Maixin Research

Demographics. Geopolitics. Innovation.

Discussing Hooking Up With Susan Walsh

Discussing Demographics

The following interview was published for YRP in 2011.

The hook-up culture is popular with Millennials and some younger members of Generation X. Given your experience counseling young people in the hook-up culture, could you explain what it is to people who are unfamiliar with it?

  • Hooking up is a term to describe a sexual encounter between two people. It is a deliberately vague expression (providing plausible deniability), and can mean making out, having intercourse, or anything in between.
  • Hooking up has replaced traditional dating on college campuses, and has also become prevalent in the general population and culture. The hallmark of hooking up is the clear understanding between both parties that the encounter will be free from any expectations for further contact. It is designed to avoid the possibility of commitment. However, hooking up is still the primary pathway to a potential romantic relationship, although only 12% of hookups eventually lead to relationships.
  • The hookup script reverses the sexual norm; the pair becomes sexual first, before emotional intimacy or a relationship is established.
  • Hooking up is awkward for both sexes. Most students get drunk to relax inhibition about getting naked with a stranger. Research shows that hooking up is not something unplanned that happens when people drink. Rather, young people drink heavily with the full intention of hooking up later in the evening.

What made the hook-up culture become popular and where does the perception of “engage in [behavior] like a man” originate (or another derivative in college was “it’s a man’s world”)?

First, hookup culture is the consequence of the Sexual Revolution, which occurred as a result of the Women’s Movement and the introduction of the Pill. Once women were able to have sex without fear of pregnancy, and with the blessing of Second Wave Feminists, they set out to have sex without restraint, much in the way that men did. When colleges stopped acting in loco parentis, the stage was set with coed dorms, and the hookup became the prevalent mode of male-female sexual interaction.

What happened over a period of 50 years is the loss of assortive mating. That is, it used to be the case that sex was tied to commitment, and people often married their first sexual partners. People generally married a mate with similar characteristics – education, intelligence, socioeconomic background and physical attractiveness.

As casual sex became more prevalent, and the Women’s Movement provided opportunities for women to pursue more education and professional careers, the average age at marriage increased significantly. In the meantime, both men and women seek sex, whether casual or in long-term relationships. However, they no longer limit themselves to people of similar traits.

As the gatekeepers of sex, women soon learned that while they might not hope to marry a man significantly more attractive or higher status than themselves, it is quite possible to command his attention in the short-term – often just for one night. This has led to a sexual “wealth gap” in the population, in accordance with the Pareto Principle. That is, 20% of the men are deemed highly desirable by women. They have the most options for sex, and as a result are the least likely to form committed relationships, especially at a young age. The other 80% struggle to find mates of similar traits, even if they’re willing to offer commitment. I’ve also estimated that about 20% of women are highly promiscuous. They seek short-term male attention. The other 80% recognize that they are unlikely to garner much male attention without offering casual hookups.

In this way, the idea that it’s a “man’s world” or that men have it made is misleading. A small percentage of men have it made. I don’t see any real winners among the women, frankly. Some women do enjoy no-strings sex, and are not seeking a relationship, but many struggle with feelings of regret, depression and low self-esteem.

I’ve heard two basic theories about the future of anything: the pendulum analogy, where things go back and forth from one extreme to the other, and the slippery slope analogy, where once things go downhill, they never return. Based on your interaction with people involved in the hook up culture and dating, experience in the pros and cons of each, and knowledge of Western culture, what do you see for the future in terms of hooking up?

That’s a very interesting question, and we debate it at Hooking Up Smart all the time. Personally, I subscribe more to the pendulum theory. History is characterized by large swings in morality, with periods of extreme hedonism followed by more disciplined or restrictive norms. I see hookup culture sticking around for a long while, but there is some backlash already occurring. In the three years I’ve been blogging, college student newspapers have been printing a greater number of editorials by students opposing the culture. One thing that’s interesting to note is that while most students believe it’s common, and that many other students are hooking up regularly, 90% of college students have only 0-5 sexual partners during their four years. So the culture doesn’t really reflect the reality, but it dominates nonetheless.

