15 ms·

Baby boomers are making it harder for millennials to buy homes

186 points by MilnerRoute 9y ago

BrentOzar 9y ago
The flip side of this is that as the baby boomers pass, there's going to be a glut of retirement home communities available - and with my generation probably never being able to retire, that's going to be an interesting market.
- ianai 9y ago
  I foresee either a huge market value adjustment (for a long long time) or prices buoyed through immigration.
- sjg007 9y ago
  Govt subsidies?
- noobiemcfoob 9y ago
  The nice thing about retirement homes is they convert into decent apartments.
- closeparen 9y ago
  Retirement home communities are not so much about the ability to retire as the necessity of receiving medical services from onsite staff. I don't know what it will look like. Maybe being bussed to work every day from the retirement home. But for now, our bodies are most likely going to need them.
- ceejayoz 9y ago
  The glut of housing will come with a massive loss in healthcare jobs, though.
  - zanny 9y ago
    I don't get this sentiment. Boomers weren't all born in the same year, right now the "bubble" of US population is 50-60. because they do start dying off after that. But the trick is medical advances are likely to push the 40-50 year olds now (respectively, 50-60s make up 7% of the population while 40-50s make up 6%) to live longer and die slower, meaning they will probably still fit in the currently emerging retirement markets meant for older boomers who are going to die sooner. The difference is 1%, though. Millions of people isn't a small amount, but considering how the country had to adapt before to growing and shrinking classes of population before it isn't going to be catastrophic, and like I said, it is likely the current 40-50 year olds will live longer and fill out the healthcare market for current boomers.
- flashman 9y ago
  Retirement home corporations are going to end up holding huge real estate portfolios because they'll take boomer houses in exchange for aged and end-of-life care. Wealth concentrates, virtually without exception.
  - expertentipp 9y ago
    > Retirement home corporations are going to end up holding huge real estate portfolios ...then there is reverse mortgage - pay off the mortgage for decades, and then return the property to another financial institution in exchange for better pension.
- Broken_Hippo 9y ago
  Like others, I disagree. First things first, you have actual nursing homes. Folks generally aren't living there by choice: They are there because they need a good amount of medical care. Some would be better off with assisted living (which is too expensive for most folks) or a nurse visiting a home a few times a day (which isn't nearly as common in the US). Those last options will still exist for folks that have money: I think the home nurse will become more common if the US winds up going toward single-payer healthcare. Again, though, these are in place for folk's medical needs. Our generation might not be able to retire for leisure, but we'll still get sick. The very last sort of retirement community is the non-medical sort. Many of these are simply apartments that cater towards older folks, though a few likely have a kitchen and/or activity areas. In indiana, these generally offered quiet spaces (no children) and discounted apartments if you met the age requirements. I truly don't see these sorts of things going out of style, even if folks are working instead of being in retirement.
mnm1 9y ago
"Many homeowners are holding off on listing their homes for sale because they want to avoid entering a competitive buyer's market, further tightening inventory." I don't understand this. What's the advantage of holding off when you have multiple people willing to bid on your house, including above asking?
- qzervaas 9y ago
  Because you're subsequently buying into the same inflated market.
  - ianai 9y ago
    It's also much easier to stay where you are than to move. Real estate is a very illiquid asset and it is supposed to be. If you perceive your house being worth more 12 months down the road it makes sense to stay until that point. This is where you get people taking out second mortgages. It be a great idea today but horrible 5-10 years out. Once valuations correct many people will be under water and looking at defaults. Real estate is not where you want overvaluations and (huge) inefficiencies.
- ikeyany 9y ago
  Easy to say when the main demographic here has no qualms with picking up and moving.
- maxsilver 9y ago
  > What's the advantage of holding off when you have multiple people willing to bid on your house, including above asking? Most people still have to live somewhere. If a market is so hot that every single property is in a hyper-competitive bidding war, and a person in that market sells their house, how are they going to find a new place to live in there?
jkezfvjnawu 9y ago
Blaming someone else. Typical millennial behavior.
deleted 9y ago
[deleted]
mythrwy 9y ago
