5 ms·

The issue for most younger people is standard of living that they are used to. Their parents bought houses in rural suburbia. Now that area is part of the bigge

The issue for most younger people is standard of living that they are used to. Their parents bought houses in rural suburbia. Now that area is part of the bigger metropolitan area, and is getting gentrified. Go on Zillow and look at actual rural America and you will find houses in the 100-130k range. On the flip side, having a good standard of living != owning a house. I think that most people don't actually understand how the finances work out, and are just hoping that 30 years down the line their house is going to be worth more, without actually realizing the amount of money they "threw away" in interest.

acchow 5y ago
True in so many cities, especially Toronto. So many people grew up in Toronto now upset they can't afford a single family home and are "stuck" with condos. But isn't this how urbanization works? How are detached SFHs sustainable in an urban environment?
smt88 5y ago
> Their parents bought houses in rural suburbia. I bought a 3,000+ sqft house in a desirable part of my city 5 years ago. My friends spent 10% more money 1 year ago and got a 1,800 sqft house that's newer, recently renovated. It's a few blocks away. This is not an issue of generational expectations. Prices for the same type of house with the same standard of living have skyrocketed compared to real income.
- danielmarkbruce 5y ago
  Has the all in cost actually changed much? If someone bought a house 6 months ago, they could lock in high 2's for 30 years.
- ByersReason 5y ago
  Quite right. And also I know multiple people from the (now) older generation who are sitting on large amounts of property and renting it out for correspondingly huge amounts of income. Once into one property .. it was possible for a person to essentially chain from one mortgage to another (using the proceeds from the previous rental as collateral). The person in question now owns 5 houses -all accomplished bootstrapped on a school salary, starting in the early 70's. Utterly impossible now IMO, unless you win at the tech work lottery :) - it is of course impressively entrepreneurial, but also she wonders why her daughter has not settled down and purchased a house ..
doubled112 5y ago
I think that's probably a big part of it. There's also that growing up I was taught anybody who didn't own a house was a failure. And a condo wasn't yours. I can't be the only one. As an adult, I think it's a strange way of looking at it.
credit_guy 5y ago
Yes, it only feels like life sucks, but if you just change the way you look at it, it’s actually quite good. For example you don’t need to own a house. Or if you do, what’s wrong with Flint, MI? You can drink bottled Fiji water.
- deleted 5y ago
  [deleted]
fatnoah 5y ago
My personal opinion is that renting vs. buying is a lifestyle choice with financial implications. Owning and renting each have risks and rewards. When I was younger and wanted to live in a city and have that lifestyle, renting was the only way that was possible. I enjoyed that life, but also made sure to save for retirement. Now that I'm older and want massive TVs and audio systems w/out annoying neighbors, a house in a suburb allows that. A big problem, though, is that for many people, appreciation of their home was the primary means to build a nest egg for retirement. Sell the expensive home, buy a cheaper home somewhere warm, and let the different fund your retirement along with your pension and social security. My big worry for people who are getting priced out of markets, is that rents are also increasing dramatically, and that people are going to be left without home appreciation AND without savings.
- dzhiurgis 5y ago
  Is not a choice anymore. In my place it takes 27years to save just for a deposit, assuming no price change…
- s1artibartfast 5y ago
  I felt that it was a lifestyle choice too until I saw some of my co-workers who make 120k/yr salary realizing 400k/yr in home appreciation between 2010 and 2020. Mortgages just provide an astounding amount of leverage and tax advantage compared to renting and investing in stocks. You get to invest 5X the purchasing power You don't have to pay capital gains when you sell You can realize your gains at any time and reinvest again with a new 5X leverage All the while, you are getting an income TAX deduction
Barrin92 5y ago
Ownership related costs are significant as well. 1% of the price annually for maintenance is what I've seen as a guideline and that's a lot of money for young people in particular. Personally I never got the appeal of home ownership (context maybe that here in Germany rent protection is strong and HO rate is low in general), you can build wealth by putting the equivalent of money in index funds, never pay attention to it, can move easily, have no debt, high fixed costs, or significant risk of losing your home like people did in 08-09, and so on.
nimos 5y ago
As a counterpoint there also used to be jobs and careers in other places that have largely been centralized into bigger metropolitan areas I do agree somewhat though. Be interesting to see how remote work shakes out in the long run. I think people are hesitant to buy and be stuck somewhere with no jobs.
Auracle 5y ago
Even in rural areas you can no longer get the same house that your parents had for the equivalent money. My parents have an extremely nice house on a beautiful 60 acre piece of land. My dad did water & sewer work and my mom worked part time when we were young and later worked as a postmaster. My wife and I both have degrees and jobs that pay way better after accounting for inflation, and our house is absolute shit by comparison. My parent’s house and land is worth millions. My wife’s parents did what is pretty standard around here and built on a lake, also with low paying jobs. Their home is probably worth close to a million or so as well.
- ajford 5y ago
  Exactly. There's so many stories from earlier generations about working their way through college and a family home. My partner and I make three what my parents did, and while we're comfortable, we're nowhere near what my parents were at 20-30 years ago because of inflation. There's no chance I'm able to buy a home within an hour of the Metro I'm living in within Texas. I'm really hoping working from home sticks around as most major cities are quickly becoming so costly to live in. It's so bad I've been talking to some family about going in together on some rural land to split and create a family commune type thing to share infrastructure while living rural. A number of us can work fully remote as long as we have solid online connectivity.
anarticle 5y ago
You have to live somewhere. The model I used for homeownership is you are paying to play: you lock up some capital for your down, and you are able to save the difference in principal from your mortgage. If things go well, you are leveraging your down and principal. Oh also, you get to write off your mortgage interest via taxes which is a nice tax fence if you're in a techbro tax bracket. Welfare for middle classesque people. There are tons of small benefits that come with home owning that are often ignored: rent never goes up if you didn't get an ARM, and you never have to leave because a landlord says so. Also you don't have to go to war with a landlord every year while they decide your fate (raise the rent? sell the place? change policy?). Don't like a wall? Blow it up. Want a pet? Go for it. Get five dogs whatever. Not moving every year to surf rental costs is pretty good. Appliance quality on a non-flipped property is WAY better than any rental. Negatives include: everything is now your fault/problem, and you have to be willing to sit still for a few years. Property tax sucks, but if you think you're not paying the property tax on a rental you may be bad at math. No landlord is renting AT A LOSS. All of this is of course, assuming you can afford the down in the first place and that you're not buying something that is a jumbo mortgage. NYC, SF, sorry dudes. Those places are not meant to be owned in imo. Everyone I know that lived in those places has a timer on their head, and they eventually bail to somewhere else. My track record is bought with a partner, broke up, sold, did well, rented for 2y, bought again. Your mileage may vary of course, there are no universals etc.

