The lightweight reporters who nibble around the edges don’t ever get to the point. It doesn’t matter who wins the election, rich people are taking over. Millennials and others will have to find a way to buy a home, or be at the mercy of rich people for the rest of their lives.
http://www.npr.org/2016/07/26/487470787/fewer-young-people-buying-houses-but-why
Trevor Burbank is single, 27 years old, and has been house hunting in Nashville for the last year.
“My rent’s going up in August, so I have to figure out what I’m doing,” he says.
The last time Burbank looked for a place was five years ago. He decided to use his down payment to start a business instead.
“There was a house that I really liked that was going for $60,000, and I saw the house being sold in the past few months for just shy of $300,000,” Burbank says.
There’s a big debate in real estate over where home ownership rates are headed, and whether Millennials — people who came of age around 2000 — will get into the housing market the way generations before them did.
The percentage of people younger than age 35 who are homeowners went from 42 percent a decade ago to just a little more than a third now.
Lawrence Yun, chief economist for the National Association of Realtors, says young people are squeezed from both sides. Rents are increasing even faster than home prices.
And, he says, city politicians aren’t making it easy for developers to build condominiums that would be good starter homes.
“We are creating this divide because of the ongoing housing shortage,” Yun says.
There are other factors everyone agrees are making it harder for today’s younger home buyers. They’re delaying marriage, mortgages are harder to get, and people are staying in school longer, taking larger loans.
Which has the biggest effect, though? Is home ownership on a permanent decline because of high costs, changing demographics or new attitudes about home ownership?
“That’s the million-dollar question,” says Jonathan Spader, senior researcher at Harvard’s Joint Center for Housing.
He takes the view that ownership may stay the same, just delayed for the younger generation.
“We really haven’t seen a shift in interest in home ownership among younger households,” Spader says.
In surveys, a huge majority — 90 percent — of those younger than age 30 expect to eventually own, he says, but their earnings took a hit in the recession eight years ago and it’s taking them longer to save up a down payment.
Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute, takes a different view: she thinks the younger generation is simply less interested in home ownership.
“This is a permanent shift,” Goodman says.
She cites a 2014 study by Fannie Mae of “prime” home buyers. It found that among young, college educated, upper-income, white families, home ownership fell 6 percent from 2000.
“And that sort of best captures the subtle change in attitudes towards home ownership, because this is a group for whom there’s no reason not to be homeowners,” Goodman says.
Of course more than 80 percent of them eventually buy, but, she says, “they’re doing it later, and a lower percentage of them are eventually doing it.”
One observation might be that Millennials are a special blend of awesome sauce, and we should expect remarkable things from them.
https://www.youtube.com/watch?v=hpOFOVA-eaQ
Don’t yuk my yum!
Gen Y here – it’s a Multitude of factors compounding the problem.
1) No security with jobs anymore – sure, there has never been complete security with any job but it’s much worse now.
2) Adverse attitudes towards massive debt – I’ve noticed advertisements with loans as low as 1% down now. Most millennials are adverse to taking on 400k+ mortgage or leveling up 4x + earnings to buy.
3) Not much breathing room for “starter homes” Inventory low, tough to imagine a situation where one can build equity in “starter home” when the prices are near all time highs. Economy is creating jobs, but the vast majority pay less than 50k, are part time, etc.
4) Bubble lurks – does anyone really believe this rebound in prices is due to anything BUT supply and demand and Fed policy of ZIRP? If interest rates were @ 5%, would the prices be where they are now?
5) Boomers retirement portfolios. NC Coastal is an outlier b/c the majority are wealthy – but what does the average boomer / homeowner have saved for retirement? 100-150-200k? That’s not going to last, especially in the era of ZIRP.
6) CALPERS – they need to hit 12% annual returns in perpetuity. Either taxes up or benefits down, don’t see how either of those situations bode well for home-ownership in CA.
“This is a permanent shift,” Goodman says.
For some reason this reminded me of a line from a Freakonomics podcast:
“the butcher feeds the turkey for a certain number of days, and then the turkey imagines this is permanent.”
http://freakonomics.com/2011/06/30/the-folly-of-prediction-full-transcript/
So are you the butcher, or are you the turkey?
I wouldn’t buy most of the overpriced outdated crap of inventory that’s available today either.
Yeah, it just doesn’t make any sense! Paying an outrageous amount of money for a structure that’s as or older than I am (mid 40s) and it still needs a ton of work!?
It just seems like money is too easy to get (low interest rates) and people are able to qualify using new and dubious income streams like counting friends and family as a source of income!?
It’s as if they’re (Feds, banks, etc.) doing anything and everything possible to keep prices inflated and to keep pumping them up!
“Gen Y here – it’s a Multitude of factors compounding the problem.”
Google “the tragedy of the commons,” and consider property investment in New Zealand.