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
(Getty)
Where the lawsuits challenging NY’s 2019 rent law stand
Where the lawsuits challenging NY’s 2019 rent law stand
Steven Mnuchin and 740 Park Avenue (Getty, Google Maps)
Steven Mnuchin’s $26M home finally finds a buyer
Steven Mnuchin’s $26M home finally finds a buyer
Robert Millard and 9 East 88th Street (MIT Corp, Google Maps)
Former Lehman exec lists Carnegie Hill mansion for $38M
Former Lehman exec lists Carnegie Hill mansion for $38M
April’s occupancy levels climbed to 61.6 percent, above March’s 60.9 percent. (iStock)
Demand for short-term rentals surges past pre-pandemic levels
Demand for short-term rentals surges past pre-pandemic levels
Cape Cod and the Jersey Shore suffered among the sharpest inventory declines. (iStock)
Here’s where homes virtually sold out in the pandemic
Here’s where homes virtually sold out in the pandemic
1384 Meadow Lane
The 20 priciest Hamptons sales this year
The 20 priciest Hamptons sales this year
Airbnb CEO Brian Chesky. (Airbnb, Getty)
Airbnb’s losing spree continues with $1B loss in Q1
Airbnb’s losing spree continues with $1B loss in Q1
Madison Realty principal Josh Zegen, Raphael Toledano with the properties at 325-329 East 12th Street and 223-235 East 5th Street (Madison Realty, Google Maps, Toledano by Michael McWeeney)
Madison Realty Capital closes on Toledano’s bankrupt East Village portfolio
Madison Realty Capital closes on Toledano’s bankrupt East Village portfolio
arrow_forward_ios

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

Loading...