Another possibility is a crisis in sexual health. STDs continue to spread rapidly, and are becoming increasingly resistant to treatment. HPV is causing cancers in both sexes, and there is a strain of gonorrhea in the UK, which is now considered untreatable. Of course, there’s the very real possibility of a new, opportunistic virus, much as we saw with AIDS in the early 80s. A worsening of the outlook in this area could create behavioral changes.

We’re in uncharted territory, and the Sexual Marketplace feels hostile to most people. My own view is that regardless of what is happening in the culture at large, each individual has the agency to formulate and implement a strategy that is most likely to help them meet their personal mating objectives. At, I’m working on the margins. There are always opportunities in chaos, and hookup culture is no exception.

About Susan Walsh

Since earning my MBA in 1983 from The Wharton School, I have worked with companies and non-profit organizations to identify key challenges and opportunities, and formulate winning strategies. Launched in November, 2008, Hooking Up Smart brings together my passion and concern for young women with a professional, practical and systematic problem-solving approach.

Millennial Women Make More Than Millennial Men

Discussing Demographics

The following article comes from 3 original articles from YRP that have been edited and combined. The articles were written between the time of 2010 to 2013.

Long time clients of [then YRP] will recall my repeated assertion that Millennial women will do better than Millennial men in regards to income, assuming some factors (see the end for details). The mainstream is slowly coming around to this, much slower than my predictions:

The first thing you should know about the big flip — it’s big. 40% of American working wives now already out-earn their husbands (Pew Research 2012). In 40% of American families (with kids under 18), mom is the breadwinner (Pew Research 2013).

Keep this in mind: very few of these families are Millennials (see the ages listed). Given that most Millennials are not married and most don’t have kids, these data from Pew Research – who’s slowly catching up to [then YRP] – is admitting that for Generation X, we’re seeing a large amount of women out earn men. The education discrepancy between Millennial women and men is even larger.

Reviewing the Prediction

At this current time, Millennial women will make more money over their lifetimes than Millennial men assuming a few factors (see “Assumptions” below this) because of a few observations I’ve made several years ago:

  1. Millennial women are choosing more stable career paths over Millennial men, such as education (the most stable job) and medicine, which is in a massive shortage and seeing wage growth significantly above other industries.
  2. At the current time of this article, Millennial women almost make up over 55% of 4-year college graduates and the numbers are even higher for associates’ and masters’ degrees. Medicine (MDs) is still an exception for males – males are still highly likely to graduate medical school relative to females, though the number of females has increased.
  3. Single women without children have always made more money on average than single men without children in the United States. Since many Millennials will never marry (25-30%), this will have a strong impact on Millennial female and male earnings.
  4. When factoring out the top 5% of income earners in general, wages between men and women are very close. Very few people could handle the workload of the top 5% and a large portion of the top 5% of income earners are men.


When discussing wage differences between women and men, especially in the context of a “household” we must consider a few facts:

  • Loss of professional capital: taking an extended break from work results in a loss of capital. By extended break, this means a time exceeding a year. Because of the higher education of Millennial women compared to men, it makes no sense if Millennial women drop out of the workforce. However, if they do, Millennial men may become the larger wage earners, as they will avoid losing professional capital by continuing to work.
  • Temporary “high” incomes with high unemployment rates Millennial women are avoiding “bubble” jobs, such as engineering, technology, etc. Millennial women are much more likely to enter stable jobs that have massive shortages of labor, such as medicine and education. These jobs may provide slightly lower wages than jobs like engineering or technology (except medicine, which is crushing every other industry in wage growth), but they are much less likely to experience unemployment. Has everyone forgotten how terrible it was to be a computer scientist for the five years after the technology bubble? Or an engineer? The same applies to industries like oil, finance, etc – industries that tend to attract men. They pay high, but also experience long periods of unemployment. Think of this numerically: if a male engineer makes $100,000 per year, but only works 15 out of 20 years, due to 5 years unemployment, the female RN will out-earn him by making $90,000 a year without any unemployment for 20 years. In addition, many engineers after losing their job never recover, as their experience quickly becomes outdated. This doesn’t happen in education or medicine, industries women prefer.
  • The myth of “stay at home” parent of the past: while we saw more stay at home parents during the 1950s in the United States, the underlying reason for this was the United States was the most powerful country in the world and had 22,000 tonnes of gold. Europe was recovering from war, China and the Soviet Union were both communists, creating famines and shortages for their people and the United States was “the place to be” in the world, attracting the best talent. This is no longer true, which explains why a household now requires two wage earners. You can see this by comparing the “magical 1950s of the United States” to the 1800s of the United States and see that it was common for all members of a household to work in the 1800s – what differed was the state of the rest of the world.

