimal effects on average tariff rates,” its most recent report said.

Businesses and consumers are likely to change their purchase behavior to avoid the higher costs associated with tariffs, especially from China, according to economists.

After accounting for these substitution effects, the average effective tariff rate would be 16.4%, the highest since 1937, the Yale Budget Lab estimates.

The timing of that substitution is “highly uncertain,” it said.

“Some shifts are likely to happen quickly — within days or weeks — while others may take longer,” according to the report.

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Personal Finance

Fidelity technical issues kept some investors out of their accounts

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A Fidelity Investments branch.

Nicholas Pfosi | The Boston Globe | Getty Images

Limited ability to trade in a big market day

The brokerage’s login issue may have been a greater problem for day traders, institutional investors and options investors, or investors who want to buy at a certain price before the market jumps, said certified financial planner Lazetta Rainey Braxton, the founder and managing principal of The Real Wealth Coterie.

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Not having access to their brokerage accounts during big market swings can hurt their strategies because they are actively managing their portfolios, said Braxton, a member of CNBC’s Financial Advisor Council.

But for long-haul investors, a login glitch that lasts a few hours might not make a huge difference, she said.

“Most investors are not chasing the market,” Braxton said.

‘Remain calm’

Technical issues at brokerages have happened in the past. In August, customers of Charles Schwab and Fidelity Investments were unable to trade in the middle of a steep market sell-off of global equities.

If a blip like this happens again, “it is important for investors to remain calm,” said Carolyn McClanahan, a certified financial planner and the founder of Life Planning Partners in Jacksonville, Florida. She’s also a member of CNBC’s Financial Advisor Council.

While it can be a grievance at the moment, such technical difficulties are temporary — “these outages usually don’t last long,” said CFP Cathy Curtis, the founder and CEO of Curtis Financial Planning in Oakland, California.

And besides, “tech outages will not affect the value of investments,” said Curtis, a member of CNBC’s Financial Advisor Council

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