7 ms·

Luckily you don't have to do anything to make that happen. Housing is going to correct in a serious way, and soon. Quantitative easing artificially keeping le

by kromem 8y ago

Luckily you don't have to do anything to make that happen. Housing is going to correct in a serious way, and soon. Quantitative easing artificially keeping lending rates low screwed the housing market. That's in the process of correcting in a major way. At the same time, the increasing rates are going to hit the stock market in a bad way, decreasing general liquidity for down payments. The real headline is: "you can't keep high prices and increase mortgage rates amidst stagnant incomes." A few other considerations: Baby boomers are a huge population. The generations afterwards simply don't match their numbers. That generation is still primarily homeowners. As they age, that's no longer going to be the case, and the supply constrained market is going to reverse as houses get handed down or put on the market. New developments and construction/renovation are targeting higher-end buyers, which makes affordable housing hard to find. But as everyone races to chase the higher end buyer, eventually there's going to be an over-supply and the market will tank. This was in part one of the contributing factors to the 2008 crash - new developments ended up as wastelands that eventually ended up as "affordable" housing because the buyers disappeared. Personally, even though I'm open to buying a house at the moment, I'm staying the heck away from the market. I'm already seeing properties in my area sold a few months ago put back on the market initially for more, but then dropping the price below what they bought at. We're approaching the cusp of the upward wave, and as rates increase, a lot of people that bought in the past two years are going to be stuck with whatever they bought into for a good while.

pfooti 8y ago
While I don't disagree with a lot of your argument, according to some preliminary research it seems like there's about as many millennials as boomers. Like 77 million boomers, 65 million gen x, 75 million gen y.
- Mtinie 8y ago
  The count is less important than the buying power. Millennials, as a group, have significantly less buying power than their Baby Boomer peers at the same point in their lives. One source, but eye-opening if you can believe/trust the underlying data: "Only a third of millennials own their own home, compared with almost two-thirds of baby boomers at the same age. It will take a millennial on average 19 years to save for a deposit, compared[0] with three years in the 1980s. A third of millennials will, it is predicted, have a lifetime of renting with less space, poorer conditions, longer commutes and more insecurity than the baby boomers experienced."[1] ----- [0] https://www.resolutionfoundation.org/publications/home-improvements-action-to-address-the-housing-challenges-faced-by-young-people/ https://www.resolutionfoundation.org/publications/home-impro... [1] https://www.theguardian.com/society/2018/apr/29/millennials-struggling-is-it-fault-of-baby-boomers-intergenerational-fairness https://www.theguardian.com/society/2018/apr/29/millennials-....
  - psergeant 8y ago
    We’ve also not convinced our peers to vote in anywhere near the numbers that the boomers do.
    - WalterBright 8y ago
      The boomers didn't vote when they were young, either.
    - amanaplanacanal 8y ago
      I'm a boomer myself, but I absolutely hope that this can be turned around. Higher voter participation from your generation could do much to reverse some of the really bad stuff that my generation has done.
bredren 8y ago
I barely got out of the last downturn. I did a very un-HN thing and went and got a 2 year MBA on top of my engr degree. I made my last mortgage payment from across the country and less than 12 months later the housing crash started. Now, I see the market at a peak again and I'm not going _anywhere near_ this thing. I also contemplate whether I will ever afford a family sized place in a nice location. I am not sure but I wonder if I may have missed the boat on this. I don't see a social adjustment to housing happening in my lifetime so at this point I'm just hoping that a major downturn happens during a time I'm not having a startup fail but instead on a rise from time off consulting or a successful company. I wouldn't give up what I've done to have worked corporate for the past decade, but I'm also completely beholden to macro trends in housing with timing that feels completely like luck to me.
- village-idiot 8y ago
  Unless if you are quite old, you will live to see the adjustment. Houses at this point are owned by Boomers, some Gen Xers, and the richest subset of Millenials. But this is quite an unstable situation. Everyone needs somewhere to live, but vanishingly small parts of the population need two places. As the Boomers either die or move to retirement homes they will need to liquidate their real estate in massive numbers, largely all at once thanks to the tight clustering of the Boomers. There’s simply no way that this glut of housing will be absorbed by the richest groups of Millenials without sudden and deep price shocks, especially since Boomers appear to prefer suburban homes that the childless Millenials don’t typically want. What’s interesting to me is what will happen politically. Boomer house owners have been very adept at using local politics to prop up their property values, the only notable failure was 2008. What kind of bailout will they ask for when their home is worth 1/5 what they expected?
Mtinie 8y ago
The sooner the Baby Boomer stop being consumers, the better, in regards to the rest of society. As a voting block and as a consumer group they've been large enough to completely reset the status quo. I love my Baby Boomer parents, my aunts and uncles, and their friends -- but from a purely economic standpoint they've had their way for too long (extending to politics and societal-norms) and ultimately have hurt those of us in the later generations more than they've helped us.
- bredren 8y ago
  I feel the same way. There is a fair amount of stigma that boomers also look down on millennials. As a result, I think there is a bit of a dim view the opposite way: seeing a generation that has been able to take and control so much while resenting the one coming next.
  - WalterBright 8y ago
    I've seen this all before, in the 1970's. Nothing new here. Just the name changed, then it was the "Establishment" instead of the "Boomers". You can see it in the movies of the time, too, starting with "A Summer Place".
- wycs 8y ago
  >The sooner the Baby Boomer stop being consumers, the better, in regards to the rest of society. To make your comment explicit, you are cheering on the death and decrepitude of millions of people. I hope your children are kinder to you.
  - Mtinie 8y ago
    Not at all—morally and with a humanistic-bent—I don’t cheer for the deaths of my loved ones or their peers. But like taxes, death is inevitable. Economically, I’ll consider it from a Machiavellian perspective: The sooner limited, choice, resources are freed up for the younger generations the better. The Old were useful because they spawned, and raised, the young. As replacements, knowingly.
village-idiot 8y ago
I think the Boomers are in for a huge shock once they go to sell their homes for a “fair” price and discover that nobody is there to buy.