Unless Millennial women drop out of the workforce, copy men’s choice of career, or some major disaster shifts opportunity back to the United States relative to the world, we can expect Millennial women to outperform Millennial men in terms of income and career. What Pew Research (and others eventually) is finally seeing is a reality that’s been true for at least a decade. I expect mainstream media to be the last source of information to discover this. Of course, knowing which group has money is only a small part of the equation of business.

The Privacy Regret

Discussing Demographics

In 2009 I observed that Millennials don’t see value in privacy, even though privacy has historically been valuable. I predicted that Millennials would later regret valuing their privacy. Within five years of this prediction, we began seeing sentiment shifts back toward favoring privacy, though I caution people that this shift hasn’t even fully started yet. Privacy is important for multiple reasons. People tend to assume that privacy only matters because it protects the person who’s privacy is in tact and this isn’t true. Privacy is also important because it strengthens focus.

The below story is based on a true story with changed details showing why privacy matters. Rather than from the view of “respect the individual” we see this story from the view of “mind your own business.” This story relates to Millennials because Diedra is viewed by Millennials as a victim who’s lived through an abusive husband, unsupportive father, and difficult work environment. But how would Millennials come to this conclusion about Diedra if they didn’t involve themselves in other people’s affairs? The irony of this is that the person who has to be involved in some of Diedra’s affairs due to a familial relationship (her daughter Jessica) knows that Diedra is a liar.

Most people who meet Diedra feel that she has experienced a tough life. She would tell you that she has struggled in poverty, been rejected by family and friends, and had an abusive ex husband. However, her story is a complete sham.

Diedra married a man named Gary that her father cautioned her would be terrible. Gary lacked ambition. This created a conflict between Gary and Diedra, as Diedra didn’t want to work at all. After their marriage, Diedra immediately set into motion her plan: she wanted to be a stay-at-home wife. Gary felt skeptical: they both shared household chores, so what would she be doing all day? Diedra realized the importance of having babies to justify her desire to avoid work.

Over a period of seven years, Diedra had 5 children – Sarah, Jackie, Jessica, Courtney, and Melissa. As Diedra had kids, she realized that raising kids involved more work than she expected. This contradicted her desire to avoid work. She also saw a declining standard of living as Gary’s lack of ambition meant that she had a lower capacity to consume. After Courtney was born, Diedra began manipulating Gary by overspending his income (which she referred to as “family income” even though she earned none of it). She hoped Gary would feel the pressure to take a second job. Gary did not and the manipulation resorted to major fights.

Diedra also needed someone to take care of her kids, as she hated working. She lacked money because Gary didn’t feel ambition, so she cultivated a friendship with a kind woman at church named Melanie. Melanie loved to serve other people and Diedra immediately exploited this desire by having Melanie care for her 4 (later 5) children four days a week. With time to relax, Diedra also had several affairs on Gary and found two lovers. She became pregnant with her 5th child and began pressuring Gary to work more hours. Gary responded and worked more hours while feeling less happy about his life’s direction.

Ten years into this situation, an event shook Diedra. Gary had enough of his current life and he quit his jobs.

Diedra felt horrified that her husband didn’t work. The result of Gary’s decision to quit meant that Gary and Diedra moved back closer to Diedra’s parents and Diedra lost Melanie as a caretaker of her 5 children. In addition, Diedra’s lovers were no longer around and she became intolerable to Gary. She punished him for taking away her lovers and free caretaker of her children (though she never said this explicitly to avoid divorce). Gary didn’t understand her anger or pouting and they had major conflicts.

