12 ms·

2012 vs. 1984: Young adults really do have it harder today

114 points by joeyespo 15y ago

protomyth 15y ago
Truthfully, a young adult shouldn't be buying a house anyway. Owning a home in a depressed market will increase the length of unemployment for a young adult. Since you cannot unload the home, you need to find a job within commute range of your home. This limits the job prospects. We need to make renting or other alternatives more attractive.
- ontoillogical 15y ago
  I generally agree with you, but I just want to point out that Toronto's housing market is anything but depressed right now. Houses are regularly selling for a few 100K above list price. See for instance http://fmlistings.tumblr.com/ http://fmlistings.tumblr.com/.
- krschultz 15y ago
  I agree with you whole-heartedly. In your 20s, the best investment you can make is in your career. These days, that often means moving. Staying light on your feet and going for the best job for your career is more important than optimizing cashflow. A couple good experiences in the first 2-10 years of your career really can set you apart, especially when other people are floundering in this economy.
malandrew 15y ago
I would bet that the reason housing prices have outpaced inflation is due almost entirely to the popularization of rent-seeking activities and real estate speculation (not including the relatively recent distortions due to late 1990s deregulations that led to CDS and other financial "innovations" created to derisk the asset class beyond what was rational). Someone should do a comparison of the number of landlords per capita today versus back in 1984 and a comparison of the number of people who own a second home or own real estate investments. I would speculate that society has by and large re-organized in a way that permits older generation to extract greater rents from younger generations beyond just social security. It's probably possible to write an entire Phd thesis on the myriad ways in which the baby boomers and to some degree older Gen Xers extract rent from younger Gen Xers, GenY and millenials. The world would be a much better placed if the most highly taxed form of income was rent profits in all its forms. Non-productive income is responsible for perpetuating a lot of income disparity. If any government really wants to promote sustainable home ownership for all their citizens, they'd make homes a financial deadweight for people that aren't fully utilizing the home themselves. This would do more to make homes affordable for those that will actually live in them. Homes need to stop being seen as an investment and need to be seen as a utility. Whenever a utility is perceived as an investment you often seen market manipulation phenomena like the ones that contributed to the California Electricity Crisis of 2001.
- pyoung 15y ago
  My opinion is that rent seeking has probably been fairly constant (relative to the size of the economy). I think the bigger issue at play is the effect of the baby boomers. As they reached their peak earning potential in the late 90's and early 00's, their spending power had an impact on the broader economy, raising demand and prices across a wide range of services and goods. While the recession has had an impact, I don't think it is a coincidence that as the Baby Boomers retire, the economy feels like it is entering a long period of stagnation.
  - malandrew 15y ago
    Possible, but anecdotally I know tons of boomers with multiple properties, but I cannot say the same for previous generations and generations that came after the boomers. This is why I suspect that novel research in the area would show that rent seeking, especially from housing has risen. Another issue that may be contributory to rising house prices are divorce rates, which skyrocketed since the early 80s. A divorce almost always results in the occupancy of two residencies per family.
  - rmrm 15y ago
    "I don't think it is a coincidence that as the Baby Boomers retire, the economy feels like it is entering a long period of stagnation." Coupled specifically with everything else that happened over those 20 years. An ever increasing workforce, with an ever increasing productivity rate, employing an ever increasing amount of financial leverage, purchased at an ever decreasing cost. It's certainly a recipe for a peppy feeling decade or two, and a well deserved hangover later on.
- joliveira 15y ago
  "If any government really wants to promote sustainable home ownership for all their citizens, they'd make homes a financial deadweight for people that aren't fully utilizing the home themselves." This! In Portugal it is common for rich people to buy apartments near universities just to rent to students. The thing is, people who are rich enough buy several at once and get nice discounts on them (investor discounts they call them) and they will use the houses to make money with the rents. If you are just a regular person looking for a place to live you might negotiate a bit on the price but you always start at full price, not discounted. I wouldn't go to the extreme of making every home you possess, except the one you live in, a financial deadweight but make it increase steeply after maybe 2 or 3 places.
solson 15y ago
