TRD publisher Amir Korangy: Millennials purchasing homes with 401(k) funds is like “buying champagne with beer money”

“If you don’t have the financial acumen to put a down payment on it, then you don’t buy it”

Aug.August 02, 2018 08:30 AM

The Real Deal publisher Amir Korangy appeared on FOX Business Today on Tuesday to discuss millennial homeownership with host Charles Payne.

The two mainly focused on how the generation has been tapping into its 401(k) money to purchase homes, with a new study from Bank of the West finding that 29 percent of millennials are doing so.

“Have you heard of the term buying champagne with beer money?” Korangy said. “This is exactly what’s happening here.”

Korangy outlined multiple flaws with the practice. He stressed that people who cannot afford to buy real estate should not buy it, noting that this was one of the main causes of the 2008 recession. He also added that the amount of fees involved with using 401(k) money to pay for a house could make the whole transaction much more expensive.

“If you don’t have the financial acumen to put a down payment on it, then you don’t buy it,” he said.

Millennials have generally shied away from real estate as an investment opportunity, with many seeing savings accounts and other cash instruments as better options, according to a recent Bankrate survey. — Eddie Small

Related Articles

As the years go by_A look back at 17 years of real estate history

A look back at 17 years of real estate history

157 West 57th Street (Credit: iStock)

One57 condo with reduced ask tops a slow week of luxury contracts

Clockwise from top left: 730 Fifth Avenue, Unit #PH21; 730 Fifth Avenue, Unit #18A; The Pierre, Unit #3101; and The Park Imperial, Unit #64

Priciest homes listed last week include $60M pad at Crown Building

250th Issue

The Real Deal celebrates 250 issues

From left: Publisher and founder Amir Korangy, Editor-in-chief Stuart Elliott and VP of Corporate Development Yoav Barilan

TRD’s founders share war stories from over the years

56 Leonard Street (Credit: iStock)

He invested more than $130M into 4 Manhattan condos. Now he’s taking a hit

Due to relatively high income levels and low transportation costs, New York City is the eight most affordable of 20 major cities (Credit: iStock)

NYC is the 8th most affordable big city in America*

53 West 53rd Street, 885 Park Avenue, 70 West 45th Street (Credit: StreetEasy)

Five priciest homes to hit the market last week all over $22M