Even though Gary felt a season of change in his life, he recognized his wife and kids needed support. He worked another two jobs to make ends meet. These jobs felt more fulfilling to him, but Gary made half of the salary he made before the move. This lack of resources angered Diedra and she began looking for a new source of free money.

Since Diedra was near her father (Adam), she began manipulating him. She expressed disappointment in her husband while adding that “You [Adam] are the only man who’s ever really loved me.” Given Adam’s good nature, he believed Diedra. She used him to get a position at his job with a salary above her level of experience. She had no skills, but because of him, no one could question her lack of skills. In addition, she discovered that she didn’t need to work at all, as Adam would always defend her. Everyone at her job respected him, so she exploited this.

Six years later, a conflict erupted between Gary and her daughter Courtney. Courtney agreed to move out, but Diedra jumped on the opportunity to divorce Gary. Since Gary’s income had been rising, she appealed to the court to grant her alimony (her last child was already graduating, so child support was out of the question). In a rare ruling, the judge did not grant Diedra alimony pointing out that Diedra had a college degree and had chosen to avoid working throughout her life, except for the past six years. This angered Diedra and she vented to Adam about the “unfair” ruling after her divorce.

Since Adam was a loving father, he bought Diedra a new car, a house, and provided her with any financial assistance. Since Diedra didn’t need to actually work and now had a free house and car, she continued avoiding responsibility at her job. She knew Adam would continue to cover for her laziness. But Diedra’s ex-husband, Gary, didn’t know she had received financial support from Adam and as a good man he paid Diedra more than she would have received from the court had they granted her alimoney. Gary felt that she had done well by taking care of their daughters throughout their marriage (he had no idea that Melanie was the real caretaker) and that paying Diedra a large monthly income would be the appropriate action to take. Diedra now had two sources of income outside her job – Adam and Gary.

It was at this point that Diedra’s third daughter, Jessica, discovered this money Diedra received from Gary by stumbling across a check. Jessica also learned from Adam how much monthly he would pay to support Diedra. Jessica had discovered significant deceipt and began digging into this, questioning many of Diedra’s past stories. Since Jessica still knew Melanie as a second mother, she talked with Melanie about her mother Diedra. Jessica learned that Melanie loved Diedra because Melanie believed that Diedra had an illness. Jessica realized that Melanie had thought that Diedra had been suffering from an illness the entire time Melanie helped raise Jessica and her sisters. Jessica knew the truth though: Diedra had never been ill. Jessica never revealed that she knew this to Diedra, but Jessica did find it odd that Diedra would gossip and criticize Melanie when Melanie wasn’t around (Diedra still pretended to be her friend). Jessica couldn’t help but feel sick at how much of a monster her mother was.

And Diedra’s fraud didn’t stop. Even though Diedra had two sources of money from Adam and Gary, she needed to ensure that she locked in a third source of income. Diedra’s oldest daughter Sarah was a very successful business woman who ran two businesses and was also engaged to a great man who she loved, Jason. Diedra realized that Jason was a threat because he felt skeptical around Diedra and had even mentioned to Sarah at one point (when Jessica was around) that “Something doesn’t seem right about your mom.” Diedra also needed to lock in Sarah’s money, as it would go to children if she married Jason. She began working on undermining Sarah’s relationship with her fiance. Within a year, Sarah had called off the engagement and Diedra began manipulating Sarah for money.

After destroying Sarah’s possible marriage, Diedra’s father – Adam – died. With Adam’s death, Diedra could no longer avoid work and she lost an ongoing source of income. Even though Adam had supported Diedra for the past decade when she pretended to have financial emergencies, he had millions in retirement. Since he had 7 children, he dispersed his funds to all of his children equally, except Diedra. In his will, he mentioned his support for Diedra along with buying her house and car and pointed out that she had received her percent of inheritance in her lifetime while he was alive. This really angered Diedra. She began criticizing Adam in front of her children, but around her brothers and sister, Diedra pretended to respect Adam’s decision.