by kromem 8y ago

pfooti 8y ago

While I don't disagree with a lot of your argument, according to some preliminary research it seems like there's about as many millennials as boomers. Like 77 million boomers, 65 million gen x, 75 million gen y.

Mtinie 8y ago
The count is less important than the buying power. Millennials, as a group, have significantly less buying power than their Baby Boomer peers at the same point in their lives. One source, but eye-opening if you can believe/trust the underlying data: "Only a third of millennials own their own home, compared with almost two-thirds of baby boomers at the same age. It will take a millennial on average 19 years to save for a deposit, compared[0] with three years in the 1980s. A third of millennials will, it is predicted, have a lifetime of renting with less space, poorer conditions, longer commutes and more insecurity than the baby boomers experienced."[1] ----- [0] https://www.resolutionfoundation.org/publications/home-improvements-action-to-address-the-housing-challenges-faced-by-young-people/ https://www.resolutionfoundation.org/publications/home-impro... [1] https://www.theguardian.com/society/2018/apr/29/millennials-struggling-is-it-fault-of-baby-boomers-intergenerational-fairness https://www.theguardian.com/society/2018/apr/29/millennials-....
- psergeant 8y ago
  We’ve also not convinced our peers to vote in anywhere near the numbers that the boomers do.
  - WalterBright 8y ago
    The boomers didn't vote when they were young, either.
  - amanaplanacanal 8y ago
    I'm a boomer myself, but I absolutely hope that this can be turned around. Higher voter participation from your generation could do much to reverse some of the really bad stuff that my generation has done.

bredren 8y ago

I barely got out of the last downturn. I did a very un-HN thing and went and got a 2 year MBA on top of my engr degree. I made my last mortgage payment from across the country and less than 12 months later the housing crash started. Now, I see the market at a peak again and I'm not going _anywhere near_ this thing. I also contemplate whether I will ever afford a family sized place in a nice location. I am not sure but I wonder if I may have missed the boat on this. I don't see a social adjustment to housing happening in my lifetime so at this point I'm just hoping that a major downturn happens during a time I'm not having a startup fail but instead on a rise from time off consulting or a successful company. I wouldn't give up what I've done to have worked corporate for the past decade, but I'm also completely beholden to macro trends in housing with timing that feels completely like luck to me.

village-idiot 8y ago
Unless if you are quite old, you will live to see the adjustment. Houses at this point are owned by Boomers, some Gen Xers, and the richest subset of Millenials. But this is quite an unstable situation. Everyone needs somewhere to live, but vanishingly small parts of the population need two places. As the Boomers either die or move to retirement homes they will need to liquidate their real estate in massive numbers, largely all at once thanks to the tight clustering of the Boomers. There’s simply no way that this glut of housing will be absorbed by the richest groups of Millenials without sudden and deep price shocks, especially since Boomers appear to prefer suburban homes that the childless Millenials don’t typically want. What’s interesting to me is what will happen politically. Boomer house owners have been very adept at using local politics to prop up their property values, the only notable failure was 2008. What kind of bailout will they ask for when their home is worth 1/5 what they expected?

Mtinie 8y ago

The sooner the Baby Boomer stop being consumers, the better, in regards to the rest of society. As a voting block and as a consumer group they've been large enough to completely reset the status quo. I love my Baby Boomer parents, my aunts and uncles, and their friends -- but from a purely economic standpoint they've had their way for too long (extending to politics and societal-norms) and ultimately have hurt those of us in the later generations more than they've helped us.

bredren 8y ago
I feel the same way. There is a fair amount of stigma that boomers also look down on millennials. As a result, I think there is a bit of a dim view the opposite way: seeing a generation that has been able to take and control so much while resenting the one coming next.
- WalterBright 8y ago
  I've seen this all before, in the 1970's. Nothing new here. Just the name changed, then it was the "Establishment" instead of the "Boomers". You can see it in the movies of the time, too, starting with "A Summer Place".
wycs 8y ago
>The sooner the Baby Boomer stop being consumers, the better, in regards to the rest of society. To make your comment explicit, you are cheering on the death and decrepitude of millions of people. I hope your children are kinder to you.
- Mtinie 8y ago
  Not at all—morally and with a humanistic-bent—I don’t cheer for the deaths of my loved ones or their peers. But like taxes, death is inevitable. Economically, I’ll consider it from a Machiavellian perspective: The sooner limited, choice, resources are freed up for the younger generations the better. The Old were useful because they spawned, and raised, the young. As replacements, knowingly.

village-idiot 8y ago

I think the Boomers are in for a huge shock once they go to sell their homes for a “fair” price and discover that nobody is there to buy.