In california, NY, DC, Seattle, Boston, etc - there's no way a millenaial could afford the 250k down payment on a starter home in these markets. Homes in these areas are owned increasingly by two groups - asians (Chinese) and people who bought them in the 70s when they were cheap (boomers)
so lol, they have to move to Utah/Kansas/Tennessee. Sad!
Millennials can't afford Utah. Not sad!
I think you are correct, but I'm also not sure it matters. NYC has been 75% renters since at least the mid-70s. Nonetheless, it is just about the best and most desirable places to live America for those who prefer urban living (obviously urban living is not for everyone, but don't want to argue that here). Similarly, this (almost everyone renting) has been a feature of almost all major European cities for probably 100+ years. Nonetheless places like Paris, London, Zurich, Berlin, etc. are also amongst the best and most desirable places to live in the world for those who prefer urban living.
The truth is, through most of history there has been little financial advantage to home ownership for the average person. The level of wealth creation attributable to home ownership during period from roughly the 1950s to the early 2000s is largely a historical anomaly. Even during that historically anomalous period, those gains were limited to only a small number of major cities (i.e. see how well home owners in cities like Detroit and Cleveland fared over the same period). I think eventually American culture will come to recognize the benefits - mobility, liquidity, etc. - of renting, and the will stop lionizing homeownership. This has largely already happened amongst the high income/high net worth set. While most people in this group do in fact own real property (add sometimes multiple properties), a surprisingly large percentage actually rent their primary residence in recognition that mobility is a highly valuable commodity in an increasingly globalized economy.
Apologies for all of the typos in my previous post. Typing quickly on a mobile device.
Rent control and too many regulations when it comes to building lead to an increase in cost of housing.
That's about to change. The US economy is on
the verge of collapsing as China and Russia and Iran have dumped the dollar. War is probably next as the US will be despairing to save it's ass.
Some fair points above. The real case for home ownership boils down to two points:
(1) It usually makes a lot of financial sense IF you compare apples to apples, i.e., are you going to buy something equivalent to what you're renting. A lot of people are comfortable with pretty small places when they rent, but once they decide to buy, they think they should go huge. A home is a great investment, not because it appreciates in value (it really doesn't, once you account for maintenance costs), but because it pays a massive dividend in the form of a place to live. If you decide to live in a really big house, you're really just increasing your consumption, and a home ceases to be a good investment.
(2) A lot of people lack the discipline to save. Owning a home forces you to save, provided you don't just turn around and take out a HELOC.
As for down payments, you do not need 250k down, even in very expensive markets (I'm referring to regions and metro areas, not specific blocks). If you think you have to spend that much, it's because you think that a home you buy should be significantly nicer/bigger than a home you rent (see above) or because you are being too picky about location.
Also, I'm very skeptical of people who complain about down payments. If you can't scrape together a down payment, then you're probably going to struggle to service the mortgage. Sure, some people right out of school have a great salary and no assets. If that's you, then you should try living like you did when you were a student, and you'll have your down payment in no time.
Luv2Run wrote:
Rent control and too many regulations when it comes to building lead to an increase in cost of housing.
While somewhat true, by far and away the most important reason for high housing prices in major US cities is that people with lots of money want to live there. My memory fails me when trying to recall the source, but there was recently a paper out from one of the top universities (probably Yale as that is where Shiller is I believe) that modeled housing prices in San Francisco if all rent control and building restrictions were removed. While prices dropped quite a bit with lower construction costs and increase inventory, a studio apartment still was projected to cost well in excess of $500K.
Historically, housing prices in major metro areas actually track levels of income/wealth inequality pretty well. As the rich get richer relative to the general population they bid up the value of positional goods like housing and healthcare (and less essential positional goods like art, vintage cars, vintage watches, etc.).
They spend too much money on avacados
But...but....but...that's not FAIR! We're all winners and everyone should be treated the same, regardless of work ethic or education. I deserve fair prices!
generation fail wrote:
In california, NY, DC, Seattle, Boston, etc - there's no way a millenaial could afford the 250k down payment on a starter home in these markets. Homes in these areas are owned increasingly by two groups - asians (Chinese) and people who bought them in the 70s when they were cheap (boomers)
so lol, they have to move to Utah/Kansas/Tennessee. Sad!
I bought a home in the D.C area just over a year ago and put about $30k down. If you don't have that you shouldn't own a home.
Boomer here. Simply untrue. I went to school in Boston and could l not afford to live there when I started out late 1970's early 1980's . Worked in Beantown and commuted 1.5 hours each way. Many others did the same. Now its your turn. Stop whining.
generation fail wrote:
there's no way a millenaial could afford the 250k down payment on a starter home in these markets.
Lol. Poor trolling.
R1200 wrote:
Boomer here. Simply untrue. I went to school in Boston and could l not afford to live there when I started out late 1970's early 1980's . Worked in Beantown and commuted 1.5 hours each way. Many others did the same. Now its your turn. Stop whining.
Terrible take. Housing and rental prices have far outpaced wage gains and inflation in major metro areas. Mainly due to a lack of construction -- failure to keep pace with rising demand. This has generally been encouraged by current homeowners as they like to see their house values rise.
Much of the wealth inequality we hear about today is explained by greatly rising real estate prices.
How to fix this:
1) keep people out. Don't let them move to the city. You got yours so screw everyone else. This is bad (and unamerican) and will hurt areas as you need young people for labor.
2) Build more housing. Homeowners can either tolerate medium-rise apartments on their block OR sell their house for a 500% profit and get out to somewhere suburban that fits with their intended "neighborhood character."
Cities are the most efficient way to organize an economy.
R1200 wrote:
Boomer here. Simply untrue. I went to school in Boston and could l not afford to live there when I started out late 1970's early 1980's . Worked in Beantown and commuted 1.5 hours each way. Many others did the same. Now its your turn. Stop whining.
Math here. You are simply wrong.
Median House price in Boston:
1983: 82,000 .
2018: 580,000
1983 median house price adjusted for inflation: $207,000
You were only off by about 200%
A millennial wrote:
But...but....but...that's not FAIR! We're all winners and everyone should be treated the same, regardless of work ethic or education. I deserve fair prices!
You need to be tough on you mom and demand a better rate on the basement. Try certain-to-frighten-mom tactics like: holding your breath, refusing to eat, pouting; they are can work like magic if properly applied to a mom.
40% of millenials get 2k/month from mommy and daddy
Boomers didn’t have that luxury and you didn’t live with your parents after college
Obama and the government fixed the economy by blowing housing prices through the stratosphere. Only a racist would object to 20 years of 0% interest rates.
Overlooked fact is that the majority of millenials are now flocking to the suburbs for the same reasons their parents did, cheap affordable housing, good schools and room to spread out. While the birth rate is down over the last few decades, people will continue to reproduce, and when they do they find city living doesn't make much sense, especially in the places you mentioned. Urban school districts are horrendous, and no room for the kids to play is a no go for most moms. So you move to the burbs or a small town.
Aduunkm wrote:
Obama and the government fixed the economy by blowing housing prices through the stratosphere. Only a racist would object to 20 years of 0% interest rates.
Not blaming Obama because homeownership is such a big goal of all administrations, but giving such huge handouts to homeowners has really increased the wealth gap between those with and without property.