millenials are effectively priced out of most major city housing markets

I live on the Upper West Side of Manhattan. I haven't seen any new construction here in the last decade that has any apartments starting at less than $3 million. I am not joshing.

This is not just a problem for "millenials."

Yoing wrote:

OK so let's summarize this thread:

1. Millennials are no more priced out of trendy places than any other generation. But most of this thread is about.....

2. Everyone hates boomers. Hey, I'm a boomer and I despise my generation (but I loooove being a boomer). All generations are the same. Only their circumstances are different. Boomer circumstances were set up by the REAL villains, the GG's

Do you not have the ability to read, or just choose not to?

Never realized how much of a boomer trait it was to just stick to their original views at all costs, no matter what the facts say.

joedirt wrote:

Millennials born between 1980 and 1990 probably should have purchased a house sometime between 2009 and 2015. Back in 2010 was probably the best time to buy as prices were low and interest rates were low (a condition that rarely happens). Now prices are high, and interest rates are rising. If you are renting now, stay renting until prices come down (which they will and have started to in some markets). If you are in your low to mid 30s or early 40s have never owned a property and are renting, then shame on you. A number of people on the boards that are complaining had plenty of decent opportunities in the past ten years to buy a house.

right because most people have so much purchasing power and job stability in the first few years out of college.

Shame? really?

Economy is a bit different nowdays. I've moved multiple times across the country and to other other countries chasing job market. Buying a house doesn't make that much sense if you are moving thousands of miles every 2-3 years.

A number of people on this board have had decent opportunities not to develop into holier-than-thou, my-way-or-the highway, judgemental a-holes. Shame on you.

If you have all of those other factors going on, then stop complaining about not being able to buy a place. If you aren't in a location for more than 5 years it doesn't make sense to buy a place regardless, as the transaction costs will eat you up (unless you plan on slum lording it out from abroad, which can be profitable, but is a pain in the rear). That isn't a market thing, that is a you thing. Having that as a reason for not owning a house is different than not being able to afford a house (which is where most of the whining is coming from).

joedirt wrote:

If you have all of those other factors going on, then stop complaining about not being able to buy a place. If you aren't in a location for more than 5 years it doesn't make sense to buy a place regardless, as the transaction costs will eat you up (unless you plan on slum lording it out from abroad, which can be profitable, but is a pain in the rear). That isn't a market thing, that is a you thing. Having that as a reason for not owning a house is different than not being able to afford a house (which is where most of the whining is coming from).

So why then did you say 'shame on you who don't own a house by 40'? It's almost as if you don't even believe your own stance....

i havent' complained once about not being able to buy a place. I don't need to buy a place, i already own one w/o a mortgage.

You are reframing things in your mind to fit your narrative. I'm merely refuting the idea that it's not any harder for millenials to buy a house in the major cities than it was for boomers, and using my own experiences as a counter to your overly simplistic view of the modern job market and the boomers on this threads non-stop refrain of "Just do what i did, kiddos"

It's amazing how often you just completely ignore most of what i say and just assume things that support your pre-drawn conclusion.

My situation of moving jobs isn't unique to me. I'd be willing to bet that the data shows that millenials move more often for career than boomers did. Yet another reason supporting the premise that , yes, it is harder for millenials to own houses in the major cities than it was for boomers.

Anyone who denies that at this point is just being crotchety and lazy.

Let's stop looking at price in absolute terms; it doesn't matter.

Suppose there is a town of 100 people and there are only 50 houses and everyone wants a house and there is no space to build new houses. Then only the top 50% can have a house. Suppose 200 people move to the town. Then only 25% can have a house. Suppose that interest rates go up or an economic crash happens and incomes go down. House prices will go down, but if the demand for having a house is the same, then still only 25% can afford a house.

This is an overly simplistic model, but you get the point.

How houses actually become affordable to more people is if the present demand is largely a function of people speculating rather than truly wanting to live in a house. Like Warren Buffet's quote about how when the tide goes out, you can see who has been skinny-dipping. Happened in '08.

Millennial here. Bought a home in 2016 for about 500k in a market where homes are 1 million. Redfin says it’s worth about 690k now - not sure I believe it. I try to follow Warren Buffett’s advice with everything I do. Buffett says he doesn’t think housing is in a bubble right now but does admit it is not as good of a time to buy as in 2010-2012. Personally I think 2009-2012 was close to a once in a lifetime opportunity to acquire rental properties at ridiculously low costs. I think house prices will be mostly flat in the next few years and track inflation but I don’t think they’ll go down much. I think unless things change drastically those waiting on the sidelines for the next crash will be disappointed.

I still think it sucks out there for millennials since wages haven’t gone up much while my stocks and my real estate investments show double digit returns. I think wages will finally go up and people will be able to afford more house that way, even if interest rates on mortgages go to 5%+ or worse.

^This.

...sums it up well....

Just because you live in Mass does not mean that you are Jesus Christ

Let’s cut the Boston talk already...living there is a real pisser 8 months of the year and home prices there are dirt cheap compared to coastal cities in Californiastan

$250k in LA or SFO for a down payment is cats piss

And for good measire: BAA Boston Marathon could not hold the jock strap of Big Sir Marathon

Discuss unless you are a Masshole.