Speculation and free markets are great and all and there is a time and a place for those and it allocates capital more efficiently than central planning (from what we have seen so far) and freedom to attain wealth is a beautiful thing. That being said, there are basic human needs that should be met by any civilization of note. And if a civilization doesn't then it is failing. These needs include the the opportunity to obtain food and water (or food and water itself), basic physical security (for the most part), and in respect to the topic, a place to lay ones head. Home speculation never should have been allowed to grow to the monster it has become. Ever. Not just because it's morally wrong, but because it is destabilizing. As we found out before and will again. When you have people sitting on three vacant homes in hopes they will appreciate while others are shitting in the streets and sleeping on sidewalks it's absolute lunacy. We all are entitled by birthright to a little piece of earth. It's our heritage. The current situation is just objectively nuts and will be corrected. Sure as gravity or the sun rising in the morning. Now, I'm not suggesting to take everything from the rich and give to the poor. I know that doesn't really work sustainability. I also know everyone in the world can't live in the most desirable places. So I'm not making any concrete suggestions at all because I don't have the answers. But what we have going on now is both horrible and crazy.
- obstinate 9y ago
  The millennials we are talking about are not, for the most part, going without shelter. They are living in smaller, less nice place than they would otherwise, and/or renting. Homelessness is a qualitatively different problem than middle class millennials competing with boomers for houses.
  - mythrwy 9y ago
    True, but using homes as a wealth building instrument is (one of) the root problems in both the case of people not being able to own homes and homelessness. I rant because, well, its just plain nuts, but I don't have answers. I do think we need a paradigm shift in this regard though and I think it's inevitable, just a matter of how much pain it causes.
deleted 9y ago
[deleted]
misnamed 9y ago
You know the same headline could be written in reverse and still work. Of course, it would get fewer votes and clicks. The actual bottom line is they are going for the same size of home ... surely that's not either generation's fault.
- zeckalpha 9y ago
  People have not made as much of a claim that "boomers are no longer buying homes and it could cause another housing crash". There's been quite a bit of press of "millennial are not buying homes and it could cause another housing crash".
rabboRubble 9y ago
Once the babyboomers start selling for retirement home cash, or dying, many property bubbles will be popping.
- spaceflunky 9y ago
  You're not wrong, but don't hold your breath. The average age of the boomers is an spry 67 with a life expectancy of ~85.
  - randomdata 9y ago
    67 seems a tad high, no? Babyboomers are generally considered to be those born from 1946-1964. If we assume an even distribution of people born through those years, the average would be 62. However, births per year were higher towards the end of the boom, so in fact I would expect the average age to be even lower.
kevinburke 9y ago
I'm going to sound like a broken record here but there are policy and other decisions being made in the Bay Area that are restricting the housing supply and driving up the price of existing housing. You don't have to be a bystander in this process, you can help lobby for more supply. A list of propositions and legislation to support (SF, Brisbane, Mountain View, the CA state legislature) can be found here: https://news.ycombinator.com/item?id=14195301 https://news.ycombinator.com/item?id=14195301
- Camillo 9y ago
  There should be a site where these actionable things are concisely listed. Not a HN comment, a real website. Maybe people could even sign up for emails whenever a new action item pops up. OTOH, many people here are not US citizens, so they cannot really do much about any of this.
  - kevinburke 9y ago
    There is! yimbyaction.org. They have a mailing list where they send out calls to action on upcoming legislation. https://yimbyaction.org/mailinglist/ https://yimbyaction.org/mailinglist/
  - Kluny 9y ago
    strongtowns.org can keep you posted as well.
  - deleted 9y ago
    [deleted]
- jrapdx3 9y ago
  The question I have has several parts, but fundamentally I wonder if the housing supply could even be increased enough to materially affect housing prices. Not saying that the housing supply isn't excessively restricted, but how much can restrictions be decreased and how much difference would it make? An analogy is building freeways to relieve traffic congestion. What regularly happens is that additional roads or adding lanes to existing roads provides temporary respite from traffic jams. But before too long the roads are jam-packed again, the problem isn't solved, just have more cars clogging traffic. I suspect adding more housing won't lower housing prices, just bring some more people into the area. BTW this is what's happening here in Portland OR, where a building boom has been going on for years. The area population has increased, housing prices are still out of range for many people.