Yes college was more affordable and for many it is unaffordable today. Young people and parents need to seriously consider forgoing college entirely, that will be the only thing that will force the price down. These parents and students freely choose to pay these absurd tuition fees. Until you stop paying them, they will keep raising them. Cars in 1984 are not comparable to cars in 2012. There are many emissions and safety requirements on modern cars that have forced the price up. Also the reliability and quality of most modern cars far exceeds 1984 models. Most young people would not want anything like a 1984 car. Ford Pintos were cheap, problem is they exploded when they were rear ended. Housing is expensive, but it depends where you choose to live. Hip areas have always been expensive. Toronto wasn't hip in 1984 and nor was silicon valley. In Mpls I rented a decent 2 bedroom apartment in 1986 for $550 per month, the same apartment today rents for $850. if you want to live near the "cool" people it will cost you.
- firefoxman1 15y ago
  > Young people and parents need to seriously consider forgoing college entirely, that will be the only thing that will force the price down. That's definitely a problem I've seen with my peers. They go just because their parents expect it of them. I can't find the article (it was on HN maybe 6 months ago) that compared college majors in the mid 80's to 2011. While useful stuff like CS stayed relatively flat, the majors that skyrocketed were things like Liberal Arts. Those are the people making college expensive for all of us. One real way to bring prices down would be to attend community college for 1-2 years. It's extremely cost effective, easily transferable, and designed for working adults so the schedules are often more flexible than traditional college.
  - JVIDEL 15y ago
    Maybe but the thing is that people you mention also go to expensive schools because of the prestige, not the learning part, so you wont be able to convince them of going to a community college.
    - firefoxman1 15y ago
DanielBMarkham 15y ago
But other comments reflected a view that today’s young adults should just grow up. Hmmmm. Bullshit alert going off. Every generation needs to come of age, get their education, look around in the world, and fit in. Many times this involves a lot of protesting and asking for change, complaining about the way things currently are, and experimenting with various alternative lifestyles. This is good for everybody. What some observers see -- probably because of the way the press reports it -- is a lot of kids who are ass-deep in debt, lack the education (even though they've graduated from a nice college) to be employable, and instead of adapting to the world as they see it, are stuck in a mode of complaining and waiting around until something comes their way. This is by no means all of them, but kids like that make for a good newspaper story: "Still living in his parent's basement at 35, Joe Smith emails out 100 resumes per day before going to the Starbucks and playing MMORPGs all day. 'I'm just not sure where the management jobs are,' the Art History major says...." To a story like that, sure, people will say something like "perhaps instead of insisting the world conform to your ideas, you should learn to like the world as it is and adapt. Many have found that this leads to a happier life." or the shorter form, "grow the hell up, kid!" People who offer this advice are not trying to be callous, cruel, or insensitive to the plight of the young. Nobody is saying to give up on your dreams. It's just that big goals like being an astronaut often begin with flipping burgers down at the Mickey D's, even for people with 4-year degrees. Like I said, I blame the press for setting up this "fight". If you ask me, most college grads already have this figured out.
- derleth 15y ago
  > big goals like being an astronaut often begin with flipping burgers down at the Mickey D's And end there, because you can't pay down your debt load with that kind of a job. Remember: Student loans can't be discharged through bankruptcy.
  - DanielBMarkham 15y ago
    People want to talk about investment bubbles or the national debt, but here's a topic I don't see enough of: by subsidizing investment in college education for everyone without some feedback loop to make sure grads have employable skills, we've created a huge debt burden of people owing college loans for skills the marketplace isn't valuing. And it's just getting worse. And to "fix it", just like the way we fix all these other bad policies like taxes, we'll just tighten the screws on some minority of the population that people will accept. Quite frankly I'm disgusted at the whole thing, and I blame both political parties for it. The young are getting screwed over royally by previous generations who knew economics but failed to apply it in their policy decisions. You can't pay for something for somebody else without a very detailed and tight feedback loop. You'll only end up driving up prices and getting less value. But to your direct point: I can't play the hypothetical game here. It has no end. I'll propose a counter-argument and you'll shoot that down, and on we go ad infinitum. My point was that it is critical to view yourself as adapting to the market, wherever that is, not the other way around. If you sit in your figurative parent's basement waiting for that management job, it's not only bad for you it's also bad for the rest of us. You have to accept your role is adaptation, and the even more bitter truth that you might have spent four years gaining nothing but a bad attitude and a boat load of debt. Blech. Not a good place to start. But for some, that's the reality of where they are. You have to make decisions and baby steps toward adaptation. What those decisions are and what those steps are is going to vary from person to person. ADD: Note that this is the very definition of a startup. Go find something people want and give it to them. Adapt and pivot based on what the market wants, not what you want (or have been trained) to do.
