5 ms·

Could be? For anyone outside the boomer generation falling housing prices would be a godsend. Millennials are starting to get priced out of entire cities, and

Could be? For anyone outside the boomer generation falling housing prices would be a godsend. Millennials are starting to get priced out of entire cities, and it's generally the ones with the most jobs available. It's starting to look like "millennial" will become an insult meaning someone with no job and no money, hilarious given that it applies to an entire generation.

zkms 10y ago
I strongly concur -- as a millennial who has been without adequate housing a few times, falling housing prices and rising housing supply (the latter tends to be a necessary condition for the former) is extremely good.
- throwawaydbfif 10y ago
  I'm in the upper middle class wage quartile and my rent is so high that losing my job would ruin me completely. High rent(for a reasonable one-bedroom) combined with my student loan payments means it takes about $3700 a month just to pay bills and live. I'm not in Cali or NYC either.
patrickthebold 10y ago
I think you mean it's good for anyone who's not a homeowner.
- chatterbeak 10y ago
  I'm an actual homeowner (no mortgage!) in 94087, and I'd love it if house prices fell. Bubbles aren't good for anyone, in the long run.
caconym_ 10y ago
No kidding. I'm not an economist so my opinion on this isn't necessarily worth a lot but it seems pretty clear that it's more important for young people to be able to live financially stable lives near good job markets than it is for real estate to perform as a lucrative investment for those who are already well-off enough to own it. The former is clearly necessary for the future health of our society and economy; the latter seems easily replaceable: just invest in something else. Since we can't all live in the single most desirable place, it's always going to be a market in some sense, but I really believe that we could (and should) do a much better job making housing affordable than we do now.
- throwawaydbfif 10y ago
  The biggest problem in most of these cities is current residents preventing new housing from being built. Most of these residents own property of their own and directly benefit from the higher prices that result. Most of these residents are also old. It's literally the boomer generation fucking over everyone trying to move in for their own benefit.
  - guard-of-terra 10y ago
    The solution here is to build new communities. Find a place with no residents but within commute radius, and build up. And ignore all the environmental bullcrap that existing home owners will try to astroturf. People won't hurt environment by gathering in one place that they did by spreading up.
    - dajohnson89 10y ago
      The amount of capital required for that seems enormous. But a good idea.
      - guard-of-terra 10y ago
        That's the sort of capital banks will happily lend to you.
    - Decade 10y ago
      Not feasible in the San Francisco Bay Area. People are already commuting as far as Sacramento, because housing is more affordable out there. It's socio-economic repression. The job growth is in knowledge, which benefits from being close by. For example, last week I walked from the office to Eventbrite to learn what they're doing. No way you're getting the same benefit from watching a video. To promote the best opportunities, we're going to have to reform our existing cities. If you're trying to build a new community, it's going to require some other benefit. Like Peter Thiel and his seasteading.
      - 10y ago
autokad 10y ago
i'm not a boomer and that wouldn't be good for me. it wouldnt be a godsend to cities either, with plummeting revenues (schools would be especially hit hard). home prices fell not long ago, and that was bad for nearly everyone. home prices and jobs kind of come together, not always but mostly. its sort of like wishing no one would eat at your favorite restaurant so you wouldn't have to wait in line, only to see it go out of business. millennials will have to do better than wishing people ahead of them get dragged down so they can jump ahead.
- throwawaydbfif 10y ago
  This is only a problem for foolish states/cities that raise money mostly from property taxes. Besides, the main problem is current residents not allowing additional housing to be built. The additional income from new properties would more than offset the revenue drop from property values. It's not about millennials "jumping ahead" either. This generation came of age during the worst recession since the great depression. They are on track to be the poorest generation in American history. The combination of funding cuts to state universities and rising housing costs in places with jobs available gives millennials less choice and more debt than any generation alive in the US. This is a generation that is the best educated but poorest in our nation's history, coming right after one of the richest and prolific generations. The implications are clear. The previous generation maintaining the status quo. They voted for the funding cuts and NIMBYism that resulted in the lack of housing and student loan debt of the current generation.
- monkmartinez 10y ago
