4 ms·

Fellow millennial at apparently the same age. I agree with your sentiment. I remind myself that what goes around comes around. Boomers and GenXers bid housing p

by voisin 6y ago

Fellow millennial at apparently the same age. I agree with your sentiment. I remind myself that what goes around comes around. Boomers and GenXers bid housing prices up to absurd levels and stayed working longer than past generations (mainly because they failed to save when they could have and have to service debt that is unheard of in past generations). Eventually these assets will be poured back into the market and it will be a buyer’s market. Eventually they will retire and upper ranks will be ours for the taking. They won’t live forever - that wealth will disperse. Our best times are ahead. Theirs are behind. Stay strong and don’t play their game by overleveraging.

gold_age 6y ago
> wealth will disperse. Wealth doesn't necessarily disperse. See simulation by Norvig: https://nbviewer.jupyter.org/url/norvig.com/ipython/Economics.ipynb https://nbviewer.jupyter.org/url/norvig.com/ipython/Economic...
fxtentacle 6y ago
Sadly, the owning class could just transfer their housing assets into a corporation which will rent it out in perpetuity and pay the profits to their heirs. As such, there's no guarantee that the housing market recovers when the current house owners die.
- game_the0ry 6y ago
  Partially true. This did happen more or less during the great recession - private equity companies (ie colony capital, blackstone, etc) raised specific funds and created corps to buy foreclosed housing and rented them out. However, typically they will want to realize a liquidity event (sale) which is why sometimes those homes were rent-to-own. Since the market picked back (thanks to the fed for buying trillions in mortgage backed securities), they were able to sell in a good market. So usually want to sell your investment at some point to realize some capital gains, not hold forever. Two opposing forces (outside of supply / demand) will drive pricing: > how much the fed buys in mortgage backed securities > the economy being strong enough to raise real wages of home buyers so they can buy expensive homes Given that the fed bought assets so aggressively in such a short period of time (raising its balance sheet from ~$4.5T to $7T in H1 of 2020) in response to covid [1], my bet is that housing prices will not come down as long as the fed is run by boomers (they can't afford to have their net worth go down bc they are also economically fragile). [1] https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
karatestomp 6y ago
The only real models we have to base our “normal” on for the post-depression post-WWII, modern postindustrial society are the Greatest and Silent generations. It’s not like the Boomers broke with long-standing tradition. What they inherited was a world and economy unknown just a couple decades earlier. They probably did fail to move us forward, socially and in terms of long-term large-scale planning and saving (on the scale of nation-states, I mean—welfare fund-building and other things that ought to have happened in the “good times”) but it’s not like there were 200 years of people dealing with a similar situation before them.
giantrobot 6y ago
Part of the problem is that in the meantime millennials can't save anything and have to overleverage in order to get by. At some future Boomer Great Dying a lot of millennials wont have a lot of liquid cash to take advantage of the situation. Millennials (on average) had to take on massive student debt just to get entry level mail room positions where previous generations did not. Millennials are entering their 40s. Their adult lives have been filled with Black Swan events which says those aren't Black Swans but the new normal much shittier swan. So not only did Millennials have to start from behind they keep getting hit with externally imposed crises that make it extremely difficult to get ahead. Germane for a lot of HN Millennials, housing prices in areas with tech companies are insane and even a Boomer Great Dying isn't going to help get a toehold in real estate.
sukilot 6y ago
Recent History lesson: Gen X had the same concerns that Millennials had. No one in Gen X is at "normal" retirement age. The people bidding up housing are millenial techies. Mark "young people are just smarter" Zuckerberg is a millennial.

by voisin 6y ago

gold_age 6y ago

> wealth will disperse. Wealth doesn't necessarily disperse. See simulation by Norvig: https://nbviewer.jupyter.org/url/norvig.com/ipython/Economics.ipynb https://nbviewer.jupyter.org/url/norvig.com/ipython/Economic...

fxtentacle 6y ago

Sadly, the owning class could just transfer their housing assets into a corporation which will rent it out in perpetuity and pay the profits to their heirs. As such, there's no guarantee that the housing market recovers when the current house owners die.

game_the0ry 6y ago
Partially true. This did happen more or less during the great recession - private equity companies (ie colony capital, blackstone, etc) raised specific funds and created corps to buy foreclosed housing and rented them out. However, typically they will want to realize a liquidity event (sale) which is why sometimes those homes were rent-to-own. Since the market picked back (thanks to the fed for buying trillions in mortgage backed securities), they were able to sell in a good market. So usually want to sell your investment at some point to realize some capital gains, not hold forever. Two opposing forces (outside of supply / demand) will drive pricing: > how much the fed buys in mortgage backed securities > the economy being strong enough to raise real wages of home buyers so they can buy expensive homes Given that the fed bought assets so aggressively in such a short period of time (raising its balance sheet from ~$4.5T to $7T in H1 of 2020) in response to covid [1], my bet is that housing prices will not come down as long as the fed is run by boomers (they can't afford to have their net worth go down bc they are also economically fragile). [1] https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

karatestomp 6y ago

The only real models we have to base our “normal” on for the post-depression post-WWII, modern postindustrial society are the Greatest and Silent generations. It’s not like the Boomers broke with long-standing tradition. What they inherited was a world and economy unknown just a couple decades earlier. They probably did fail to move us forward, socially and in terms of long-term large-scale planning and saving (on the scale of nation-states, I mean—welfare fund-building and other things that ought to have happened in the “good times”) but it’s not like there were 200 years of people dealing with a similar situation before them.

giantrobot 6y ago

Part of the problem is that in the meantime millennials can't save anything and have to overleverage in order to get by. At some future Boomer Great Dying a lot of millennials wont have a lot of liquid cash to take advantage of the situation. Millennials (on average) had to take on massive student debt just to get entry level mail room positions where previous generations did not. Millennials are entering their 40s. Their adult lives have been filled with Black Swan events which says those aren't Black Swans but the new normal much shittier swan. So not only did Millennials have to start from behind they keep getting hit with externally imposed crises that make it extremely difficult to get ahead. Germane for a lot of HN Millennials, housing prices in areas with tech companies are insane and even a Boomer Great Dying isn't going to help get a toehold in real estate.

sukilot 6y ago

Recent History lesson: Gen X had the same concerns that Millennials had. No one in Gen X is at "normal" retirement age. The people bidding up housing are millenial techies. Mark "young people are just smarter" Zuckerberg is a millennial.