acchow 5y ago

True in so many cities, especially Toronto. So many people grew up in Toronto now upset they can't afford a single family home and are "stuck" with condos. But isn't this how urbanization works? How are detached SFHs sustainable in an urban environment?

smt88 5y ago

> Their parents bought houses in rural suburbia. I bought a 3,000+ sqft house in a desirable part of my city 5 years ago. My friends spent 10% more money 1 year ago and got a 1,800 sqft house that's newer, recently renovated. It's a few blocks away. This is not an issue of generational expectations. Prices for the same type of house with the same standard of living have skyrocketed compared to real income.

danielmarkbruce 5y ago
Has the all in cost actually changed much? If someone bought a house 6 months ago, they could lock in high 2's for 30 years.
ByersReason 5y ago
Quite right. And also I know multiple people from the (now) older generation who are sitting on large amounts of property and renting it out for correspondingly huge amounts of income. Once into one property .. it was possible for a person to essentially chain from one mortgage to another (using the proceeds from the previous rental as collateral). The person in question now owns 5 houses -all accomplished bootstrapped on a school salary, starting in the early 70's. Utterly impossible now IMO, unless you win at the tech work lottery :) - it is of course impressively entrepreneurial, but also she wonders why her daughter has not settled down and purchased a house ..

doubled112 5y ago

I think that's probably a big part of it. There's also that growing up I was taught anybody who didn't own a house was a failure. And a condo wasn't yours. I can't be the only one. As an adult, I think it's a strange way of looking at it.

credit_guy 5y ago

Yes, it only feels like life sucks, but if you just change the way you look at it, it’s actually quite good. For example you don’t need to own a house. Or if you do, what’s wrong with Flint, MI? You can drink bottled Fiji water.