jmclnx 9y ago
Not really the Baby Boomers fault, but bad decisions made over the past 30/40 years are coming to fruit. Right now only a hand full of cities have 'real' jobs and those cities have strict zoning laws (and NIMBY). So young people in the US, if they want to make any real $ need to move to those cities, otherwise all they will have are 'mcjobs'. I would not be surprised to see slums like the type seen in many poor countries start to occur near these cities in 20 or so years.
- humanrebar 9y ago
  > Not really the Baby Boomers fault... Eh... when the housing market corrected in 2008, it could have settled at a lower baseline but it was politically urgent to make sure that baby boomers could still on their houses as profitable investments.
  - mjevans 9y ago
    So in other words it didn't correct (actually it really didn't in the parts of the west coast (of the US) with 'real jobs')
- randomdata 9y ago
  > if they want to make any real $ need to move to those cities This is the crux of the matter. The market always seeks equilibrium. If there is an income advantage in one location, people will move there, driving up costs in the process, until the point that there is no longer an advantage. Certain cities have held an advantage in earning ability for quite some time and the market is attempting to correct that disparity by increasing costs. People complain about how expensive these homes are, but in reality they are the cheap ones! The low dollar value homes out in the middle of nowhere are truly the expensive ones. Like you mention, the profitability in a high cost city outpaces the profitability elsewhere, even after you consider that your costs are lower. If the lower paying job, but also the lower expenditures, provided a higher income there would be absolutely no hesitation to take a 'mcjob'. The question is: At what point does the 'mcjob', where housing is low cost, actually provide – after accounting for costs – a higher income and become the more desirable type of work? That is when housing in the high-priced cities will stabilize, as there is no longer the financial advantage to live there. Until then, expect price to continue upward.
deleted 9y ago
[deleted]
ouid 9y ago
the mortgage interest tax credit is making it harder for millenials to buy homes.
joyofdata 9y ago
Why do Millenials need a house? How about a flat? And when they can afford it they just build a house for themselves.
- falsedan 9y ago
  Many people in their late 20s/early 30s are thinking about starting a family, and have the secure jobs to give them the financial stability they need for this. Raising small children in an apartment can be pretty stressful, and given the choice, I think young families would overwhelmingly prefer a house over an apartment (all other considerations being equal barring price). Plus, houses generally have 3-4 bedrooms, apartments 1-2. But: apartments also aren't available! They're just as appealing to the downsizing boomer. > just build a house for themselves Where will they work? The places which have cheap land and labor generally are more removed from the economic hotspots. Or do you propose that they should take their job with them?
  - joyofdata 9y ago
    > Raising small children in an apartment can be pretty stressful this is precisely the entitlement I was hinting at - I was raised in an apartment - lots of my friends have been raised in apartments - I do live in an appartment (*1984) and we have many neighboors with children in our apartment building. It is absolutely possible and also very humane indeed also to raise children in an apartment. > But: apartments also aren't available! They're just as appealing to the downsizing boomer. And this is just expressing the sad state of the US. The reason why there aren't enough apartments is not b/c of the babyboomers (also not b/c of migrants and Mexicans) - it's b/c your government fails to build them (I'm from Germany). Now you are stuck with a market in favor of people renting out own flats. > Where will they work? Not build at all - just live in an apartment or not move to super-hot-spot areas like LA or NY. If you can afford to build a house you can afford a car and you have to commute.
    - falsedan 9y ago
