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Message
re: The High Cost of a Home Is Turning American Millennials Into the New Serfs
Posted on 8/23/17 at 8:04 am to lsupride87
Posted on 8/23/17 at 8:04 am to lsupride87
Comparing eras is tricky. Most of the following appears in previous posts and is anecdotal, but here goes anyway.
For folks we're calling millenials, they've experienced a federal funds rate near zero and single digit inflation their entire adult lives. For a lot of the 2000s, lenders would give you enough money to bury yourself if you had a job and a pulse.
For folks who were adults in '75, double digit inflation was real, and meant you might see your real buying power decrease by 10% in a single year--pretty terrifying. Also, there weren't the plethora of mortgage provides like now, and lending standards for mortgages were very different. The securitization of mortgage paper really wasn't a thing back then. Lenders for the most part held the paper they wrote, so their standards were damn tight. Plus, Congress hadn't get their noses into it yet. Throw in the 9+% mortgages, and you get a lot of folks paying rent.
Regarding an "average house", I think the world has really changed there. During the late 90s through the mortgage meltdown, near free money and changing tastes drove builders. "Entry level" houses in the 70s weren't built to satisfy first time buyers driven by HGTV and Pinterest addicted tastes - no marble island countertops, custom cypress cabinets, high end appliances, oak hardwood floors (this trend is NOT unique to millenials-- boomers and Gen Xers raise your hands, too). That's not what the houses I remember in the 70s looked like- more like Formica, particle board, and Congoleum. Maybe we and my friends were just poor :). Point is an "average home" is a lot more expensive now in adjusted dollars.
Regarding wages, using a federally controlled minimum wage to show wage stagnation is probably not the best example, but I do agree that wages haven't kept pace with inflation. I do concur that home prices have outpaced wage growth for many reasons.
Summarization --
1) The challenges in the article are real, but maybe exaggerated.
2) Buying a house has never been a picnic. 1975 had different challenges, but it is tough now, too.
3) Old folks always had it rougher, even if they didn't.
For folks we're calling millenials, they've experienced a federal funds rate near zero and single digit inflation their entire adult lives. For a lot of the 2000s, lenders would give you enough money to bury yourself if you had a job and a pulse.
For folks who were adults in '75, double digit inflation was real, and meant you might see your real buying power decrease by 10% in a single year--pretty terrifying. Also, there weren't the plethora of mortgage provides like now, and lending standards for mortgages were very different. The securitization of mortgage paper really wasn't a thing back then. Lenders for the most part held the paper they wrote, so their standards were damn tight. Plus, Congress hadn't get their noses into it yet. Throw in the 9+% mortgages, and you get a lot of folks paying rent.
Regarding an "average house", I think the world has really changed there. During the late 90s through the mortgage meltdown, near free money and changing tastes drove builders. "Entry level" houses in the 70s weren't built to satisfy first time buyers driven by HGTV and Pinterest addicted tastes - no marble island countertops, custom cypress cabinets, high end appliances, oak hardwood floors (this trend is NOT unique to millenials-- boomers and Gen Xers raise your hands, too). That's not what the houses I remember in the 70s looked like- more like Formica, particle board, and Congoleum. Maybe we and my friends were just poor :). Point is an "average home" is a lot more expensive now in adjusted dollars.
Regarding wages, using a federally controlled minimum wage to show wage stagnation is probably not the best example, but I do agree that wages haven't kept pace with inflation. I do concur that home prices have outpaced wage growth for many reasons.
Summarization --
1) The challenges in the article are real, but maybe exaggerated.
2) Buying a house has never been a picnic. 1975 had different challenges, but it is tough now, too.
3) Old folks always had it rougher, even if they didn't.
This post was edited on 8/23/17 at 12:47 pm
Posted on 8/23/17 at 8:31 am to CorporateTiger
If you need proof/data on housing price correction between 2008-2012 this convo is over. I will absolutely agree from 2013-current most markets have since corrected, mine has exploded, but we know another correction is coming 2020.