sparknlaunch12 15y ago
Generations will always have their differences. Generation X v Generation Y etc etc It is easy to compare income/costs however what about non-financial value? Health and life expectancy Globalization and travel Academic and learning Technology etc At least these can apply in the first world [1] and even second world. Maybe these are all correlated to money? [1] http://www.reddit.com/r/firstworldproblems/ http://www.reddit.com/r/firstworldproblems/
bearmf 15y ago
I am sorry, but this guy is an idiot. He is referring this study: http://www.conferenceboard.ca/hcp/hot-topics/caninequality.aspx http://www.conferenceboard.ca/hcp/hot-topics/caninequality.a... It has a chart of INFLATION-ADJUSTED median after-tax income in 2009 dollars, from 1976 to 2009. He then takes a figure for 1984 from this chart, around $48500, and proceeds to compare it to prices in 1984 dollars, without converting them to 2009 dollars. So from a house price of 100k in 1984, he infers it was only 2x times median income then. While in fact, he needs to convert 100k in 2009 dollars and get around 200k and 4x times median income.
- tosseraccount 15y ago
  Yeah, I though he was, too. but ... "Average family after-tax income back then was close to $50,000." 1984???? He's got to be adjusting for inflation in some cases. (or he is an idiot)
  - bearmf 15y ago
    He is adjusting median income but not prices.
- liber8 15y ago
  Not only that but his other example (cars) is ludicrous. Cars are by far, without a doubt, cheaper, safer, better made, more reliable, and more feature-laden than at any point, ever. For $12k (roughly 1/4 the median income), you can get a brand new, pretty decent car. Also, just about everything else (save maybe gas) is much cheaper and more plentiful today than 30 years ago. The Russian athletes and dancers who came here to compete/perform in the 70's and 80's told many tales of being awed by common supermarkets. I think if you took Americans from the 80's and brought them to a Costco, they might not be awed, but they'd be pretty surprised.
  - JamisonM 15y ago
    Although he opens mentioning buying a car in 1986 what he actually says is that cars have pretty much matched the rate of inflation. Seems to me he is saying cars are about as good a deal today as they were back then. I do not find that ludicrous. The other point to be made about cars is that all those improvements do not really matter that much in terms of the value you are getting out of them, cars in the '80s got you from point A to point B just like a brand new one does today. (To be completely off topic I would add that computerization in the modern cars has always been a concern for me, when a 2012 car's computer starts acting up in 2032 what are we going to do with them? I have a late-ninties highway tractor and every time I have a wiring problem with it I am pretty worried it will become more expensive to fix than it is worth despite being mechanically sound.)
planetguy 15y ago
Article rather specific to the Canadian big cities, in which prices are currently rather high. Some of this house price growth is transient, some is permanent. How much does land cost? In a place like Toronto or Vancouver, it costs as much as it possibly can. That is to say, since desirable land in these cities is so much more desirable than undesirable land, people will pay as much as they can possibly afford in order to get a good piece of land rather than a lousy one. What this means in practice for most people is: take all the money you're ever likely to earn, deduct the money you need to spend on other stuff, and what's left over is the amount of money you're going to wind up spending on a house. Sure, you can spend less if you want, but you're going to wind up living in a much worse place, and since (as I just said) the desirable places are much more desirable than the undesirable places, people are willing to give up, say, a fancier car, for the benefit of living in The Beaches rather than Outer Missisauga. The good news is that things don't actually get worse for people just because they have to engage in this cut-throat competition for desirable land. Like I said, house prices merely soak up all the money that's left over once the necessities are paid for, and if house prices go up considerably in real terms it just means that the prices of necessities have, in real terms, dropped.
- michaelochurch 15y ago
  There is an obvious solution to the housing problem, which is to fix transportation and take pressure off the market. There's one reason urban housing is so expensive, and it's this: commuting sucks, and finding parking is horrible, and people will pay immense amounts of money not to deal with that shit. Obvious simple and right solution: tax the hell out of the landlords and the very rich, and build the best public transit system the world has seen.
aeturnum 15y ago