  I disagree. One, property taxes didn't go down materially in my jurisdiction despite housing prices dropping precipitously. Two, schools have already been hit hard with horrible admin teams and the rise of open-enrollment. Three, jobs don't have as much of an affect on home prices as they once did. That is, investors|flippers|NAR shysters| and the government control far more of the housing market prices than we give credit for. I am not a boomer, but they have been in charge for a while and have really messed things up.
  - autokad 10y ago
hsitz 10y ago
The idea that you need to buy a house, or that buying a house is always a wise financial move if you have the means to do it, is misguided. The question of whether it's a financially smarter decision to own a house vs rent (and invest the savings) is not easily answered, which alternative ends up better over the long term is different in different scenarios. One thing that is true in most conditions, though, is that in comparing alternatives where a young person buys more house than they need (which used to be quite common) against renting a modest and reasonable "young adult" apartment, renting is likely to come out ahead.
- throwawaydbfif 10y ago
  It's not fully about buying or renting either. Pricing effects both equally
  - hsitz 10y ago
    The question of whether buying or renting is better financially depends on lots of different things. The price to rent ratio is one of those things. I'm not sure what you mean by "pricing affects both equally", but it certainly is not true that the price to rent ratio in a location is fixed over time or that it is the same in different locations or cities at the same time. In areas with high price to rent ratios it is often better to rent. In areas with low price to rent ratios it is often better to buy. A basic definition can be found here: http://www.investopedia.com/terms/p/price-to-rent-ratio.asp?lgl=no-infinite http://www.investopedia.com/terms/p/price-to-rent-ratio.asp?...
  - ArkyBeagle 10y ago
    It depends. Outside NYC/SanFran, rents are usually what you'd pay for a mortgage plus some nominal upcharge. I took a gig in Houston in 2011, knew it was a bubble going in, and rented. I probably paid $200 more per month to rent vs. buy. Apres la deluge in 2016, I was in great shape; it cost me roughly $12k as insurance against having to sell into a down market.
RestlessMind 10y ago
Today's first time homebuyer is typically 35 yr old[1]. Assuming people older than 35 too have (typically) purchased homes by now, you are looking at boomers + genX + genY, invested in the real estate market. In other words, falling home prices would devastate a broad portion of the society and would wreck the economy. [1] http://www.zillow.com/agent-resources/download/todays-first-time-home-buyer/ http://www.zillow.com/agent-resources/download/todays-first-...
- throwawaydbfif 10y ago
  Another way to look at it is that home buying in the millennial generation is at a historical low. They are the biggest generation besides boomers so the effect of this is somewhat magnified. "Devastating" the housing market to make it possible for younger Americans to buy homes again will only decrease wealth inequality since the ones who own homes are generally wealthy. It's not like the houses will suddenly go away if housing prices drop. They are hard assets, nothing is destroyed by the lowering of housing values besides speculative worth. Sure some people would lose a lot of money but it would largely hurt the wealthy and help income equality along with leveling the gap a bit between those generations and poorest one in our history
  - RestlessMind 10y ago
    > ... will only decrease wealth inequality since the ones who own homes are generally wealthy. I beg to differ. Wealthy will be fine because they have diversified assets. The ones truly hurt would be people in their 30's, who have just started putting down roots (first home, family etc) and would have invested a chunk of their savings in the downpayment. So wealth inequality might reduce a bit between top 20% and bottom 20%. But it will increase between 1% and the rest. > ...nothing is destroyed by the lowering of housing values besides speculative worth. Household balance sheets for middle-class, whose main asset is their homes, are destroyed. Now suddenly you are left with, say, a mortgage of 400K vs a house worth only 250K. > ... help income equality along with leveling the gap a bit ... Nope - the boomers would still fare better since their mortgages should have been paid off by now (generally), and they have a decent rich safety net. Ones screwed are genX and genY as I explained above.
pdkl95 10y ago
While lower house prices would be great for "millennials", the real problem is the gap in income[1] that started a ~25 years ago. Housing prices wouldn't be nearly as bad if incomes were at their proper level relative to productivity. [1] https://upload.wikimedia.org/wikipedia/commons/e/ef/Productivity_and_Real_Median_Family_Income_Growth_in_the_United_States.png https://upload.wikimedia.org/wikipedia/commons/e/ef/Producti...
- ArkyBeagle 10y ago
  Dean Baker places this at around 1980, so more than 25 years. There was the one span of time ( late '90s ) where it was suspended, and wages grew. He has a new book, "Rigged" and flogs the book on BookTv ( my "books for the post literate" source... )
ArkyBeagle 10y ago
Policy has been explicitly designed to suppress wages. The Humphrey-Hawkins bill of 1979 is considered in Fed moves, but a vague notion of "price stability" gets first pick.