      So congratulations on living somewhere that medium-high density living is not only accepted but seen as obvious! My wife also grew up in an apartment. The thing is, apartments in the US usually have timber floors (since wood is so available and cheap), and little insulation (apartments are usually on the coasts, where the climate is mild). > It is absolutely possible and also very humane indeed also to raise children in an apartment. I feel that the social fabric between Europeans is stronger than in the US. Sure, kids will be fine, but property owners in the US are an entitled bunch and may feel like their rights are being violated by the pitter-patter/clonk-bonk of active children. A foot of concrete absorbs a lot more noise than an inch of timber. > it's b/c your government fails to build them Most development in the US is done by private companies; very little housing stock is built by government agencies. The biggest constraint is building permits, which is controlled by local government like city councils, which local residents are elected to, who generally are… baby boomers. > If you can afford to build a house you can afford a car and you have to commute. I don't understand this comment. If I live in Nebraska/Detroit (where is is extremely easy to afford a house & jobs are scarce), do I commute to the Bay Area? That's days of driving, or getting a pilot's license. It's the same in Australia: if I can afford to build a house in Bourke, do I commute to my job in Sydney every day? Even Centrelink says that the maximum reasonable commute is 90min each way, which (at worst) would mean getting a place in the Blue Mountains/Wollongong/Gosford.
mcv 9y ago
Houses in "hot" markets still stay on the market for 54 days? In Amsterdam, you can reliably sell your house in 2 weeks. Some people are willing to buy a house without a visit. The housing market here is insane. We recently bought a house and sold our old one (we haven't moved yet, but remodeling on our new house will start in a couple of days). We sold our house for EUR 100k over what we paid for it in 2008 (just before the mortgage crisis), and 60k over what our neighbours got for their nearly identical house less than a year ago. The seller of our new house got more than 3 times what he paid for it in 1996. If this isn't another housing bubble, I don't know what it.
- expertentipp 9y ago
  This is the case for any major desirable city in EU, applying both to property rental and acquire market. Someone please stop this craze.
- maxsilver 9y ago
  > The housing market here is insane. This is sort of the problem -- the housing market is insane literally everywhere. You mention that houses in Amsterdam sell in 2 weeks. Houses in bumblefuck Michigan are selling the same day. It's common here for sellers to do no showings at all, simply throw an open house on Sunday and say "best offer by 9am Monday wins". These houses all have multiple offers, $20k+ over asking prices. We're not London, or NYC, or SF, or Boston, or Paris, or Amsterdam. Bumblefuck Michigan can't even keep their housing market sane. Pick any city with any half-functional economy. Yes any city. The housing market is insane there. Big city? small city? Popular city? Unknown city? It doesn't matter -- the housing market is insane there too. Literally everywhere the housing market is broken. Literally everywhere.
jaclaz 9y ago
I am failing to see an actual "weight" in the matter. I mean: >Millennials also make up 42% of all homebuyers overall, first-time or not. And while baby boomers make up a much smaller portion of homebuyers, the two generations may end up competing for the same type of home, despite being in completely different phases of their lives. WHO (which "group" they belong to) are the remaining 58% buyers? HOW MUCH is "a much smaller portion"? Let's say that the much smaller portion is 25%. The amount of houses where there is (supposedly) competition between the two groups is then - at the most - 25%. And since: >"Millennials buy a 1,800-square-foot home on average, and a baby boomer buys a 1,950-square-foot home. The other generations are away from those." Any home smaller than 1,750-square-foot and any home bigger than 2,000-square-foot should then not be something these two groups compete for. How many of these "suitabe size" homes are on the market? Do they represent 25% (or less than 25%) of the total amount of homes? So, what happens to the other 75% (or more)?
CodeWriter23 9y ago
Millennial whines about how hard prosperity is making her life. Blames another generation for her woes. Of course the competition in the market has nothing to do with the trend the author cites, that Millennials have upset the natural order by skipping the starter home. Nope, just blame the boomers. For the record, I'm GenX, and like many from my generation, I hope to be a homeowner some day.
- saurik 9y ago
  The article explains that they are being forced to skip the starter home because almost all of the lower end housing stock is only available for rent, not to own.
  - CodeWriter23 9y ago
    Sure, if you just skip over this statement from the article: "Millennials, on the other hand, tend to overestimate what they can afford in terms of housing." The reality in the Bay Area is hyper gentrification driven by the currently inflating Silicon Valley Bubble 3.0 (or is it 4.0 now) has deleted low end from the market altogether.
mirimir 9y ago
Well, everyone is competing with everyone else, so singling out these two groups seems like clickbait. Still, the article does note that baby boomers are downsizing, whereas millennials are foregoing starter homes. So one could argue that baby boomers are outbidding millennials. But I don't see that point explicitly made.