I think part of this is that young adults have a harder time doing what our parents did at the same age. When I was trying to rent my first post-college place with my girlfriend, my parents didn't think we would need a co-signer. They had gotten all their apartments, years ago, with a handshake and an understanding they had word. After they realized things had changed, they were happy to help, but it took a while. I think there are many people, who are divorced from the experience of being a young adult, who think "kids today" aren't achieving like their parents did. They're right - we aren't living in the post-war prosperity - but I think young people are also achieving differently. Even if the things our parents did were the same price, how many of us would do them?
deleted 15y ago
[deleted]
moxiemk1 15y ago
I am about to graduate college (taking second to last final at 1730 this evening). I will very soon start working full-time at a job that puts the household of just me into the top 25% of Americans. My gross paycheck for a year isn't enough to cover all the loans I had to take out in order to pay for college. Because of what schools of what quality have what financial aid programs, there is essentially little way I could have spent less on college and gotten a similar benefit. Despite that, I am by far one of the luckiest ones - hopefully I'll have it payed down in 5 years comfortably. It is worth noting that in my parents generation, the ratio of expected debt to typical wages made the idea of paying your way through school a commonly reachable thing. Now, it certainly is not if you are planning on actually getting an education, rather than a piece of paper.
captobvious 15y ago
It's funny how most comments here are dancing around the issue trying to point out factual errors and counterexamples. Bottom line: Young adults today have it way worse than their parents. In most developed countries in the world. How should this issue be dealt with? In my opinion you can't just call it bad luck, and tell people to deal with it and adapt. Personally I think the biggest motivation of all is the sense of change for the better, and a future to look forward to. I simply can't accept that my generation got the bad future, and all the good future was used up by our parents. Looking at my parents generation I think they lived pretty subservient lives, which were also quite stressful, with lots of stress related disease, heart attacks, blood pressure issues etc.. And if I work really hard and study, best case scenario is that I get the same jobs as my parents, only twice the workload and half the pay.
- jdminhbg 15y ago
  > best case scenario is that I get the same jobs as my parents, only twice the workload and half the pay Unless you're way out of the target demographic for HN, this is preposterous. Even semi-competent programmers are way under-supplied; you can name your price, location, and working conditions.
  - captobvious 15y ago
    Ok I'll name my working conditions: A work environment with peace and quiet to be able to concentrate. Have enough time to be able to deliver though-out quality work. Having reasonably specified tasks, and if not, have the decision power to fill in the blanks as I see fit. Not being constantly interrupted. Not being under constant stress and pressure to the point where I feel that my health might be suffering. From my experience these (common sense?) demands on working conditions would rule out pretty much most programming jobs.
    - jlgreco 15y ago
      Do you think low stress heart surgeon jobs exist? Work conditions in tech have more to do with what those jobs are than economic conditions. Companies are desperate to fill positions and you see many going out of their way to create as low stress office environments as possible but after a certain point you just have to come to grips with that's just what the job is. That said, low stress programming jobs do exist, but in my experience they tend to exist in companies you would not normally look at for programming jobs. Damn near every sizeable company has programmers but we tend to only look for jobs "in industry" at the Googles, Microsofts, Facebooks, etc. Think east coast, foundations of the company not in tech, non-glamorous. Basically the equivalent of your heart surgeon working in some sort of research instead of in a hospital on live patients.
moocow01 15y ago
We should be burning the financial system to the ground... well maybe not literally but pretty damned close. The despicable thing is that the insanely rising cost of education is just plain class warfare under a veil of financial hocus pocus and it takes aim at what I see as developed society's achilles heel. Education is the root of everything that underpins our current and future society. You kill that and you are tinkering with killing just about everything of social value in X years. Look at any country that has a weak education system and the correlation is extremely clear. Our current education system is/was a very very good one that now is largely unaffordable and increasingly inaccessible. Complaints about the impractical value of certain degrees has merit but on the whole the US education system has provided an environment that has fostered a class that by enlarge has been one of the most creative, productive, and compassionate of this past century. I really fear that our current trajectory in the opportunities for one to receive rich educational experiences is going to inevitably lead to our society being stagnant at best.
