I’m a millennial who bought a Brooklyn apartment this year, and I was only able to because of the pandemic

Moving, milennial home ownership
Moving: It’s no fun at all.

  • Late last year, in the middle of the pandemic lockdown, my wife and I bought a Brooklyn apartment.
  • After graduating college into the financial crisis, the odds of homeownership were not in our favor.
  • The pandemic forced banks to offer historically low mortgage interest rates and allowed us to buy an apartment.
  • Visit the Business section of Insider for more stories.

For the last decade, as friends and relatives bought homes, my wife and I paid rent.

More specifically, we paid rent in New York City – which is to say we paid a lot of money in rent. So, so much. I try not to think about it, honestly.

We did it because we love living here, and Brooklyn is home. I considered it a necessary evil of living in the greatest city in the world.

But this January, just after the most uneventful New Year’s Eve in New York City history, we closed on a one bedroom Brooklyn co-op apartment. If you’d asked me in January 2020, “Will you ever buy a home in New York City?” the answer would’ve been simple: “No, not unless we win the lottery.”

Real estate prices in New York are notoriously high, of course, but that’s just one of several issues facing potential buyers. Not only is it expensive, but it’s extremely competitive. Before the pandemic hit, just going to see an available place in Brooklyn meant competing against people with, frankly, a lot more money than me. I am never going to outbid someone who makes $500,000 annually.

So, how did a couple of avocado toast-eating, cold brew-swilling, MacBook-using millennials manage to buy a home in Brooklyn?

Millennial homeowners
The avocado toast tastes so much better when you make it in the kitchen of the home you own.

It boils down to several key factors:

1. We are immensely lucky and privileged.

My wife and I graduated from college directly into the 2008/2009 subprime mortgage-spurred market collapse that led to a massive recession. Unlike so many of our peers, we were both tremendously lucky to get jobs directly out of college doing what we went to college to do: I am a journalist and my wife is an environmental scientist. I consider myself particularly lucky in this respect, as the media business isn’t known for its stability.

We are also both white Americans, which confers a variety of privileges throughout our lives. Literally everything was easier because of these factors, and must be acknowledged up front.

Because we were lucky enough to have steady employment for years after college, we had good credit scores from years of paying bills on time. That steady employment history coupled with good credit scores meant we were easily pre-qualified for home loans at low rates.

Notably, we don’t have kids, and we saved money steadily for several years before beginning this process.

2. The pandemic.

QUEENS, NEW YORK - MARCH 30: Two members of the Fire Department of New York"u2019s Emergency Medical Team wheel in a patient with potentially fatal coronavirus to the Elmhurst Hospital Center in the Queens borough of New York City on March 30, 2020. New York City is the epicenter of the coronavirus pandemic in the United States, putting historic pressure on a world-renowned healthcare system as the number of confirmed cases in the area grows. (Photo by Robert Nickelsberg/Getty Images)
Two members of the Fire Department of New York Emergency Medical Team wheel in a patient with potentially fatal coronavirus to the Elmhurst Hospital Center in Queens, New York City on March 30, 2020. New York City was the epicenter of the American coronavirus outbreak.

Above all else, the global pandemic was the most immediate reason we were able to buy an apartment.

If it weren’t for the coronavirus pandemic, the housing market wouldn’t have been in the gutter. If it weren’t for the coronavirus pandemic, we would’ve had to compete with crowds of interested buyers. If it weren’t for the coronavirus pandemic, mortgage rates would’ve priced us out of the market.

It’s horrifically sad that this is the case, but it’s very much the truth. We locked in a 30-year fixed-rate home loan at a 2.75% interest rate. That is a historically low rate, and enables us to afford the monthly payments. In fact, our monthly payment is just a touch higher than our last rent price.

Unlike rent, though, our mortgage price doesn’t increase over time. If we choose to move, we can sell the place and are likely to earn some money on the sale thanks to Brooklyn’s already rebounding real estate market. The benefits of homeownership over renting, at least in this respect, are so profound that they’re almost comical. In 10 years, when our mortgage is the same but average NYC rent prices have increased dramatically, we’ll really feel the difference.

3. Timing was critical.

In mid-August 2020, about five months into pandemic lockdowns, a really obnoxious piece was published in the New York Post where a former hedge fund manager Manhattanite declared New York City “dead forever” because he saw a video of Black Lives Matter protesters trying to break into his skyscraper. It was part of a gaggle of trend pieces that summer in which panicked rich people speculated that the pandemic would be the end of New York City.

That struck me as the perfect time to start looking for apartments: If the rich are fleeing, and the home loan rate is low, I figured, maybe there would be a chance for us.

It turns out that was more or less accurate: We only saw five, maybe six places, and we saw them at our leisure. Because of the pandemic, all showings were by appointment only, so there was no pressure to outbid other buyers on the spot.

Also because of the pandemic, a lot of people in our situation – married millennials in their mid-30s – were fleeing to the suburbs. It was as close as Brooklyn gets to a buyer’s market for a young-ish couple.

In the end, our offer was accepted for (slightly) below the listing price. For what we paid for a one bedroom apartment, we could own a pretty nice suburban home. But we don’t want a pretty nice suburban home, and we didn’t have to settle for one.

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Avocado toast will save the economy

avocado toast
Millennials are set to drive restaurant spending during the economic reopening.

  • Restaurants are making a comeback.
  • March’s jobs report smashed expectations, adding 916,000 against a 660,000 estimate, and dining led the way.
  • Led by dining, leisure and hospitality added 280,000 jobs, so avocado toast and the like should lead to a lot more hiring.
  • See more stories on Insider’s business page.

The economy really began to reopen in March, and restaurants led the way.

The US economy added 916,000 jobs in March, trouncing economic forecasts that predicted that number would look more like 660,000 jobs. The leisure and hospitality industry not only drove nearly all of February’s jobs gains, it accounted for roughly one-third of March’s upswing. With 280,000 payroll additions last month, it added more jobs than any other sector.

Leisure and hospitality consists of arts, entertainment, and recreation, ranging from performing arts and museums to amusement parks. It also includes accommodation and food services, which contributed to 215,000 of the sector’s added payrolls in March. Food services and drinking places fueled most of these additions, with 175,000 new jobs alone. It’s becoming clear that eating out will be very important for the economic recovery.

While restaurants made huge job gains last month, the sector will also need Americans willing to spend on dining out for its recovery – along with that of the wider American economy.

Americans seem to have already started doing that. For the seven days ending March 27, spending on restaurants and bars was up a whopping 200% year-over-year, per Bank of America card data. The more representative two-year change still showed an 11.9% increase. Overall, BofA found total card spending up 82% year-over-year and up 20% over two years for the period, signaling that trillions of federal stimulus are working.

Of course, with restaurants come things like avocado toast, a luxury long used as a metaphorical stick to beat the millennial generation with, perpetuating the narrative that this frivolous generation isn’t focused on the right things financially. While that’s not quite true, it is the case that millennials ate out more and spent more eating out than any other generation prior to the pandemic. They’re on track to be the biggest food and beverage spenders by 2030.

High-earning millennials saw a lot of excess cash build up in their savings accounts during the pandemic. That puts them in prime position to cash out on a favorite experience they’ve been deprived of for a year.

They’ve already begun fueling New York City’s indoor dining scene when restrictions were lifted and splurged while doing so. Millennials shelled out for high-priced items like steak, wine, and tasting menus, sending check averages and tips on the climb, Bloomberg’s Kate Krader reported.

It turns out the economic reopening – and recovery – will taste like avocado.

Read the original article on Business Insider