186 points by MilnerRoute 9y ago

The flip side of this is that as the baby boomers pass, there's going to be a glut of retirement home communities available - and with my generation probably never being able to retire, that's going to be an interesting market.

ianai 9y ago
I foresee either a huge market value adjustment (for a long long time) or prices buoyed through immigration.
sjg007 9y ago
Govt subsidies?
noobiemcfoob 9y ago
The nice thing about retirement homes is they convert into decent apartments.
closeparen 9y ago
Retirement home communities are not so much about the ability to retire as the necessity of receiving medical services from onsite staff. I don't know what it will look like. Maybe being bussed to work every day from the retirement home. But for now, our bodies are most likely going to need them.
ceejayoz 9y ago
The glut of housing will come with a massive loss in healthcare jobs, though.
- zanny 9y ago
  I don't get this sentiment. Boomers weren't all born in the same year, right now the "bubble" of US population is 50-60. because they do start dying off after that. But the trick is medical advances are likely to push the 40-50 year olds now (respectively, 50-60s make up 7% of the population while 40-50s make up 6%) to live longer and die slower, meaning they will probably still fit in the currently emerging retirement markets meant for older boomers who are going to die sooner. The difference is 1%, though. Millions of people isn't a small amount, but considering how the country had to adapt before to growing and shrinking classes of population before it isn't going to be catastrophic, and like I said, it is likely the current 40-50 year olds will live longer and fill out the healthcare market for current boomers.
flashman 9y ago
Retirement home corporations are going to end up holding huge real estate portfolios because they'll take boomer houses in exchange for aged and end-of-life care. Wealth concentrates, virtually without exception.
- expertentipp 9y ago
  > Retirement home corporations are going to end up holding huge real estate portfolios ...then there is reverse mortgage - pay off the mortgage for decades, and then return the property to another financial institution in exchange for better pension.
Broken_Hippo 9y ago
Like others, I disagree. First things first, you have actual nursing homes. Folks generally aren't living there by choice: They are there because they need a good amount of medical care. Some would be better off with assisted living (which is too expensive for most folks) or a nurse visiting a home a few times a day (which isn't nearly as common in the US). Those last options will still exist for folks that have money: I think the home nurse will become more common if the US winds up going toward single-payer healthcare. Again, though, these are in place for folk's medical needs. Our generation might not be able to retire for leisure, but we'll still get sick. The very last sort of retirement community is the non-medical sort. Many of these are simply apartments that cater towards older folks, though a few likely have a kitchen and/or activity areas. In indiana, these generally offered quiet spaces (no children) and discounted apartments if you met the age requirements. I truly don't see these sorts of things going out of style, even if folks are working instead of being in retirement.

mnm1 9y ago

"Many homeowners are holding off on listing their homes for sale because they want to avoid entering a competitive buyer's market, further tightening inventory." I don't understand this. What's the advantage of holding off when you have multiple people willing to bid on your house, including above asking?

qzervaas 9y ago
Because you're subsequently buying into the same inflated market.
- ianai 9y ago
  It's also much easier to stay where you are than to move. Real estate is a very illiquid asset and it is supposed to be. If you perceive your house being worth more 12 months down the road it makes sense to stay until that point. This is where you get people taking out second mortgages. It be a great idea today but horrible 5-10 years out. Once valuations correct many people will be under water and looking at defaults. Real estate is not where you want overvaluations and (huge) inefficiencies.
ikeyany 9y ago
Easy to say when the main demographic here has no qualms with picking up and moving.
maxsilver 9y ago
> What's the advantage of holding off when you have multiple people willing to bid on your house, including above asking? Most people still have to live somewhere. If a market is so hot that every single property is in a hyper-competitive bidding war, and a person in that market sells their house, how are they going to find a new place to live in there?

jkezfvjnawu 9y ago

Blaming someone else. Typical millennial behavior.