- fennecfoxen 15y ago
  The financial system has tons of problems, but it's a hell of a lot better and more democratic than a world where there is no avenue for the wealthy and the middle-class to share in ventures. You and I and our neighbors can buy stocks in big companies and earn returns to save for retirement; we can (at our discretion) have rich jerks fund our little startup and launch businesses we couldn't otherwise. We can borrow money to buy a house, and enjoy the stability and independence that such a purchase provides for the next couple of decades while we pay it off, instead of saving up while we're renting and enjoying none of that. But of course no one who's been through an introductory economics course should be surprised that subsidizing the purchasers of a good or service (like education) makes the price rise. :)
  - moocow01 15y ago
    What you describe is also my definition of a healthy financial system but IMHO we are increasingly moving away from that description and I think the fact that socio-economic mobility has been decreasing in the US somewhat verifies this. Just about everyone can "share" in economic growth in the US. That is positive. But the problem is that the financial vehicles accessible to most are increasingly weighted to capture less of the percentage of capital gains.
larrys 15y ago
Cars are a bargain relatively. An example low end of the Mercedes line in 85 was a 190E about 30k. That's $58k in today's dollars. Current low end is MB C-Class MSRP about 34,800 (so you are probably talking a few thousand more with options but less a discount brings you back to that amount approx.). A much better car for only a little more.
- afterburner 15y ago
  Mercedes prices actually did go down relative to standard car prices. Pointing at Mercedes alone doesn't really show much.
tosseraccount 15y ago
He's picking on a couple of numbers: cost of education and cost of housing. Both have outpaced inflation. Canada's had the same commodities boom as Australia, Chile and Russia. Housing bubble obviously hadn't hit. yet. ( I hear they balance their budget and don't give away tax deductions for going into debt so maybe they won't have as bad a one). Other obvious question is : have houses improved over almost 30 years making the question of average priced house then vs average prices house now a bit cloudy. $6000 for tuition??? Not a bad deal. Canadian government must be subsidizing it. Maybe it was higher subsidies back then. Bottom line cherry picking your comparisons are hard. Unemployment was worse then: http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=UNRATE&scale=Left&range=Max&cosd=1948-01-01&coed=2012-04-01&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Monthly&fam=avg&fgst=lin&transformation=lin&vintage_date=2012-05-11&revision_date=2012-05-11 http://research.stlouisfed.org/fred2/graph/fredgraph.png?&#3... But duration was better : http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=UEMPMEAN&scale=Left&range=Max&cosd=1948-01-01&coed=2012-04-01&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Monthly&fam=avg&fgst=lin&transformation=lin&vintage_date=2012-05-11&revision_date=2012-05-11 http://research.stlouisfed.org/fred2/graph/fredgraph.png?&#3...
- mattmiller 15y ago
  I hear the argument about how products have improved over time and how that justifies their increased price and I don't buy it. It makes sense if people still have the option of buying the 1980s house in which case purchasing a 2012 house would be an expensive luxury. But people can't get the 1980s house for the 1980s price so we must conclude that housing prices have inflated.
medell 15y ago
Similar tone to an excellent article about last year's hockey riots in Vancouver from an angle most of the media did not take. It's by no means an excuse, but I agree most of the troublemakers were youth from the suburbs disenchanted by many of the same economic reasons: "What does the future look like for the average 20 year old? It's a depressing, empty place where they can't get decent-paying (let alone secure) jobs or ever have a hope of owning property." http://www.straight.com/article-399635/vancouver/vancouver-hockey-riot-symptom-larger-problem http://www.straight.com/article-399635/vancouver/vancouver-h...
joshuahedlund 15y ago
But... but... today's young adults have the Internet! I'm being slightly facetious, but technological advance has gotta count for something, right? (ex. new cars may be expensive, but is it easier to find used cars these days with Craigslist, etc?)
- mattmiller 15y ago
  If you look at the numbers as percentage of income instead of dollars then we can see the percentage of income that an item costs go up if the item has advanced (ie better cars, better refrigerators, better houses). If the percentage of income for one item goes up it must go down for another. Since no technologies get worse over time which expenditure is suppose to become less of a percentage of income over time?
- meric 15y ago
  >> But... but... today's young adults have the Internet! Sometimes I feel this is the only thing we got, and even then the government is trying to take it away also with censorship legislation.
gpapilion 15y ago
the author highlights the higher interest rate, but neglects to give a mortgage payment as a percentage of monthly income. current rates are as sometimes a third of what they were in the 80s.

