millenials are effectively priced out of most major city housing markets

Dnndndnd wrote:

Honestly you have to be an idiot to not be able to afford a downpayment. Stock market has done incredibly well so how hard is it to come up with 100k or so? Even if you were laid off in 2009, if you kept 10k in the S&P and didn’t work for years then you’d have enough!

Agree that housing is not necessarily a great investment. Too many Americans have their retirement savings wrapped up in home equity instead of stock investments.

Things should get a little easier soon for millennials as wages tick up as interest rates rise and inflation

If you don’t save & invest though in something (stocks, housing, etc ) you’ll always be poor and screwed

If you timed the low perfectly in 2008, the S&P is not up 4 times since then:

- I understand that there was a formula for qualified home buyers. My point is that this "exclusive" club of qualifiers wasn't all that exclusive because of the booming economy at the time and comparably low housing costs.

- Sorry about the student debt for you just an unlucky person I guess, but on average debt is much higher at little fault to millennials (both private and public schools)

- I understand the point about changing jobs, but you realize on average wage growth was BOOMING around the time you talk about. That's why you got huge salary changes changing jobs, not just because you had the guts to move jobs. Wage growth was much higher back then whether you stayed in your job or not.

- you afforded to put a down payment on a home at 26 with your wife (unclear if she worked or contributed financially) but you realize that due to incredible rents (upwards of 60% of take home vs 35-40% of take home in 1980) its very hard to save that.

you keep telling millennials to do it the way you did it. you don't seem to realize they can't. the numbers don't add up. If you tried to live your life they exact same way you would be struggling just as much as the next millennial. Southern NH doesn't have crazy cheap rents ($1,000-1,500) and the commute is worse today than it was in the 80s. We know money compounds so even cutting your savings back then while renting from $100 a month to $50 a month would have a huge impact. Add on extra student loans and all that job hopping would get you minimal raises at best.

Another factor : Boston's population in 1980 was pretty low but in 2010 its population expansion was off the charts

down payment on $350k is $70k for no PMI, not $250k. When you tire of your job in the bay area, sell it and move someplace cheap in mid America with decent access to an airport and do your job from home. There are tons of people in tech careers who work from home once they are established.

joedirt wrote:

down payment on $350k is $70k for no PMI, not $250k. When you tire of your job in the bay area, sell it and move someplace cheap in mid America with decent access to an airport and do your job from home. There are tons of people in tech careers who work from home once they are established.

I don't do that because alarm bells go off in my head when i'm about to pay $350,000 for a tiny 1 bedroom. "Hmm...this MIGHT be a bad idea." Not saying that it's bad investment but there's definitely the risk of it going belly up and I would be at fault. Instead I rented shared rooms on Airbnb and saved to buy a place in another state in cash. Not really a realistic option to expect this to be the norm for millenials though.

can't do my job from home. NDAs and all that. can't even let family/friends into the office, no way they'll let me take work home. Yes, it is an option for some tech workers, but for a lot of people working high paying jobs in the city, working full time in another state in the same industry is not an option. And I'd say less than 10% of my job skills transfer at all to another career.

I've already bought my cheap place and am transitioning out of my industry, it's just not as easy as one might think. I am lucky enough that I won't have a mortgage so can take a minimum wage job and survive, but it's not realistic to expect most millenials to be able to do the same, especially if they have hopes of having a family.

You believe that rent is 60% of net pay? I don't have any dog in this fight, I am not trying to rent, and I don't care to debate on any part of this "pay attention to me" post. However, if you are going to post something that largely factual, don't just make stuff up.

My net pay is $2350 a month. Rents for a nice apartment are not "upwards of 60% of take home" like you say. That would be $1410. I live in a Capital city in the midwest with an MTSA of 450,000 people.

Maybe somewhere there are apartments for $8,500 a month for people that make $200,000 a year, but you really are not good at math.

Option 1) Wait patiently for a distressed property to pop up and pick it up at a large discount. Get a 203k loan to rehab the place, live in it for a year, then do a cash out refinance. You can also rent out rooms to house hack during the first couple years (assuming your single)

Option 2) Buy a duplex, triplex, or 4-plex and live in one unit. You then can qualify for FHA loan as long as you plan to live there and the other units pay your mortgage so you can live "free" so to speak.

Option 3) Get a bunch of like-minded individuals and go into the rough and/or unappealing neighborhoods and have everyone start buying cheap, fixing it up, and living there. As more people move in with the same mindset, the neighborhood starts to turnaround. It turns into the next up and coming neighborhood. Once it gets established, sell and cash out. It is very risky, but could be done in the right area if you have a lot of people willing to buy and hold long term.

