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”

National /
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

arrow_forward_ios
Overall, the number of housing units that started construction last year was up 7 percent from 2019. (iStock)
Residential construction had busiest year since 2006: MBA
Residential construction had busiest year since 2006: MBA
Common Projects sneaker designer Peter Poopat bought the home in December. (Getty, Brown Harris Stevens)
$6.5M Fort Greene townhouse sale breaks neighborhood record
$6.5M Fort Greene townhouse sale breaks neighborhood record
(iStock)
Homebuilder sentiment falls for second month in a row
Homebuilder sentiment falls for second month in a row
(iStock)
Homebuying up again, but rising mortgage rates depress refinancing
Homebuying up again, but rising mortgage rates depress refinancing
The two most expensive contracts signed last week were condos at One Prospect Park West. (Douglas Elliman)
Brooklyn luxury market roars back to life
Brooklyn luxury market roars back to life
Fidelity’s Raymond Quirk (iStock)
Title insurers launch new closing tools as homebuying rises
Title insurers launch new closing tools as homebuying rises
Corcoran to sublet 50K sf in IBM Building
Corcoran to sublet 50K sf in IBM Building
Corcoran to sublet 50K sf in IBM Building
Quarters CEO Rui Barros (Linkedin)
Quarters, the “WeWork of co-living,” files for bankruptcy
Quarters, the “WeWork of co-living,” files for bankruptcy
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...