114 points by joeyespo 15y ago

Truthfully, a young adult shouldn't be buying a house anyway. Owning a home in a depressed market will increase the length of unemployment for a young adult. Since you cannot unload the home, you need to find a job within commute range of your home. This limits the job prospects. We need to make renting or other alternatives more attractive.

ontoillogical 15y ago
I generally agree with you, but I just want to point out that Toronto's housing market is anything but depressed right now. Houses are regularly selling for a few 100K above list price. See for instance http://fmlistings.tumblr.com/ http://fmlistings.tumblr.com/.
krschultz 15y ago
I agree with you whole-heartedly. In your 20s, the best investment you can make is in your career. These days, that often means moving. Staying light on your feet and going for the best job for your career is more important than optimizing cashflow. A couple good experiences in the first 2-10 years of your career really can set you apart, especially when other people are floundering in this economy.

malandrew 15y ago

I would bet that the reason housing prices have outpaced inflation is due almost entirely to the popularization of rent-seeking activities and real estate speculation (not including the relatively recent distortions due to late 1990s deregulations that led to CDS and other financial "innovations" created to derisk the asset class beyond what was rational). Someone should do a comparison of the number of landlords per capita today versus back in 1984 and a comparison of the number of people who own a second home or own real estate investments. I would speculate that society has by and large re-organized in a way that permits older generation to extract greater rents from younger generations beyond just social security. It's probably possible to write an entire Phd thesis on the myriad ways in which the baby boomers and to some degree older Gen Xers extract rent from younger Gen Xers, GenY and millenials. The world would be a much better placed if the most highly taxed form of income was rent profits in all its forms. Non-productive income is responsible for perpetuating a lot of income disparity. If any government really wants to promote sustainable home ownership for all their citizens, they'd make homes a financial deadweight for people that aren't fully utilizing the home themselves. This would do more to make homes affordable for those that will actually live in them. Homes need to stop being seen as an investment and need to be seen as a utility. Whenever a utility is perceived as an investment you often seen market manipulation phenomena like the ones that contributed to the California Electricity Crisis of 2001.

pyoung 15y ago
My opinion is that rent seeking has probably been fairly constant (relative to the size of the economy). I think the bigger issue at play is the effect of the baby boomers. As they reached their peak earning potential in the late 90's and early 00's, their spending power had an impact on the broader economy, raising demand and prices across a wide range of services and goods. While the recession has had an impact, I don't think it is a coincidence that as the Baby Boomers retire, the economy feels like it is entering a long period of stagnation.
- malandrew 15y ago
  Possible, but anecdotally I know tons of boomers with multiple properties, but I cannot say the same for previous generations and generations that came after the boomers. This is why I suspect that novel research in the area would show that rent seeking, especially from housing has risen. Another issue that may be contributory to rising house prices are divorce rates, which skyrocketed since the early 80s. A divorce almost always results in the occupancy of two residencies per family.
- rmrm 15y ago
  "I don't think it is a coincidence that as the Baby Boomers retire, the economy feels like it is entering a long period of stagnation." Coupled specifically with everything else that happened over those 20 years. An ever increasing workforce, with an ever increasing productivity rate, employing an ever increasing amount of financial leverage, purchased at an ever decreasing cost. It's certainly a recipe for a peppy feeling decade or two, and a well deserved hangover later on.
joliveira 15y ago
"If any government really wants to promote sustainable home ownership for all their citizens, they'd make homes a financial deadweight for people that aren't fully utilizing the home themselves." This! In Portugal it is common for rich people to buy apartments near universities just to rent to students. The thing is, people who are rich enough buy several at once and get nice discounts on them (investor discounts they call them) and they will use the houses to make money with the rents. If you are just a regular person looking for a place to live you might negotiate a bit on the price but you always start at full price, not discounted. I wouldn't go to the extreme of making every home you possess, except the one you live in, a financial deadweight but make it increase steeply after maybe 2 or 3 places.