Option 4) Move into a mobile home park with a tiny home and save your money for experiences.

The ugly American wrote:

You believe that rent is 60% of net pay? I don't have any dog in this fight, I am not trying to rent, and I don't care to debate on any part of this "pay attention to me" post. However, if you are going to post something that largely factual, don't just make stuff up.

My net pay is $2350 a month. Rents for a nice apartment are not "upwards of 60% of take home" like you say. That would be $1410. I live in a Capital city in the midwest with an MTSA of 450,000 people.

Maybe somewhere there are apartments for $8,500 a month for people that make $200,000 a year, but you really are not good at math.

the conversation was centered around Boston as that is where he lives.

Average salary is around 70k and average rents for a one bedroom $2,600.

Net pay would be around $4,000 per month.

#math

This thread was launched by blaming boomers once again for the woes of millenials. Its not about needing to do it my way. Its about adapting to change and finding a way to live a productive enjoyable, quality life without finding someone else to blame. Live in a less expensive place, find a different job, work from home, run for office, make change yourself, etc. Figure something out on your own. To be clear, I don't think all (or even many) millenials complain about these issues, but those on this thread and the succession of never ending generation vs generation LRC threads? Always.

For what its worth I'm the parent of 2 millenials, both college grads, one with a graduate degree. They went to school, we helped, they worked part time during the school year and summers, they had some loans to pay off, they got jobs and are living their life. One bought a condo and the other pays $1500 in southern NH for rent. They seem to be people enjoying life. Statistically insignificant? Yes, but it appears to be possible.

Lastly, based on my admittedly limited experience the commute to Boston doesnt seem to be all that much worse than when I worked there. (We go to Beth Israel of a fairly frequest basis and arrive at 7AM) Roads have improved drastically.

From NH route 3 is now 3 lanes all the way to 128. It was 2 lanes and stopped when I commuted on it.

Route 95 used to end in Peabody thus there was no choice at all except Route 1.

The Tobin Bridge toll booth backed traffic up for miles and it has now been removed.

The tunnel is a m illion times better and faster than the old above ground expressway.

Storrow drive to expressway/Route 1 is way faster. There used to be a stop light for all traffic. It was hopeless.

128 still sucks at every intersection but has more lanes. Pretty sure it used to be 2 lanes only after route 93.

Train service is (marginally )better today.

There certainly are many more people now though.

Racket wrote:

R1200 wrote:

At 26 we bought our first house further away still in NH.

Not necessarily the fault of boomers, but millennials are getting married a lot later in life. Good luck getting a mortgage on one source of income.

When I said we, I meant my wife and I. We had 2 incomes and would not have gotten a loan based on mine alone.

R1200 wrote:

Racket wrote:

Not necessarily the fault of boomers, but millennials are getting married a lot later in life. Good luck getting a mortgage on one source of income.

When I said we, I meant my wife and I. We had 2 incomes and would not have gotten a loan based on mine alone.

^This is a bunch of Boomer BS propaganda. If Boomers had actually been paying attention to running the country, instead of running 100 miles per week to get 30th in some meaningless, no-name road race then we wouldn't be in the mess we now are as a country. They also wouldn't all be on their 3rd and 4th marriages if they had a little less running and a little more balance in their lives.

Boomers are a worthless generation that has done nothing but destroy this country and continually take credit for things they did not do. They have run BOTH political parties into the ground and are responsible for running the economy into the ground and creating a mountain of debt by consistently voting for generous entitlements for themselves while simultaneously refusing to pay (i.e. Raise taxes) for those entitlements.

They claim they have benefited us all by giving us cultural gifts--by starting movements that gave us fast running times, equal rights for blacks, women, gay folks, by giving us modern music (like rock & roll) through their pioneering efforts, by giving us modern computer science, and through things like iconic movies.

But a closer look at these claims reveals their lies. As a starting point, please take note that it is widely agreed that Boomers were born 1946-1964. This means that the oldest members of this generation turned 30 in 1976 and, thus, they have been running the show (...or they should've been instead of running 100 miles per week) in the US since the mid to late 1970s.

The major civil rights leaders for black equal rights in the 60s (Martin Luther King, Jr., Medger Evers, Rosa Parks, Ceaser Chavez, Fred Shuttlesworth, Jon Lewis, Malcom X, and many more) were all born in the 20s to early 40s. But you know who is a boomer? Al Sharpton.

