Why Young People Will Benefit Greatly from the Recession
The consumer confidence index, the measure of how individuals feel about the current state of the US economy, has hit a new all time low since the 2008 recession began. Consumers are worried about their jobs, their investments and their home values. Some are wondering if they will ever be able to retire. However, the 2008-2009 recession will actually benefit many young people. If you are in your 20’s or 30’s you can take advantage of lower prices on homes, cars, and investments. When the economy recovers a few years down the line, you could find yourself in a much better position than if the recession had never happened.
First, let’s look at the housing market. Home values typically appreciate at around 6% per years, which is essentially the rate of inflation plus one or two percentage points. In the last decade, the price of homes increased much more than that because of speculation and increased demand. The prices of home values started increasing substantially making it very difficult for first-time homebuyers to purchase a home. Since the real estate market started to slow down, prices have essentially fallen back to about where they were in 2003, making it so that individuals who don’t own a home, can buy one for much less than they would have been able to two years ago.
When it comes to investments, young people can also buy stocks and mutual funds at a discounted price. If a share of stock was worth $100.00 a year ago, and is now worth $50.00, you will get two stocks for your $100.00 when a year ago, you would have only gotten one. When the stock market recovers, as it appears that it is beginning to, you’ll see significant appreciation on the stocks or mutual funds that you purchased while the stock market was near the bottom.
Automobile prices have also seen a significant decline. Individuals are increasingly keeping vehicles around longer when they would have otherwise purchased a new vehicle. This means that the demand for new and used cars is down and prices have dropped accordingly. Other expensive consumer products, such as high-end electronics, have seen a similar decline in prices.
Students will also benefit from depressed college costs. Although tuition has traditionally increased at 7% per year, but many universities are adopting a new sense of discipline to control costs and make the educational experience much more cost effective. Some universities that are focused on research are moving towards focusing on teaching to reduce costs.
Costs for just about everything are lower. If you have a job and are still investing and buying consumer products, just about everything that you are buying is available at a discount.
Source: Fine Tuned Finanaces
