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The Baby Boom, says Richard C. Michel of the Urban Institute, was hit by a quadruple whammy: inflation, fierce competition for jobs, exorbitant housing costs and the recessions of the '70s and early '80s. "They grew up with the expectation that they would live better than their parents no matter what they did," says Michel. "The 1970s ended that. It was a time of tremendous economic disillusionment for many people." Between 1973 and 1983 the median real income of a typical young family headed by a person ages 25 to 34 fell by 11.5%. In the 1970s, for the first time in history, the economic value of a college degree declined. An awful lot of physics majors found themelves driving cabs.
There is, in the voices of Baby Boomers whose higher education was not rewarded with higher earnings, a certain bewilderment. "I certainly expected to live as well as my parents," says Audrey Burnam, 35, a research psychologist at UCLA who lives in a rented two-bedroom apartment while her father, who works at a copper smelter in Arizona and never graduated from high school, owns his own three-bedroom house. "I certainly expected to be able to afford a home. I am comforted," she sighs, "that this is happening to a whole generation."
In the '70s and '80s, real estate became an obsession with the Baby Boomers. Demand outstripped supply: while new housing starts rose by only 11% in the 1970s, the total of outstanding mortgage loans tripled. Those who rented in that inflationary decade watched helplessly as the price of homes took off. People born late in the generation found that home prices were out of sight even before they entered the housing market. The tales were particularly grim in fashionable high-priced areas like Manhattan, where would-be yuppies desperate for affordable housing have even moved, VCRs and all, into rundown "single-room occupancy" hotels, sharing the bathroom down the hall with strangers.
Such cocktail-circuit horror stories were accompanied by panicky fears that the American dream of home ownership was becoming illusory. In fact, statistics show that by scraping and borrowing, most Baby Boom families eventually managed to buy at least a modest dwelling. In 1983 nearly half of all young families owned their homes, about the same proportion as a decade earlier. Many a down payment came from parents; Rutgers University Housing Economist George Sternlieb quips that Baby Boomers have popularized a new form of G.I. financing: "G.I. as in Good In-laws."
In many cases, young couples were able to jump into the spiraling real estate market only because wives went to work: by 1983 more than 65% of all first-time home buyers needed two incomes to make payments on their mortgages. In 1949 the average 30-year-old male homeowner spent 14% of his earnings on mortgage payments; by 1983 the proportion had climbed to 44%. For some the sacrifice has meant forgoing additional children. Tom Cray, 36, of Rochester, and his wife Jean, 41, would like to have a second child, but they are not sure their two salaries will stretch to cover the mortgage and two children. Says Cray: "It's depressing to think human life has a price tag."