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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”
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