But Diedra wasn’t going to get nothing in inheritance and she began manipulating family members. She talked about how Gary, her ex-husband, abused her, even though this was a lie. She said that Gary had prevented her from working, even though this was a lie. But none of these lies worked until she came up with the best lie of all. She said that because of her poverty level, she didn’t see a doctor for a “medical issue” that caused her trauma. It worked! Other family members felt guilty, and Diedra was awarded with a share of the inheritance total. Some family members even gave her some of their share and mentioned to Jessica, “We hope your mom uses our funds for her medical issue – we’re so sorry.” As Jessica learned of this support and fraud, Diedra had already moved onto her next target – locking down the funds of Sarah with a new sad story.

Who Are iGenz?

Discussing Demographics

The below are some facts about the iGenz generation. By “iGenz” we refer to people living in the world born between the years of 1995 and 2015. The last year of US “Millennials” overlaps with iGenz in our research as iGenz is characterized by the first generation that grew up with the internet from when it became conscious.

  1. iGenz gets its name for two reasons: iGenz is the first generation to approach the world from the perspective of the internet has always existed, which becomes clear in observing them (“Why didn’t people just Yandex the answer?”). Because the generation follows Generation Y (usually a title for generations), it has the added “z” to the name to indicate order. Unlike Millennials, we use a 20 year generation timeframe with iGenz due to the effect the internet will have on this age range. In addition, the following generation, AutoMons, grew up under a different technological shift and like iGenz tend to approach the world from the perspective of the internet has always existed.

Who Are the Millennials?

Discussing Demographics

The below are some facts about the Millennial generation. In some cases, we’ve updated our original research provided ceteris paribus comparative assessments were available. Some of these facts will be updated further. As for private research available to institutions, we do not include these facts on this page.

  1. Millennials are the largest generation in U.S. History since the Baby Boom generation (Millennials are internationally referred to as Generation Y as a title). There are approximately over 80 million American Millennials between the birth dates 1980 to 1995.
  2. (2008) Approximately 40% of Millennials aged 18-24 are enrolled in college. (Update 2015) 37% Millennials have graduated from college.
  3. Following the housing collapse (2008), Millennials held the highest unemployment rate of any U.S. demographic despite being one of the most college educated at an early age.
  4. (Update 2016) Millennials favor more government than other American generations, especially in healthcare and finance.
  5. Millennials are more isolationist than former American generations.
  6. Millennials think that China will pose the largest problems for the United States in the future.
  7. Millennials observe religion far less than former generations.
  8. Millennials use drugs and alcohol more than previous American generations and its drug use is much broader than previous American generations.
  9. (2009) 21% of Millennials were married. (Update 2017) 45% of Millennials were or had been married (45% includes currently married, divorced and widowed).
  10. (2011) Only 20% of Millennials list owning a home as a major priority
  11. (2009) 54% of Millennials lived in the suburbs; living with parents is included.
  12. Millennials view living with parents as pragmatic and sensible. This significantly differs from earlier American generations.
  13. (2010) Over 90% of Millennials have access to the internet; 75% of Millennials use some form of social networking; 40% of Millennials have no land-line.
  14. (2010) Millennials do not value privacy and believe that privacy is a relic of the past.
  15. (2010) Median income of individual Millennials is $22,000. (2016) The median Millennial household has $2500 saved.
  16. (Update 2015) Millennials are more likely to want other transportation options than earlier American generations
  17. (Update 2016) Millennials see technology as a way to socialize instead of face-to-face methods.
  18. (2011) Millennials use email less than Baby Boomers.
  19. (2010) 40% of Millennials had a tattoo. (Update 2014) 45% of Millennials have a tattoo.

The Name Millennial vs. Generation Y

By “Millennial” we refer to people living in the United States born (or born elsewhere but live in the United States) between the years of 1980 and 1995, excluding Amish Millennials, which we refer to as Amish Millennials if referenced. With the exception of the People’s Republic of China (we refer to as “Risers”), we use the term “Generation Y” to refer to all people in the world born between the years of 1980 and 1995. The name “Riser” comes from the prediction that China has become the world superpower along with the Chinese generation being more ambitious than their American counterparts. While American Millennials received trophies for participating and were doted on by their parents, Chinese Risers had to work hard to enjoy the success and dominance they have today.