deleted 5y ago
[deleted]

fatnoah 5y ago

My personal opinion is that renting vs. buying is a lifestyle choice with financial implications. Owning and renting each have risks and rewards. When I was younger and wanted to live in a city and have that lifestyle, renting was the only way that was possible. I enjoyed that life, but also made sure to save for retirement. Now that I'm older and want massive TVs and audio systems w/out annoying neighbors, a house in a suburb allows that. A big problem, though, is that for many people, appreciation of their home was the primary means to build a nest egg for retirement. Sell the expensive home, buy a cheaper home somewhere warm, and let the different fund your retirement along with your pension and social security. My big worry for people who are getting priced out of markets, is that rents are also increasing dramatically, and that people are going to be left without home appreciation AND without savings.

dzhiurgis 5y ago
Is not a choice anymore. In my place it takes 27years to save just for a deposit, assuming no price change…
s1artibartfast 5y ago
I felt that it was a lifestyle choice too until I saw some of my co-workers who make 120k/yr salary realizing 400k/yr in home appreciation between 2010 and 2020. Mortgages just provide an astounding amount of leverage and tax advantage compared to renting and investing in stocks. You get to invest 5X the purchasing power You don't have to pay capital gains when you sell You can realize your gains at any time and reinvest again with a new 5X leverage All the while, you are getting an income TAX deduction

Barrin92 5y ago

Ownership related costs are significant as well. 1% of the price annually for maintenance is what I've seen as a guideline and that's a lot of money for young people in particular. Personally I never got the appeal of home ownership (context maybe that here in Germany rent protection is strong and HO rate is low in general), you can build wealth by putting the equivalent of money in index funds, never pay attention to it, can move easily, have no debt, high fixed costs, or significant risk of losing your home like people did in 08-09, and so on.

nimos 5y ago

As a counterpoint there also used to be jobs and careers in other places that have largely been centralized into bigger metropolitan areas I do agree somewhat though. Be interesting to see how remote work shakes out in the long run. I think people are hesitant to buy and be stuck somewhere with no jobs.

Auracle 5y ago

Even in rural areas you can no longer get the same house that your parents had for the equivalent money. My parents have an extremely nice house on a beautiful 60 acre piece of land. My dad did water & sewer work and my mom worked part time when we were young and later worked as a postmaster. My wife and I both have degrees and jobs that pay way better after accounting for inflation, and our house is absolute shit by comparison. My parent’s house and land is worth millions. My wife’s parents did what is pretty standard around here and built on a lake, also with low paying jobs. Their home is probably worth close to a million or so as well.

ajford 5y ago
Exactly. There's so many stories from earlier generations about working their way through college and a family home. My partner and I make three what my parents did, and while we're comfortable, we're nowhere near what my parents were at 20-30 years ago because of inflation. There's no chance I'm able to buy a home within an hour of the Metro I'm living in within Texas. I'm really hoping working from home sticks around as most major cities are quickly becoming so costly to live in. It's so bad I've been talking to some family about going in together on some rural land to split and create a family commune type thing to share infrastructure while living rural. A number of us can work fully remote as long as we have solid online connectivity.

anarticle 5y ago

You have to live somewhere. The model I used for homeownership is you are paying to play: you lock up some capital for your down, and you are able to save the difference in principal from your mortgage. If things go well, you are leveraging your down and principal. Oh also, you get to write off your mortgage interest via taxes which is a nice tax fence if you're in a techbro tax bracket. Welfare for middle classesque people. There are tons of small benefits that come with home owning that are often ignored: rent never goes up if you didn't get an ARM, and you never have to leave because a landlord says so. Also you don't have to go to war with a landlord every year while they decide your fate (raise the rent? sell the place? change policy?). Don't like a wall? Blow it up. Want a pet? Go for it. Get five dogs whatever. Not moving every year to surf rental costs is pretty good. Appliance quality on a non-flipped property is WAY better than any rental. Negatives include: everything is now your fault/problem, and you have to be willing to sit still for a few years. Property tax sucks, but if you think you're not paying the property tax on a rental you may be bad at math. No landlord is renting AT A LOSS. All of this is of course, assuming you can afford the down in the first place and that you're not buying something that is a jumbo mortgage. NYC, SF, sorry dudes. Those places are not meant to be owned in imo. Everyone I know that lived in those places has a timer on their head, and they eventually bail to somewhere else. My track record is bought with a partner, broke up, sold, did well, rented for 2y, bought again. Your mileage may vary of course, there are no universals etc.