solson 15y ago

Yes college was more affordable and for many it is unaffordable today. Young people and parents need to seriously consider forgoing college entirely, that will be the only thing that will force the price down. These parents and students freely choose to pay these absurd tuition fees. Until you stop paying them, they will keep raising them. Cars in 1984 are not comparable to cars in 2012. There are many emissions and safety requirements on modern cars that have forced the price up. Also the reliability and quality of most modern cars far exceeds 1984 models. Most young people would not want anything like a 1984 car. Ford Pintos were cheap, problem is they exploded when they were rear ended. Housing is expensive, but it depends where you choose to live. Hip areas have always been expensive. Toronto wasn't hip in 1984 and nor was silicon valley. In Mpls I rented a decent 2 bedroom apartment in 1986 for $550 per month, the same apartment today rents for $850. if you want to live near the "cool" people it will cost you.

firefoxman1 15y ago
> Young people and parents need to seriously consider forgoing college entirely, that will be the only thing that will force the price down. That's definitely a problem I've seen with my peers. They go just because their parents expect it of them. I can't find the article (it was on HN maybe 6 months ago) that compared college majors in the mid 80's to 2011. While useful stuff like CS stayed relatively flat, the majors that skyrocketed were things like Liberal Arts. Those are the people making college expensive for all of us. One real way to bring prices down would be to attend community college for 1-2 years. It's extremely cost effective, easily transferable, and designed for working adults so the schedules are often more flexible than traditional college.
- JVIDEL 15y ago
  Maybe but the thing is that people you mention also go to expensive schools because of the prestige, not the learning part, so you wont be able to convince them of going to a community college.
  - firefoxman1 15y ago

DanielBMarkham 15y ago

But other comments reflected a view that today’s young adults should just grow up. Hmmmm. Bullshit alert going off. Every generation needs to come of age, get their education, look around in the world, and fit in. Many times this involves a lot of protesting and asking for change, complaining about the way things currently are, and experimenting with various alternative lifestyles. This is good for everybody. What some observers see -- probably because of the way the press reports it -- is a lot of kids who are ass-deep in debt, lack the education (even though they've graduated from a nice college) to be employable, and instead of adapting to the world as they see it, are stuck in a mode of complaining and waiting around until something comes their way. This is by no means all of them, but kids like that make for a good newspaper story: "Still living in his parent's basement at 35, Joe Smith emails out 100 resumes per day before going to the Starbucks and playing MMORPGs all day. 'I'm just not sure where the management jobs are,' the Art History major says...." To a story like that, sure, people will say something like "perhaps instead of insisting the world conform to your ideas, you should learn to like the world as it is and adapt. Many have found that this leads to a happier life." or the shorter form, "grow the hell up, kid!" People who offer this advice are not trying to be callous, cruel, or insensitive to the plight of the young. Nobody is saying to give up on your dreams. It's just that big goals like being an astronaut often begin with flipping burgers down at the Mickey D's, even for people with 4-year degrees. Like I said, I blame the press for setting up this "fight". If you ask me, most college grads already have this figured out.

derleth 15y ago
> big goals like being an astronaut often begin with flipping burgers down at the Mickey D's And end there, because you can't pay down your debt load with that kind of a job. Remember: Student loans can't be discharged through bankruptcy.
- DanielBMarkham 15y ago
  People want to talk about investment bubbles or the national debt, but here's a topic I don't see enough of: by subsidizing investment in college education for everyone without some feedback loop to make sure grads have employable skills, we've created a huge debt burden of people owing college loans for skills the marketplace isn't valuing. And it's just getting worse. And to "fix it", just like the way we fix all these other bad policies like taxes, we'll just tighten the screws on some minority of the population that people will accept. Quite frankly I'm disgusted at the whole thing, and I blame both political parties for it. The young are getting screwed over royally by previous generations who knew economics but failed to apply it in their policy decisions. You can't pay for something for somebody else without a very detailed and tight feedback loop. You'll only end up driving up prices and getting less value. But to your direct point: I can't play the hypothetical game here. It has no end. I'll propose a counter-argument and you'll shoot that down, and on we go ad infinitum. My point was that it is critical to view yourself as adapting to the market, wherever that is, not the other way around. If you sit in your figurative parent's basement waiting for that management job, it's not only bad for you it's also bad for the rest of us. You have to accept your role is adaptation, and the even more bitter truth that you might have spent four years gaining nothing but a bad attitude and a boat load of debt. Blech. Not a good place to start. But for some, that's the reality of where they are. You have to make decisions and baby steps toward adaptation. What those decisions are and what those steps are is going to vary from person to person. ADD: Note that this is the very definition of a startup. Go find something people want and give it to them. Adapt and pivot based on what the market wants, not what you want (or have been trained) to do.