Characteristics of Millennials

We can see the dominant characteristic of Millennials as a generation that has never faced a major challenge, yet believes it has a fascinating story to tell. Even the “Great Recession” that Millennials discuss was a recession with a minor unemployment rate when compared to historical recessions. Additionally, outside of medicine and education – both self-inflicted – Millennials never have faced inflationary periods up to the present date of this update. Without a major challenge, Millennials believe that opportunities are challenges because they haven’t faced challenges. This is part of why we see massive stagnation in this generation – an avoidance of challenging majors, like medicine, along with too many young people going to college and pursuing easy degrees, ironically devaluing what a degree means.

Millennials learned this through their parents and their education system due to a belief that high self-esteem resulted in success. This belief was based on studies that showed successful people had higher levels of self-esteem than unsuccessful people. The previous research firm YRP has investigated this belief and found two observations in its research which question this original study:

  1. The definition of success and self-esteem differ from researcher to researcher. For instance, we found that personal or financial success have no correlation with the dictionary definition of higher self-esteem.
  2. Even if we assume that our data show successful people have high self-esteem, high self-esteem could be caused by success not the inverse. The Millennial generation confirm this too, as they do have high self-esteem, but are not successful when we compare them to Generation Y members of the rest of the world. Likewise, the Amish Millennials in the United States have lower self-esteem than American Millennials who are not Amish, yet the Amish Millennials are more financially and personally successful.

What’s important to note about self-esteem and American Millennials is how this has shaped their dominant characteristic: even without a major challenge, they still believe they have overcome a lot of difficulty. When we compare their adversity to other members of Generation Y around the world (or even the Amish), Millennials look completely out of touch with reality. We can see this contradiction in many issues Millennials are “passionate” about, such as the following:

  • Millennials verbally and through social media claim they feel passionately about helping the environment by not overusing resources and avoiding environmental damage. Yet Millennials love buying the latest cell phone, which are full of rare Earth elements involving catastrophic mining of the Earth’s resources. They also tend to travel overseas through air multiple times a year (one-round air trip does more damage than driving a full-efficient car for an entire year).
  • Millennials believe that education and health care should both be free (or are too expensive), yet very few of them pursued medicine (too hard). In the same manner, when Millennials complain about the price of education rising, they completely contradict this by attending college – the reason college tuition is high is too many Millennials are going to college.

These examples illustrate the confusion researchers experience when studying Millennials: they feel they know the challenges in reality, yet contradict these very challenges by how they live. This highlights another characteristic of Millennials – they do not demonstrate their beliefs through action, they state them verbally or through social media (like memes).

Relative to previous American generations, Millennials will under perform their American generational peers. Likewise, Millennials will under perform non-American members of Generation Y, which partially explains why we see power shift to Asian countries.

Things Don’t Matter Until They Do

Discussing Demographics


In a population of events, we tend to see a pattern that we can distribute and determine what we expect in future events. While the underlying system can impact the events – such as a logical or behavioral system – we can use the overall pattern to predict the future events. In some cases, events will cease or shift dramatically resulting in eliminating or changing the pattern where the former state never reverts, or the former state does not revert for a period of time.

The principle is stated as such: things don’t matter until they do. Since events tend to operate within a pattern, until a shift occurs, most predictions fall within the first observed pattern. Until a shift occurs shaking the events, we can expect the pattern to continue and use predictive mechanisms. The shifts in events may be foreseen by present assumptions, but these shifts are not always predictable.

Events do not continue indefinitely, unless they operate inside a system with a structure that allows for indefinite events. We can expect a pattern of events to occur until a shift changes the range of events.


Math: we have a set of one million numbers ranging from 0 to 2. The maximum possible aggregate would be 2 million with the minimum possible aggregate being zero. If we assume the maximum possible aggregate of 2 million and we observe an event measured at 1 billion, the average of the events jumps significantly, even if the previous event average was 2. If the new average represents a new state – such as a starting base or point, we will not see the normal set of events again.