In my opinion the spread on your chart is not as alarming as what you perceive over the last 30+ years. As a hedge, money has become so much more easily available and during that 30+ year period become as much as 5X cheaper increasing your buying power exponentially.
I've been in real estate for a little over a minute, the average person entering the market is usually 3-5 years post college barring rare instances. I think that number will continue to delay but lifestyle has just as much to do with that as housing prices. The "settle down" demographic of mil's is decreasing rapidly. That equates to many not wanting to enter the market/traditional family and not needing savings gen's before them did.
In my opinion the spread on your chart is not as alarming as what you perceive over the last 30+ years. As a hedge, money has become so much more easily available and during that 30+ year period become as much as 5X cheaper increasing your buying power exponentially.
I've been in real estate for a little over a minute, the average person entering the market is usually 3-5 years post college barring rare instances. I think that number will continue to delay but lifestyle has just as much to do with that as housing prices. The "settle down" demographic of mil's is decreasing rapidly. That equates to many not wanting to enter the market/traditional family and not needing savings gen's before them did.
Posted on 8/23/17 at 8:41 am to ItNeverRains
quote:
As a hedge, money has become so much more easily available and during that 30+ year period become as much as 5X cheaper increasing your buying power exponentially.
This primarily helps older people. Younger people are dealing with this
Posted on 8/23/17 at 8:43 am to dbeck
{Nobody is building small homes like that anymore.}
Thought of the day: Buy an old one.
Posted on 8/23/17 at 8:46 am to Iluvtwizzler
quote:
Thought of the day: Buy an old one.
Thought of the day: a lot of old ones are being torn down and replaced with McMansions. Makes buying one hard.
Posted on 8/23/17 at 8:51 am to GreatLakesTiger24
Perhaps millennials should stop voting for politicians and policies that are detrimental to middle class prosperity, ie anything remotely connected to the Democrat Party.By the way, there are affordable homes, but they are usually in the suburbs/exurbs (You know, the consistently Republican districts and counties/parishes)
Posted on 8/23/17 at 8:51 am to Iluvtwizzler
quote:they are in the hood na'
Thought of the day: Buy an old one.
Posted on 8/23/17 at 8:56 am to CorporateTiger
Yeah I wanted to go to Milsaps. Didn't want the debt that came with it. So I went to LSU. Also worked 2 jobs and graduated with no debt in 2000. In fact I had almost 5k in the bank and lived on my own the last year.
Many mil's believe taking on tuition debt is par for course. There is no alternative. Its foolish.
See my above post where I point this out. At least you are honest. I'll just complain until I have enough money to live where I want and it looks like what I want.
Many mil's believe taking on tuition debt is par for course. There is no alternative. Its foolish.
quote:
Thought of the day: Buy an old one.
they are in the hood na'
See my above post where I point this out. At least you are honest. I'll just complain until I have enough money to live where I want and it looks like what I want.
This post was edited on 8/23/17 at 8:59 am
Posted on 8/23/17 at 9:02 am to GreatLakesTiger24
quote:
Boomers were/are much worse savers
This is based on a 2016 GoBankingRates survey. It breaks down the average savings account by generation. The breakdown by generation is similar but what is insane is 69% of people have less than $1,000 in their savings account. Maybe being shite with money is cross generational
Posted on 8/23/17 at 9:05 am to Drunken Crawfish
No we are absolutely shite with money as a society. I had to push back a closing on a 600k house a week so the couple who made 212k/year would have money for closing costs. They called me from Jamaica to let me know. Every dollar than went in came out. Crazy.
Posted on 8/23/17 at 9:08 am to ItNeverRains
quote:
At least you are honest. I'll just complain until I have enough money to live where I want and it looks like what I want.
I have more than enough to live where I want, but I can't blame decent people for not wanting to live in run down, crime ridden neighborhoods
Posted on 8/23/17 at 9:32 am to CorporateTiger
quote:
Thought of the day: a lot of old ones are being torn down and replaced with McMansions.
That's not even close to true. Nobody is tearing down houses built in the 1950's-70's in well established neighborhoods to build houses that are 2-3x the comparable value of the homes around them. There are houses for sale in the $120k-$150k range all over this area. At most some need minor updating but most millenials are almost completely helpless when it comes to basic construction skills.
