millenials are effectively priced out of most major city housing markets

deradoodledoo wrote:

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%

Dumbarse millennials. You adjusted for wage inflation, but what you didn't adjust for was the cost of borrowing. In 1983, the average mortgage rate was 12.83%, The average mortgage rate today is 4.47%. So, a mortgage on $207k at 12.83% would be about $2300 a month (assuming 20% down). $580k at 4.47% comes to about $2900, so really he is only off by about 25-30%, which can be explained by the fact that housing prices are inflated.

R1200 wrote:

deradoodledoo wrote:

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%

Being a mathematician, you might want to compare average salaries with average home costs during each time period. When I started I could not buy any house at all and lived in apartments, then bought a house in NH then moved progressively (see what I did there?) to nicer places. I see other non whining millenials in my family doing the same, start with apartment, move to condo, buy house. My niece managed to buy a 600,000 home in Topsfield, her sister a simlar priced home in Middleton, another niece a 700,000 home in Briarcliffe, NY. They all manage sans whining.

so you are just going to ignore the fact that were blatantly wrong in your original post that insinuated that housing costs in Boston in the 1970s were as bad as today? The 'tough' housing situation that you described as an examply would be considered extremely affordable today, yet you don't even address it.

The housing collapse happened because originators were giving almost unlimited money to people with no prospects of repaying their loans in order to purchase mcmansions built on worthless wasteland. Yet even in the face of an unprecedented housing collapse, property values in the most desirable areas simply leveled off for a short period. The value of properties in expensive regions isn't a bubble because it isn't driven by speculation; it's driven by real-world demand to live in those areas. And underwriting standards are much, much tighter now. The basic rule is that as long as people have equity in their homes, there can't be a collapse. Sure, housing markets can slow--and rising interest rates should eventually have an impact--but they won't crash.

If you can't afford a house in Texas by the age of 40 as a single male, then you really are not financially astute. Housing prices in Texas tend to be affordable as they are kept in check by real estate taxes (since Texas doesn't tax incomes, they tend to tax real estate at a higher rate, so housing prices are kept in check). What pray tell have you done with your earnings by the age of 40 where you cannot afford a house?

R1200 wrote:

2 years ago for the ones in Mass. 1 year for the one in NY. Yeah, well wage increases have always been crap if you stay at one place. Jump and enjoy a nice increase with each job change. And hint. Dont live in Waltham. Pick a town that has a better route in.

Are we talking on an individual level or a macro level? Sure an individual jumping to a new job may increase salary, but a bunch of millennials moving jobs wont boost overall salary levels?.

My point about salaries was that they have been historically stagnant for years. In the late 70s early 80s, wages grew on average at 10% per year. Now its around 2-3% on average, barely beating inflation (though I admit its increased a bit recently with tax cuts). so no wage increases haven't always been crap. They were miraculously high in the late 70s early 80s.

And I don't live in Waltham I live in a town further away but a better commute (still 75+ minutes) but I also pay for that privilege. Blue collar town with poor schools, a drug problem, and poor roads, and the median house costs $500k. I can't afford anywhere else despite making a solid salary.

Harambe,

You need to look at your graph again and realize that the household debt to income ratio, especially in light of rising interest rates and the elimination of mortgage interest deduction is set to collapse the housing market. To quote Steve Eisman "They mistook leverage for genius".

joedirt wrote:

If you can't afford a house in Texas by the age of 40 as a single male, then you really are not financially astute. Housing prices in Texas tend to be affordable as they are kept in check by real estate taxes (since Texas doesn't tax incomes, they tend to tax real estate at a higher rate, so housing prices are kept in check). What pray tell have you done with your earnings by the age of 40 where you cannot afford a house?

I'm not really astute in any sense, financially or otherwise, but I don't think you've really been keeping up - real estate prices in Dallas have exploded over the past decade.

I am unwilling to break the Dave Ramsey rule - mortgage payments not exceeding 25% of your take home pay on a 15 year fixed rate. I put 25% of my salary into retirement accounts and only make about 80k, so my take home pay is only about $4k a month. I can only spend $1k a month on mortgage, insurance, and taxes. That doesn't go very far.

Plus the fact remains - I don't need a house. I live alone and am rarely at "home" anyway.

joedirt wrote:

deradoodledoo wrote:

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%

Dumbarse millennials. You adjusted for wage inflation, but what you didn't adjust for was the cost of borrowing. In 1983, the average mortgage rate was 12.83%, The average mortgage rate today is 4.47%. So, a mortgage on $207k at 12.83% would be about $2300 a month (assuming 20% down). $580k at 4.47% comes to about $2900, so really he is only off by about 25-30%, which can be explained by the fact that housing prices are inflated.

good point, but average mortgage rate hovered around 8.5% for all of the 70's.

then also factor in inflated college costs and millenials are faced with FAR higher housing costs in the job hub urban areas with much less disposable income to pay them.

the path to homeownership in desirable urban areas was far easier for boomers than it is for millenials, the math ain't that hard.