Discussing Real Estate and Millennials With Jeff Kolko

Discussing Demographics

The following interview was published for YRP several years after the 2008-2009 financial crisis in the United States.

Based on your research regarding the real estate market, what have you observed about Millennial homeowners at this point in time?

The Millennial generation suffered a worse recession than older adults. The unemployment rate of 25-to-34-year-olds rose higher than the unemployment rate overall and only recently fallen back in line. Many Millennials doubled up or stayed at home with parents rather than entering the housing market on their own as renters or buyers. But they won’t live with their parents forever. As the economy recovers, they’ll enter the housing market: nearly two-third still say that homeownership is part of their American Dream. Buying, though, will be a challenge for many of them: for Millennials, the downpayment remains the biggest obstacle to homeownership, and with rents rising rapidly and student debt hanging over their heads, saving for a downpayment is a challenge.

For the Millennials who question the value of homeownership, are there economic benefits to renting as opposed to owning a home?

There are good arguments in favor of renting, depending on your situation. Buying a home involves upfront costs, as well as time and effort – which may not be worth it unless you plan to stay in your home at least 5-7 years. Also, renting may make more sense if you are new to a city and aren’t sure which neighborhood is a good fit for you. Finally, in some markets buying is not really cheaper than renting – such as Honolulu and San Francisco, as well as Manhattan – especially if your tax bracket is low and you therefore benefit less from the mortgage interest deduction. Still, with the huge price declines in the past five years, and rising rents, buying is quite affordable relative to renting in most markets, especially in the Midwest and the South.

We don’t see Millennials rushing out and buying a home and when they do, there may not be a mortgage interest deduction. From an economic standpoint, is the mortgage deduction a good idea?

The mortgage interest deduction is politically popular, but one of the few areas of possible bipartisan agreement on tax reform might be to reduce tax deductions – of which the mortgage interest deduction is a major one. On one hand, the housing market is still fragile, and rising prices have real benefits for the economy, so reducing the incentive to buy a home right now could hurt the economic and housing recovery. On the other hand, because of the way the mortgage interest deduction works, it gives a much bigger tax break to richer taxpayers, particularly in geographic areas with higher home prices. Only 30% of taxpayers even itemize their deductions in the first place, so the benefits of the mortgage interest deduction goes to some homeowners and not others. The mortgage interest deduction is – and will remain — in the crosshairs of two big policy debates: how much should government spend to encourage homeownership, and what’s the fairest and most efficient way to spread those benefits?

As of the end of 2011, housing prices are on the rise. Can we expect housing prices to continue to rise? And what’s been assisting this rise?

The Trulia Price Monitor – which tracks asking prices – shows that prices have been rising for six months and have been rising in most major housing markets. Job growth, along with declining vacancies and inventories, are pushing prices higher. Job growth means more people are interested and able to buy, and the decline in vacancies and inventories means that buyers are chasing fewer available homes and therefore bidding prices up. A big reason for lower inventories is fewer foreclosed homes on the market. Since foreclosed homes are often at the lower end of the market, first-time buyers will find fewer bargains listed for sale then they would have a year ago. We’ve seen asking prices continue to rise in July, which means sales prices should keep rising at least through the fall.

About Jeff Kolko

Jed Kolko applies a background in economic development and research methods, transforming real estate data, economic trends, and public policy debate into digestible insights for home buyers, sellers and renters. In Jed’s prior role as Associate Director and Research Fellow at the Public Policy Institute of California, he led research projects and advised policymakers and business leaders on economic, housing and technology policies. Jeff has a Ph.D. in economics from Harvard University.

Maixin’s Thoughts On Buying A Home

Before we interviewed Jeff, our research showed that renting beats homeownership except if one of four situations applies to a person:

  • They plan to live in their area for greater than two decades.
  • They work in the medical industry.
  • They want a specific home and have no thought of ever selling it.
  • They enjoy the real estate market.