Posted on 8/23/17 at 9:39 am to Clames
quote:
That's not even close to true. Nobody is tearing down houses built in the 1950's-70's in well established neighborhoods to build houses that are 2-3x the comparable value of the homes around them.
Those holes are the ones where the price has outpaced what they were in 1980.
quote:
There are houses for sale in the $120k-$150k range all over this area.
Thanks for telling us about your area. It is completely irrelevant to the conversation and doesn't change a thing about the overall data.
This is typical in this thread. Everyone gets showed the macro data and the rebuttal is "well in my area." Your area does not fricking matter this conversation is on the overall economic conditions compared to 1980.
Posted on 8/23/17 at 9:45 am to tigahbruh
quote:
Perhaps millennials should stop voting for politicians and policies that are detrimental to middle class prosperity, ie anything remotely connected to the Democrat Party
This would help, but they might have to stop playing Pokemon long enough to think for themselves.
Posted on 8/23/17 at 9:46 am to Mingo Was His NameO
Welcome to the OT, home of anecdotal data.
Data: People who score less than a 24 on the ACT tend not to finish college.
OT: Well, I know a guy who made a 17 and he's a millionaire!
Data: People who score less than a 24 on the ACT tend not to finish college.
OT: Well, I know a guy who made a 17 and he's a millionaire!
Posted on 8/23/17 at 9:50 am to Clames
quote:
That's not even close to true. Nobody is tearing down houses built in the 1950's-70's in well established neighborhoods to build houses that are 2-3x the comparable value of the homes around them.
EVeryone is doing it my hood.
quote:
At most some need minor updating but most millenials are almost completely helpless when it comes to basic construction skills.
I've run electrical, painted, hung fans, some light plumbing, and built my countertops from scratch. The generalizations you make about my generation are laughable.
Posted on 8/23/17 at 10:13 am to Clames
quote:
That's not even close to true. Nobody is tearing down houses built in the 1950's-70's in well established neighborhoods to build houses that are 2-3x the comparable value of the homes around them
bullshite. It is happening all over the place. The current practice is to take 2 or 3 old/small houses, tear them down and place 4-6 400-600k townhouses on it.
quote:
At most some need minor updating but most millenials are almost completely helpless when it comes to basic construction skills.
Oh GFY
Posted on 8/23/17 at 10:15 am to ItNeverRains
quote:
Yeah I wanted to go to Milsaps. Didn't want the debt that came with it. So I went to LSU. Also worked 2 jobs and graduated with no debt in 2000. In fact I had almost 5k in the bank and lived on my own the last year.
Many mil's believe taking on tuition debt is par for course. There is no alternative. Its foolish.
I did something similar, rolled that into post-grad and got an amazingly paying job.
At the same time our personal success stories don't change the fact that market entry is harder for milennials than it was for previous generations.
Posted on 8/23/17 at 10:30 am to DownshiftAndFloorIt
quote:
I know many young people knocking on 6 figures in the south and they're in debt up to their asses. 3 years in the workforce and they have a $60k truck, $40k boat, $225k house, etc etc.
I know plenty of people who are the same but they make half that in salary.
Literally know of 3 couples that both husband and wife are teachers, so they're grossing about 90k between them - all sets have student loans for their advanced degrees. 2 of them are on their second or third home in 5 years. 2 of them take 3-4 vacations a year. 1 of them has 3 kids, another 1, the last is childless (but I promise not for long - the wife is lazy as frick and has to be gunning to get prego asap).
On a similar gross, my wife and I are almost completely debt free (save for mortgage), have been saving for retirement for several years, put a bunch of sweat equity into our house in a growing area, and live a merely comfortable life.
I don't know how you get by day-to-day with a truck note you can't afford, a house note you can't afford, student loans you're paying as little as possible on until the government absolves them, etc. We thought the Boomers were over-medicated when they hit middle age, bunch of my fellow Millennials will be doped up and strung out (and bankrupt) by 35.
This post was edited on 8/23/17 at 10:39 am
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