PS, I'm not a millenial

joedirt wrote:

If you can't afford a house in Texas by the age of 40 as a single male, then you really are not financially astute. Housing prices in Texas tend to be affordable as they are kept in check by real estate taxes (since Texas doesn't tax incomes, they tend to tax real estate at a higher rate, so housing prices are kept in check). What pray tell have you done with your earnings by the age of 40 where you cannot afford a house?

probably paid of student loans which are WAY higher than they were for boomers

They should all move to Carmel, Indiana.

They don't build houses for single people! I don't need 1500 SF.

The above is true. Lending standards are still pretty tight although that's starting to relax a little, but certainly not to "ninja" loan levels. Mortgage backed securities were a giant money maker for a lot of years but banks have moved on to abusing other financial instruments post-crash. Too much noise and too many eyes on mortgages.

confirmed bachelor wrote:

They don't build houses for single people! I don't need 1500 SF.

This is sneaky the biggest problem. A lot of millennial could afford homes if they got married or paired up earlier. I don't happen to live with my GF at 25 years old, but if we did we could afford a nice little house for ourselves.

there just aren't a lot of options for single people because one bedroom apts and condos are so ridiculously overpriced.

joedirt wrote:

Harambe,

You need to look at your graph again and realize that the household debt to income ratio, especially in light of rising interest rates and the elimination of mortgage interest deduction is set to collapse the housing market. To quote Steve Eisman "They mistook leverage for genius".

Lol, hopefully you're right. I doubt the correction will bring us back to reasonable level though. Look how quickly things took off again after 2009. If we are going to continue to subsidize homeownership we need to stop restricting supply.

There have been plenty of excellent opportunities to purchase real estate in the last 18 years (basically since he should have been out of college). I graduated about the same time (and yes had a decent amount of student loans) and have paid my house off in full. To be renting at 40 is kind of pathetic.

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.

Problem with your opinion is that prices have yet to return to Bush era prices.

And as usual, the boomers and millennials are at each others' throats and my Generation X slips right through the middle unnoticed. I have very few complaints about the deal my generation got. We didn't have the robust growth that the boomers enjoyed, but we also managed to avoid the challenges that the millenialls face.

Some of those challenges are the results of elections that some millennials are making - not marrying, not cohabitating, seeking jobs that fulfill them to some degree rather than seeking jobs based almost exclusively on compensation, valuing life experience over stability, etc. - while others are the result of the shift in our economy away from the manufacturing economy that helped the boomers succeed, and away from the service economy that helped my generation, and towards a technology economy that has commoditized just about everything in the world.

Either way, those of us in our 40s for the most part have had it okay - not great, not terrible, but okay. We suffered through the recession of the Carter era as children, worried about how Japan was going to own the entirety of the United States real property holdings by the end of the 80s while simultaneously seeing the re-emergence of Wall Street, and then got into the job market just in time to attain some security before everything became commoditized and entry level positions with room for real advancement became much rarer. We definitely miss out on the boomers sense of accomplishment from being born on 2nd base and thinking they hit a double, and we miss out on the freedom of the millennial life style of self-fulfillment, and we had to live with going through college during the peak of AIDS fears (yes, even for heteros - see Magic Johnson), but all in all, we have done just fine.

Lol, hopefully you're right. I doubt the correction will bring us back to reasonable level though. Look how quickly things took off again after 2009. If we are going to continue to subsidize homeownership we need to stop restricting supply.

The only way the housing supply is going to get unrestricted is to stop pushing everyone into college and begin promoting trade schools.

I’m retired for four years from the trades and I get calls all the time to come back to work. I’m tempted but I don’t need the hassle. My brother who is still wiring houses, has more work than he can handle. He often estimates jobs at much higher rates than normal and if the bid gets accepted he’ll squeeze the job in and make lower paying jobs wait.

When the market tanked in 2008, many of my older friends just gave up and retired. All the people who jumped into house building from other lines of work, bailed and moved onto other lines of work. So there is no way to get more housing built because there aren’t enough qualified people to build them.

And for what it's worth I am gen-X and my wife is a millennial and we are doing just fine (and no, neither one of us got money from our parents and yes both of us took out significant student debt).