deleted 9y ago

[deleted]

mythrwy 9y ago

Speculation and free markets are great and all and there is a time and a place for those and it allocates capital more efficiently than central planning (from what we have seen so far) and freedom to attain wealth is a beautiful thing. That being said, there are basic human needs that should be met by any civilization of note. And if a civilization doesn't then it is failing. These needs include the the opportunity to obtain food and water (or food and water itself), basic physical security (for the most part), and in respect to the topic, a place to lay ones head. Home speculation never should have been allowed to grow to the monster it has become. Ever. Not just because it's morally wrong, but because it is destabilizing. As we found out before and will again. When you have people sitting on three vacant homes in hopes they will appreciate while others are shitting in the streets and sleeping on sidewalks it's absolute lunacy. We all are entitled by birthright to a little piece of earth. It's our heritage. The current situation is just objectively nuts and will be corrected. Sure as gravity or the sun rising in the morning. Now, I'm not suggesting to take everything from the rich and give to the poor. I know that doesn't really work sustainability. I also know everyone in the world can't live in the most desirable places. So I'm not making any concrete suggestions at all because I don't have the answers. But what we have going on now is both horrible and crazy.

obstinate 9y ago
The millennials we are talking about are not, for the most part, going without shelter. They are living in smaller, less nice place than they would otherwise, and/or renting. Homelessness is a qualitatively different problem than middle class millennials competing with boomers for houses.
- mythrwy 9y ago
  True, but using homes as a wealth building instrument is (one of) the root problems in both the case of people not being able to own homes and homelessness. I rant because, well, its just plain nuts, but I don't have answers. I do think we need a paradigm shift in this regard though and I think it's inevitable, just a matter of how much pain it causes.

deleted 9y ago

[deleted]

misnamed 9y ago

You know the same headline could be written in reverse and still work. Of course, it would get fewer votes and clicks. The actual bottom line is they are going for the same size of home ... surely that's not either generation's fault.

zeckalpha 9y ago
People have not made as much of a claim that "boomers are no longer buying homes and it could cause another housing crash". There's been quite a bit of press of "millennial are not buying homes and it could cause another housing crash".

rabboRubble 9y ago

Once the babyboomers start selling for retirement home cash, or dying, many property bubbles will be popping.

spaceflunky 9y ago
You're not wrong, but don't hold your breath. The average age of the boomers is an spry 67 with a life expectancy of ~85.
- randomdata 9y ago
  67 seems a tad high, no? Babyboomers are generally considered to be those born from 1946-1964. If we assume an even distribution of people born through those years, the average would be 62. However, births per year were higher towards the end of the boom, so in fact I would expect the average age to be even lower.

kevinburke 9y ago

I'm going to sound like a broken record here but there are policy and other decisions being made in the Bay Area that are restricting the housing supply and driving up the price of existing housing. You don't have to be a bystander in this process, you can help lobby for more supply. A list of propositions and legislation to support (SF, Brisbane, Mountain View, the CA state legislature) can be found here: https://news.ycombinator.com/item?id=14195301 https://news.ycombinator.com/item?id=14195301

Camillo 9y ago
There should be a site where these actionable things are concisely listed. Not a HN comment, a real website. Maybe people could even sign up for emails whenever a new action item pops up. OTOH, many people here are not US citizens, so they cannot really do much about any of this.
- kevinburke 9y ago
  There is! yimbyaction.org. They have a mailing list where they send out calls to action on upcoming legislation. https://yimbyaction.org/mailinglist/ https://yimbyaction.org/mailinglist/
- Kluny 9y ago
  strongtowns.org can keep you posted as well.
- deleted 9y ago
  [deleted]
jrapdx3 9y ago
The question I have has several parts, but fundamentally I wonder if the housing supply could even be increased enough to materially affect housing prices. Not saying that the housing supply isn't excessively restricted, but how much can restrictions be decreased and how much difference would it make? An analogy is building freeways to relieve traffic congestion. What regularly happens is that additional roads or adding lanes to existing roads provides temporary respite from traffic jams. But before too long the roads are jam-packed again, the problem isn't solved, just have more cars clogging traffic. I suspect adding more housing won't lower housing prices, just bring some more people into the area. BTW this is what's happening here in Portland OR, where a building boom has been going on for years. The area population has increased, housing prices are still out of range for many people.

