millenials are effectively priced out of most major city housing markets

Slight tangent but renting a home is surprisingly cheap. I was surprised to learn a friend who just moved to Seattle was renting a home for $2K/month which would cost at least $800K to buy. The price-to-rent ratio is off the charts on the West Coast right now, particularly for homes above median price. There seems to be little market for home rentals much above that; everyone who could hypothetically afford to rent for $4k/month wants to buy not rent.

https://smartasset.com/mortgage/price-to-rent-ratio-in-us-cities

Who cares about high mortgage rates in decades past? It's irrelevant.

Consider:

My parents bought a small house overlooking Lake Washington in the early 90s for about $175k. I have $93k saved and could afford the house at that price even if mortgage rates were, to use an impossibly high number, 25%, because 25% on $82k borrowed is less than I pay to rent a 1-bdrm apartment.

The same house today is about $1.5 million.

I some neighborhoods of my city, house prices have gone up more than 3x since 2012!

It's hilarious when Baby Boomers bring up "high interest rates during Nixon/Reagan"

Basically they mean that prices were so low that there was no incentive to borrow versus save up cash

How often have we heard Baby Boomers wax about how they had to "endure" Paul Volcker's policies that paid them 15% on their savings account.

"Millennials," dude.

Come on, man, not that hard.

jamin wrote:

Down payment isn't the barrier when almost every house in Seattle is swooped up sight-unseen all-cash by foreign "investors" and Bay Area transplants.

Median income is ~$70k and median house is over $800k. Do the math on that.

Ahem, Sean Hannity is one of the 'foreign" investors. He uses offshore shell companies to scope up homes.

Get your facts right, fool.

The whole reason why houses cost a million dollars nowadays is almost entirely due to the lowering of interest rates during the turn of the century. It's not like 2X4s are that much more expensive than they used to be relative to inflation. That is why mortgage rates are relevant.

joedirt wrote:

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.

to be a judgemental a-hole because your were fortunate enough to purchase a house at an opportune time by 40 is much worse.

joedirt wrote:

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).

It seems what you are really looking for is pat on the back and a "Good Job!" sticker.

Congrats, your Dodge Stratus is waiting for you out front.

derpweitler wrote:

joedirt wrote:

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.

to be a judgemental a-hole because your were fortunate enough to purchase a house at an opportune time by 40 is much worse.

You sound bitter

Hardloper wrote:

derpweitler wrote:

to be a judgemental a-hole because your were fortunate enough to purchase a house at an opportune time by 40 is much worse.

You sound bitter

not bitter, i own my house, paid in cash while i was in my 30's. Just tired of this attitude: "Well I did it this one way this one time, so this must be the right way for every person to do it all the time." I'm not a millennial, and frankly am annoyed by their attitudes a lot of the time. But not being able to afford a house isn't something they should be blamed for. Most of them followed bad advice from elders and people they trusted and wasted tons of money on education before they had the experience to know better. And now to pay off those high loan payments they have to seek jobs in cities with ridiculous housing prices.

Hardloper wrote:

derpweitler wrote:

to be a judgemental a-hole because your were fortunate enough to purchase a house at an opportune time by 40 is much worse.

You sound bitter

He should be. If you live long term in a property then you should be the owner of that property period. When you move out of that property then you should have to put that property onto the market for sale. No one should be allowed to rent out a property for someone else to live in long term - it's not ethical to make money that way, it's not innovative, and it produces nothing for society. Trump needs to enforce such a law so that residential housing prices are put back to the level that they should be. Such a law will also bring some much needed dynamism into the housing market.

yeah i dunno, i'm actually in the process of renting out my place and going to live in a van or sailboat. So, yeah let's keep renting around for a bit.

I've read through this thread and believe two points are missing:

(1) One of the most beneficial aspects of home ownership is -- wait for it -- security. If you own a property, debt free, then maintaining it indefinitely is relatively easy. By comparison, if you rent, you are forever at the mercy of the market and your income sources. Rents can go up, variable interest payments can go up, jobs can be lost, etc.

The "greatest generation" lived through the Great Depression and deeply internalized this value. They prioritized owning anything (however small) over renting or "owning" with a mortgage. They bought on credit when necessary but then sacrificed other expenditures to pay off that mortgage and own free and clear. They distinguished between a bank owning your home and owning it yourself.

I get that things have changed -- they always do. But you don't hear this value touted much among millennials. When you do see it, the person comes across as pretty smart. Buy anything you can afford, own it, then move up, on, out, or just stay secure. Don't quit and settle for renting because you can't have today what your parents gave you growing up and renting gets you closer to that.

(2) Lots of complaints here about cities but little recognition that the globalization of the American economy is what's caused American cities to become so unaffordable to many. If I succeed in a global economy selling widgets all over the world, taking advantage of the low cost production of, say, the East (China, Philippines, etc.) while selling to Americans, or selling fixed (or at least low) production cost items on global scales (think tech, entertainment, etc.) then I am going to have a lot more cash than someone who is succeeding (and certainly those not succeeding) in just the local economy. To use Seattle as an oversimplified example, people who work in local sector jobs will never be able to keep up with what those working for Nike or Microsoft or the Seahawks can afford. Those folks can drive up housing prices to levels unattainable by the rest.

So remember when you're touting the benefits of the globalization of the American economy that it will inevitably do one thing -- it will help the rich get richer and live better lives, and the people who succeed in that economy will price everyone else out of housing markets with limited supplies, like the more attractive cities.

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.

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'teven address it.

Well... I dont agree with your take on my post being "blatently wrong". To wit: Nary a thing is described as 'tough'. I said that I, along with many others, couldnt afford housing in Boston. We elected to work around it by various means. I then suggested that others might do the same.

A side issue is that this thread is only the latest in a series of posts designed to slam a specific generation as the cause of another generations woes, clearly intended to incite emotion, which I concede I fell for.

Correction: "system fail", not "generation fail".

joedirt wrote:

A lot of the Pacific northwest is being inflated by people moving from China. A number of millionaires in China are coming to the US and Canada due to the better standard of living / less crowding and less pollution than what they are leaving behind in China. Vancouver, Canada is especially vulnerable to collapse as the household debt to income ratio is about 15 points higher than it was in the US in 2008.

If people were actually moving from China that would be one thing. But in my Pac nw neighborhood, Chinese buyers are paying cash, sight unseen, and then STAYING in China and renting the house. Pisses me off.

It wasn’t any different for us. Roll up your sleeves and put your time in like we did.

Wonderin' wrote:

(1) One of the most beneficial aspects of home ownership is -- wait for it -- security. If you own a property, debt free, then maintaining it indefinitely is relatively easy. By comparison, if you rent, you are forever at the mercy of the market and your income sources. Rents can go up, variable interest payments can go up, jobs can be lost, etc.

Not sure I agree with this. If you rent and your income decreases, you can downsize to a less expensive rental, or, worst-case scenario, live in your car. If you buy and your income decreases, your mortgage that you agreed to when your household income was high is still there.