The major players in the second wave feminist movement (Gloria Steinem, Betty Friedan, Mary King, Alice Rossi) of the 60s were all born in 20s - early 40s as well. Of course, this means the women who fought for basic equal rights (like the right to vote) were even older. These brave women were not boomers. But Boomers are the leaders of the disgusting mess that is third wave feminism...

The folks that were the pioneers in equal rights for gay people (Harvey Milk, Del Martin, Phyllis Lyon) also not Boomers.

Who is widely acknowledged to be the father of modern computer science? Alan Turing. A gay non-Boomer.

Let's examine the music claims...Jimmi Hendrix? ‪Jim Morrison‬? ‪The Beatles‬? ‪The Rolling Stones‬? ‪Bob Dylan‬? Yup, all non-Boomers.

How about movies, directors, actors, etc?... Stanley Kubrick? Harrison Ford? George Lucas? Robert De Niro? Al Pacino? Robert Duval? Martin Scorsese? Clint Eastwood? George Romero? Francis Ford Coppala? Chevy Chase? Steve Martin? J.J. Abrams? The entire Monty Python crew? Yup, all non-boomers.

To summarize, Boomers frequently claim that their generation was responsible for major cultural and art movements but it's totally not true. Boomers are parasites and leeches....and I am assume some are good people. We should build a wall on our southern boarder, strip the boomers of their ill-gotten entitlements, and ship them down to old Mexico. All of our problems would be solved. Let's make America great again!

Greed and avarice rule the housing sales market. No one makes true starter homes any more;

alien observer wrote:

Greed and avarice rule the housing sales market. No one makes true starter homes any more;

They are called townhomes now. You won’t find 1500 SF new stater homes anymore. If you want a home like that you need to go find an old one and renovate it to your liking.

It’s not all greed causing this it is the shortage of land that can be developed. Land costs more which drives up cost for new developments. The closer to the city and the nicer the area, the higher the cost.

Also, it is demand. Back in the 60s/70s, a typical family of 6 was comfortable in a 3br/1 ba 1500 SF home with a one car garage. Now a family of 4 thinks they need over 2000 SF 4 bd/2.5 ba home with a 2 to 3 car garage as a starter home. That demand obviously influences development and prices.

To say all the good paying jobs are downtown is not true for most jobs. I know our company was having trouble hiring young I.T. talent because they did not want to work out in the suburbs despite offering them more money. So what did our company do? They opened a fancy field office downtown, paid the standard rates and filled the office. Why would the millennials take less money to be there vs better pay in the burbs? Because they valued the experience of living downtown in the city over better pay. To each their own.

Haha, I don't agree with a lot of that but you sure ripped Boomers a new one. Harsh. No response.

A huge compounding factor is that supply has not kept up with demand in big cities. Nimby homeowners (usually boomers) block construction - usually because they are afraid of black people but don't admit it.

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'm not familiar with all of these metro areas, but at a glance at NYC suburbs in NJ I see modest detached houses ("Starter homes") under 400. A dual income couple could afford this. A single person is probably better off renting (being able to move relatively easy is an advantage worth paying a premium for especially early in your career).

House prices are perhaps still steepish in historical terms but a decade or so of relative stagnation has helped take some air out of the crazy bubble of ~2005-6.

The problem now is that rates are starting to move up. Eventually these will exert pressure on prices but until that happens, it dings affordability for a little while

Can we all agree that millennials suck?

Getting Old wrote:

I think you are correct, but I'm also not sure it matters. NYC has been 75% renters since at least the mid-70s. .

This is probably a big part of the reason that buying in NYC is so expensive -- when only 25% is owner occupied, it really has a big impact on prices. Outside the city itself it's quite a bit cheaper. Even within the city it's an exaggeration to claim that 250k is required as a deposit -- plenty of places available for well under 1.25M. I don't know what is meant by a "starter home", but if one is hoping for a detached single family house, NYC is the wrong place to look -- better off looking in the burbs. Some ( small to very small co-ops) can be had for well under 1.25M

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.

The big price runup and housing bubble was in 2000-2006 (Bush era). The bubble initially burst badly in 2007-8. Bush and Obama administrations and the federal reserve under Ben Bernanke (appointed by Bush, continued under Obama) both tried to intervene heavily with measures designed to prop up the housing market in order to prevent a major economic disaster. The big bailouts (most notably AIG) took place under the Bush administration (not the Obama administration)

Affordability increased post-bubble mostly due to rates getting very very low (also helped by a modest rise in incomesand relatively stagnant prices).

Though a lot of this happened to take place during the Bush administration I think it would be a bit unfair to just blame GWB for all the mess (pretty much everyone was buying into the whole thing at the time)