Lots of talk about capital cost of housing, but not much about affordability. The low interest rates of the last 20 years have more to do with real estate bubble than one might imagine. The payment on a 10 percent loan for 100K house isn about equal to the payment on a 3.5 percent loan on a $200K house. So while the price of the house might be higher now, the affordability is about the same because of the low interest rate environment. Point of history--early 80s, mortage interest rates ranged between 13 and 16 percent. Now they are 4%.

I'm an old gen-xer and bought my first house in 1993--and had an 8.375 rate. My boss--a hated "boomer" purchased his first house a decade earlier and had started at 13%, and refinanced a couple times as rates had dropped--each time paying a "point" for the privelege of a lower monthly payment. On his $100K ish loan, a point was a thousand bucks--so not worth doing unless your going to save a hundred or two a month.

My 1993 mortgage payment was $690 dollars per month. Had my mortgage been the 4% that could be had most of the last 8 years, the payment would have been $358.

Has anyone seen an advertisement for an ARM in the last 10 years? An ARM is an adjustable rate mortgage--where they give you a teaser rate for the first few years, and then it adjusts up to the market rate. The theory was, you could get started with low payments for 3 or 5 years, and then some appreciation would kick in, and you could lock in at a lower rate. Why have the ARMs disappeared?--because mortgage rates have nowhere to go but up--they can't be artifcially lowered anymore than they already are. ARM's were all the rage in the 80s and 90s.

Since 2008, and to a lesser degree since 2001, interest rates have been about at the most one half of what they were between 1980 and 2000.

Umm, ever heard of interest rates you spoiled millenial brats? wrote:

Why have the ARMs disappeared?--because mortgage rates have nowhere to go but up--they can't be artifcially lowered anymore than they already are. ARM's were all the rage in the 80s and 90s.

ARMs are gone because they're for people with bad credit and the avergae Joe remembers that they're partly responsible a lot of foreclosures in 2007 and 2008 (probably not since the average American is pretty stupid but whatever). No bank or non-bank is in the mood to sell that angle and besides, lending standards are still too strict.

Recent Bloomberg article on the cost of building materials :

It's not just building materials, either. Labor costs have gone up, and it's good for me. Plumbing work has gotten more and more lucrative. There are far fewer young men going into the trades these days. The entire bottom end of the construction biz now is mostly latino labor -- roofers, framers, etc. They're now penetrating into the higher end stuff (hvac, plumbing, electrical, etc). These are jobs/careers that pay very very well but there's a shortage of interested people.

https://www.construct-ed.com/millennials-still-dont-want-trades-heres-needs-happen/

https://www.huffingtonpost.com.au/2016/10/19/skilled-trades-jobs-are-the-most-difficult-to-fill_a_21587720/

Even less skilled labor is more expensive. I recently got a quote to drywall my family room -- about 15x20 room, average quote was $2500. It's $200 max worth of materials and over $2k in labor. This is in the midwest -- can't imagine what it would cost on the coasts. I did the work myself.

Racket wrote:

Umm, ever heard of interest rates you spoiled millenial brats? wrote:

Why have the ARMs disappeared?--because mortgage rates have nowhere to go but up--they can't be artifcially lowered anymore than they already are. ARM's were all the rage in the 80s and 90s.

ARMs are gone because they're for people with bad credit and the avergae Joe remembers that they're partly responsible a lot of foreclosures in 2007 and 2008 (probably not since the average American is pretty stupid but whatever). No bank or non-bank is in the mood to sell that angle and besides, lending standards are still too strict.

Recent Bloomberg article on the cost of building materials :

https://www.bloomberg.com/news/articles/2018-04-25/why-high-flying-u-s-home-prices-are-about-to-get-another-jolt

Interesting. Home sale prices are up 6.8% (across 20 cities). Lumber prices are up 16% and "prices paid at the producer level for construction inputs" are up 5.1%. I'm not entirely sure how to interpret the latter or if each of these is an apples-to-apples comparison but taken at face value it could suggest that profitability is up on average. That's assuming a lot. Thanks for sharing though.

I graduated from college in 1989.

Rented five years. Bought a 65K house in a town so small it didn't have a streetlight. Sold a few years later, turned equity into a 130K house in a Midwest city. Four houses later, and I bought a California house that has gone from 350 to 800K.

I also invested in tech stocks, and turned a few thousand into a half million. Apple, Microsoft, and IBM. It wasn't hard.

Lay off the avo toast and Starbucks, live somewhere that's not LA or NYC for a couple years, realized paint is cheap, and it's not rocket science. I'll have a million dollar house when I retire, and I literally built it from equity off a 75K home loan.

I'm taking the money, and buying a cheap house in a town so small it doesn't have a streetlight.

Don't live in LA, or NYC

Both my sons are millennials and purchased homes in Seattle in the last decade. My older son is on his second home in a pricy Seattle suburb, and the younger son recently moved into his second home in Lake Oswego, Oregon.

You can't generalize about the entire generation, because it depends on career choice, income, priorities with respect to spending, and spousal income.

You guys don’t want to work so there you go.

My kids have some of the same attitudes I see on this thread. The want everything NOW, forgetting that we've been working nearly four decades.

Easy fix. Leaving them nothing. We get to retire sooner than we planned, and we'll prove them right.

Rent with 2-3+ roommates to save $ and invest the difference (over what you would have to pay to rent a studio) in the s&p until you have enough $ for a downpayment