jmclnx 9y ago

Not really the Baby Boomers fault, but bad decisions made over the past 30/40 years are coming to fruit. Right now only a hand full of cities have 'real' jobs and those cities have strict zoning laws (and NIMBY). So young people in the US, if they want to make any real $ need to move to those cities, otherwise all they will have are 'mcjobs'. I would not be surprised to see slums like the type seen in many poor countries start to occur near these cities in 20 or so years.

humanrebar 9y ago
> Not really the Baby Boomers fault... Eh... when the housing market corrected in 2008, it could have settled at a lower baseline but it was politically urgent to make sure that baby boomers could still on their houses as profitable investments.
- mjevans 9y ago
  So in other words it didn't correct (actually it really didn't in the parts of the west coast (of the US) with 'real jobs')
randomdata 9y ago
> if they want to make any real $ need to move to those cities This is the crux of the matter. The market always seeks equilibrium. If there is an income advantage in one location, people will move there, driving up costs in the process, until the point that there is no longer an advantage. Certain cities have held an advantage in earning ability for quite some time and the market is attempting to correct that disparity by increasing costs. People complain about how expensive these homes are, but in reality they are the cheap ones! The low dollar value homes out in the middle of nowhere are truly the expensive ones. Like you mention, the profitability in a high cost city outpaces the profitability elsewhere, even after you consider that your costs are lower. If the lower paying job, but also the lower expenditures, provided a higher income there would be absolutely no hesitation to take a 'mcjob'. The question is: At what point does the 'mcjob', where housing is low cost, actually provide – after accounting for costs – a higher income and become the more desirable type of work? That is when housing in the high-priced cities will stabilize, as there is no longer the financial advantage to live there. Until then, expect price to continue upward.

deleted 9y ago

[deleted]

ouid 9y ago

the mortgage interest tax credit is making it harder for millenials to buy homes.

joyofdata 9y ago

Why do Millenials need a house? How about a flat? And when they can afford it they just build a house for themselves.

falsedan 9y ago
Many people in their late 20s/early 30s are thinking about starting a family, and have the secure jobs to give them the financial stability they need for this. Raising small children in an apartment can be pretty stressful, and given the choice, I think young families would overwhelmingly prefer a house over an apartment (all other considerations being equal barring price). Plus, houses generally have 3-4 bedrooms, apartments 1-2. But: apartments also aren't available! They're just as appealing to the downsizing boomer. > just build a house for themselves Where will they work? The places which have cheap land and labor generally are more removed from the economic hotspots. Or do you propose that they should take their job with them?
- joyofdata 9y ago
  > Raising small children in an apartment can be pretty stressful this is precisely the entitlement I was hinting at - I was raised in an apartment - lots of my friends have been raised in apartments - I do live in an appartment (*1984) and we have many neighboors with children in our apartment building. It is absolutely possible and also very humane indeed also to raise children in an apartment. > But: apartments also aren't available! They're just as appealing to the downsizing boomer. And this is just expressing the sad state of the US. The reason why there aren't enough apartments is not b/c of the babyboomers (also not b/c of migrants and Mexicans) - it's b/c your government fails to build them (I'm from Germany). Now you are stuck with a market in favor of people renting out own flats. > Where will they work? Not build at all - just live in an apartment or not move to super-hot-spot areas like LA or NY. If you can afford to build a house you can afford a car and you have to commute.
  - falsedan 9y ago
    So congratulations on living somewhere that medium-high density living is not only accepted but seen as obvious! My wife also grew up in an apartment. The thing is, apartments in the US usually have timber floors (since wood is so available and cheap), and little insulation (apartments are usually on the coasts, where the climate is mild). > It is absolutely possible and also very humane indeed also to raise children in an apartment. I feel that the social fabric between Europeans is stronger than in the US. Sure, kids will be fine, but property owners in the US are an entitled bunch and may feel like their rights are being violated by the pitter-patter/clonk-bonk of active children. A foot of concrete absorbs a lot more noise than an inch of timber. > it's b/c your government fails to build them Most development in the US is done by private companies; very little housing stock is built by government agencies. The biggest constraint is building permits, which is controlled by local government like city councils, which local residents are elected to, who generally are… baby boomers. > If you can afford to build a house you can afford a car and you have to commute. I don't understand this comment. If I live in Nebraska/Detroit (where is is extremely easy to afford a house & jobs are scarce), do I commute to the Bay Area? That's days of driving, or getting a pilot's license. It's the same in Australia: if I can afford to build a house in Bourke, do I commute to my job in Sydney every day? Even Centrelink says that the maximum reasonable commute is 90min each way, which (at worst) would mean getting a place in the Blue Mountains/Wollongong/Gosford.