zkms 10y ago

I strongly concur -- as a millennial who has been without adequate housing a few times, falling housing prices and rising housing supply (the latter tends to be a necessary condition for the former) is extremely good.

throwawaydbfif 10y ago
I'm in the upper middle class wage quartile and my rent is so high that losing my job would ruin me completely. High rent(for a reasonable one-bedroom) combined with my student loan payments means it takes about $3700 a month just to pay bills and live. I'm not in Cali or NYC either.

patrickthebold 10y ago

I think you mean it's good for anyone who's not a homeowner.

chatterbeak 10y ago
I'm an actual homeowner (no mortgage!) in 94087, and I'd love it if house prices fell. Bubbles aren't good for anyone, in the long run.

caconym_ 10y ago

No kidding. I'm not an economist so my opinion on this isn't necessarily worth a lot but it seems pretty clear that it's more important for young people to be able to live financially stable lives near good job markets than it is for real estate to perform as a lucrative investment for those who are already well-off enough to own it. The former is clearly necessary for the future health of our society and economy; the latter seems easily replaceable: just invest in something else. Since we can't all live in the single most desirable place, it's always going to be a market in some sense, but I really believe that we could (and should) do a much better job making housing affordable than we do now.

throwawaydbfif 10y ago
The biggest problem in most of these cities is current residents preventing new housing from being built. Most of these residents own property of their own and directly benefit from the higher prices that result. Most of these residents are also old. It's literally the boomer generation fucking over everyone trying to move in for their own benefit.
- guard-of-terra 10y ago
  The solution here is to build new communities. Find a place with no residents but within commute radius, and build up. And ignore all the environmental bullcrap that existing home owners will try to astroturf. People won't hurt environment by gathering in one place that they did by spreading up.
  - dajohnson89 10y ago
    The amount of capital required for that seems enormous. But a good idea.
    - guard-of-terra 10y ago
      That's the sort of capital banks will happily lend to you.
  - Decade 10y ago
    Not feasible in the San Francisco Bay Area. People are already commuting as far as Sacramento, because housing is more affordable out there. It's socio-economic repression. The job growth is in knowledge, which benefits from being close by. For example, last week I walked from the office to Eventbrite to learn what they're doing. No way you're getting the same benefit from watching a video. To promote the best opportunities, we're going to have to reform our existing cities. If you're trying to build a new community, it's going to require some other benefit. Like Peter Thiel and his seasteading.
    - 10y ago

autokad 10y ago

i'm not a boomer and that wouldn't be good for me. it wouldnt be a godsend to cities either, with plummeting revenues (schools would be especially hit hard). home prices fell not long ago, and that was bad for nearly everyone. home prices and jobs kind of come together, not always but mostly. its sort of like wishing no one would eat at your favorite restaurant so you wouldn't have to wait in line, only to see it go out of business. millennials will have to do better than wishing people ahead of them get dragged down so they can jump ahead.

throwawaydbfif 10y ago
This is only a problem for foolish states/cities that raise money mostly from property taxes. Besides, the main problem is current residents not allowing additional housing to be built. The additional income from new properties would more than offset the revenue drop from property values. It's not about millennials "jumping ahead" either. This generation came of age during the worst recession since the great depression. They are on track to be the poorest generation in American history. The combination of funding cuts to state universities and rising housing costs in places with jobs available gives millennials less choice and more debt than any generation alive in the US. This is a generation that is the best educated but poorest in our nation's history, coming right after one of the richest and prolific generations. The implications are clear. The previous generation maintaining the status quo. They voted for the funding cuts and NIMBYism that resulted in the lack of housing and student loan debt of the current generation.
monkmartinez 10y ago
I disagree. One, property taxes didn't go down materially in my jurisdiction despite housing prices dropping precipitously. Two, schools have already been hit hard with horrible admin teams and the rise of open-enrollment. Three, jobs don't have as much of an affect on home prices as they once did. That is, investors|flippers|NAR shysters| and the government control far more of the housing market prices than we give credit for. I am not a boomer, but they have been in charge for a while and have really messed things up.
- autokad 10y ago

hsitz 10y ago

The idea that you need to buy a house, or that buying a house is always a wise financial move if you have the means to do it, is misguided. The question of whether it's a financially smarter decision to own a house vs rent (and invest the savings) is not easily answered, which alternative ends up better over the long term is different in different scenarios. One thing that is true in most conditions, though, is that in comparing alternatives where a young person buys more house than they need (which used to be quite common) against renting a modest and reasonable "young adult" apartment, renting is likely to come out ahead.

throwawaydbfif 10y ago
It's not fully about buying or renting either. Pricing effects both equally
- hsitz 10y ago
  The question of whether buying or renting is better financially depends on lots of different things. The price to rent ratio is one of those things. I'm not sure what you mean by "pricing affects both equally", but it certainly is not true that the price to rent ratio in a location is fixed over time or that it is the same in different locations or cities at the same time. In areas with high price to rent ratios it is often better to rent. In areas with low price to rent ratios it is often better to buy. A basic definition can be found here: http://www.investopedia.com/terms/p/price-to-rent-ratio.asp?lgl=no-infinite http://www.investopedia.com/terms/p/price-to-rent-ratio.asp?...
- ArkyBeagle 10y ago
  It depends. Outside NYC/SanFran, rents are usually what you'd pay for a mortgage plus some nominal upcharge. I took a gig in Houston in 2011, knew it was a bubble going in, and rented. I probably paid $200 more per month to rent vs. buy. Apres la deluge in 2016, I was in great shape; it cost me roughly $12k as insurance against having to sell into a down market.

RestlessMind 10y ago

Today's first time homebuyer is typically 35 yr old[1]. Assuming people older than 35 too have (typically) purchased homes by now, you are looking at boomers + genX + genY, invested in the real estate market. In other words, falling home prices would devastate a broad portion of the society and would wreck the economy. [1] http://www.zillow.com/agent-resources/download/todays-first-time-home-buyer/ http://www.zillow.com/agent-resources/download/todays-first-...

throwawaydbfif 10y ago
Another way to look at it is that home buying in the millennial generation is at a historical low. They are the biggest generation besides boomers so the effect of this is somewhat magnified. "Devastating" the housing market to make it possible for younger Americans to buy homes again will only decrease wealth inequality since the ones who own homes are generally wealthy. It's not like the houses will suddenly go away if housing prices drop. They are hard assets, nothing is destroyed by the lowering of housing values besides speculative worth. Sure some people would lose a lot of money but it would largely hurt the wealthy and help income equality along with leveling the gap a bit between those generations and poorest one in our history
- RestlessMind 10y ago
  > ... will only decrease wealth inequality since the ones who own homes are generally wealthy. I beg to differ. Wealthy will be fine because they have diversified assets. The ones truly hurt would be people in their 30's, who have just started putting down roots (first home, family etc) and would have invested a chunk of their savings in the downpayment. So wealth inequality might reduce a bit between top 20% and bottom 20%. But it will increase between 1% and the rest. > ...nothing is destroyed by the lowering of housing values besides speculative worth. Household balance sheets for middle-class, whose main asset is their homes, are destroyed. Now suddenly you are left with, say, a mortgage of 400K vs a house worth only 250K. > ... help income equality along with leveling the gap a bit ... Nope - the boomers would still fare better since their mortgages should have been paid off by now (generally), and they have a decent rich safety net. Ones screwed are genX and genY as I explained above.

pdkl95 10y ago

While lower house prices would be great for "millennials", the real problem is the gap in income[1] that started a ~25 years ago. Housing prices wouldn't be nearly as bad if incomes were at their proper level relative to productivity. [1] https://upload.wikimedia.org/wikipedia/commons/e/ef/Productivity_and_Real_Median_Family_Income_Growth_in_the_United_States.png https://upload.wikimedia.org/wikipedia/commons/e/ef/Producti...

ArkyBeagle 10y ago
Dean Baker places this at around 1980, so more than 25 years. There was the one span of time ( late '90s ) where it was suspended, and wages grew. He has a new book, "Rigged" and flogs the book on BookTv ( my "books for the post literate" source... )

ArkyBeagle 10y ago

Policy has been explicitly designed to suppress wages. The Humphrey-Hawkins bill of 1979 is considered in Fed moves, but a vague notion of "price stability" gets first pick.