mcv 9y ago

Houses in "hot" markets still stay on the market for 54 days? In Amsterdam, you can reliably sell your house in 2 weeks. Some people are willing to buy a house without a visit. The housing market here is insane. We recently bought a house and sold our old one (we haven't moved yet, but remodeling on our new house will start in a couple of days). We sold our house for EUR 100k over what we paid for it in 2008 (just before the mortgage crisis), and 60k over what our neighbours got for their nearly identical house less than a year ago. The seller of our new house got more than 3 times what he paid for it in 1996. If this isn't another housing bubble, I don't know what it.

expertentipp 9y ago
This is the case for any major desirable city in EU, applying both to property rental and acquire market. Someone please stop this craze.
maxsilver 9y ago
> The housing market here is insane. This is sort of the problem -- the housing market is insane literally everywhere. You mention that houses in Amsterdam sell in 2 weeks. Houses in bumblefuck Michigan are selling the same day. It's common here for sellers to do no showings at all, simply throw an open house on Sunday and say "best offer by 9am Monday wins". These houses all have multiple offers, $20k+ over asking prices. We're not London, or NYC, or SF, or Boston, or Paris, or Amsterdam. Bumblefuck Michigan can't even keep their housing market sane. Pick any city with any half-functional economy. Yes any city. The housing market is insane there. Big city? small city? Popular city? Unknown city? It doesn't matter -- the housing market is insane there too. Literally everywhere the housing market is broken. Literally everywhere.

jaclaz 9y ago

I am failing to see an actual "weight" in the matter. I mean: >Millennials also make up 42% of all homebuyers overall, first-time or not. And while baby boomers make up a much smaller portion of homebuyers, the two generations may end up competing for the same type of home, despite being in completely different phases of their lives. WHO (which "group" they belong to) are the remaining 58% buyers? HOW MUCH is "a much smaller portion"? Let's say that the much smaller portion is 25%. The amount of houses where there is (supposedly) competition between the two groups is then - at the most - 25%. And since: >"Millennials buy a 1,800-square-foot home on average, and a baby boomer buys a 1,950-square-foot home. The other generations are away from those." Any home smaller than 1,750-square-foot and any home bigger than 2,000-square-foot should then not be something these two groups compete for. How many of these "suitabe size" homes are on the market? Do they represent 25% (or less than 25%) of the total amount of homes? So, what happens to the other 75% (or more)?

CodeWriter23 9y ago

Millennial whines about how hard prosperity is making her life. Blames another generation for her woes. Of course the competition in the market has nothing to do with the trend the author cites, that Millennials have upset the natural order by skipping the starter home. Nope, just blame the boomers. For the record, I'm GenX, and like many from my generation, I hope to be a homeowner some day.

saurik 9y ago
The article explains that they are being forced to skip the starter home because almost all of the lower end housing stock is only available for rent, not to own.
- CodeWriter23 9y ago
  Sure, if you just skip over this statement from the article: "Millennials, on the other hand, tend to overestimate what they can afford in terms of housing." The reality in the Bay Area is hyper gentrification driven by the currently inflating Silicon Valley Bubble 3.0 (or is it 4.0 now) has deleted low end from the market altogether.

mirimir 9y ago

Well, everyone is competing with everyone else, so singling out these two groups seems like clickbait. Still, the article does note that baby boomers are downsizing, whereas millennials are foregoing starter homes. So one could argue that baby boomers are outbidding millennials. But I don't see that point explicitly made.