sparknlaunch12 15y ago

Generations will always have their differences. Generation X v Generation Y etc etc It is easy to compare income/costs however what about non-financial value? Health and life expectancy Globalization and travel Academic and learning Technology etc At least these can apply in the first world [1] and even second world. Maybe these are all correlated to money? [1] http://www.reddit.com/r/firstworldproblems/ http://www.reddit.com/r/firstworldproblems/

bearmf 15y ago

I am sorry, but this guy is an idiot. He is referring this study: http://www.conferenceboard.ca/hcp/hot-topics/caninequality.aspx http://www.conferenceboard.ca/hcp/hot-topics/caninequality.a... It has a chart of INFLATION-ADJUSTED median after-tax income in 2009 dollars, from 1976 to 2009. He then takes a figure for 1984 from this chart, around $48500, and proceeds to compare it to prices in 1984 dollars, without converting them to 2009 dollars. So from a house price of 100k in 1984, he infers it was only 2x times median income then. While in fact, he needs to convert 100k in 2009 dollars and get around 200k and 4x times median income.

tosseraccount 15y ago
Yeah, I though he was, too. but ... "Average family after-tax income back then was close to $50,000." 1984???? He's got to be adjusting for inflation in some cases. (or he is an idiot)
- bearmf 15y ago
  He is adjusting median income but not prices.
liber8 15y ago
Not only that but his other example (cars) is ludicrous. Cars are by far, without a doubt, cheaper, safer, better made, more reliable, and more feature-laden than at any point, ever. For $12k (roughly 1/4 the median income), you can get a brand new, pretty decent car. Also, just about everything else (save maybe gas) is much cheaper and more plentiful today than 30 years ago. The Russian athletes and dancers who came here to compete/perform in the 70's and 80's told many tales of being awed by common supermarkets. I think if you took Americans from the 80's and brought them to a Costco, they might not be awed, but they'd be pretty surprised.
- JamisonM 15y ago
  Although he opens mentioning buying a car in 1986 what he actually says is that cars have pretty much matched the rate of inflation. Seems to me he is saying cars are about as good a deal today as they were back then. I do not find that ludicrous. The other point to be made about cars is that all those improvements do not really matter that much in terms of the value you are getting out of them, cars in the '80s got you from point A to point B just like a brand new one does today. (To be completely off topic I would add that computerization in the modern cars has always been a concern for me, when a 2012 car's computer starts acting up in 2032 what are we going to do with them? I have a late-ninties highway tractor and every time I have a wiring problem with it I am pretty worried it will become more expensive to fix than it is worth despite being mechanically sound.)

planetguy 15y ago

Article rather specific to the Canadian big cities, in which prices are currently rather high. Some of this house price growth is transient, some is permanent. How much does land cost? In a place like Toronto or Vancouver, it costs as much as it possibly can. That is to say, since desirable land in these cities is so much more desirable than undesirable land, people will pay as much as they can possibly afford in order to get a good piece of land rather than a lousy one. What this means in practice for most people is: take all the money you're ever likely to earn, deduct the money you need to spend on other stuff, and what's left over is the amount of money you're going to wind up spending on a house. Sure, you can spend less if you want, but you're going to wind up living in a much worse place, and since (as I just said) the desirable places are much more desirable than the undesirable places, people are willing to give up, say, a fancier car, for the benefit of living in The Beaches rather than Outer Missisauga. The good news is that things don't actually get worse for people just because they have to engage in this cut-throat competition for desirable land. Like I said, house prices merely soak up all the money that's left over once the necessities are paid for, and if house prices go up considerably in real terms it just means that the prices of necessities have, in real terms, dropped.

michaelochurch 15y ago
There is an obvious solution to the housing problem, which is to fix transportation and take pressure off the market. There's one reason urban housing is so expensive, and it's this: commuting sucks, and finding parking is horrible, and people will pay immense amounts of money not to deal with that shit. Obvious simple and right solution: tax the hell out of the landlords and the very rich, and build the best public transit system the world has seen.

aeturnum 15y ago

I think part of this is that young adults have a harder time doing what our parents did at the same age. When I was trying to rent my first post-college place with my girlfriend, my parents didn't think we would need a co-signer. They had gotten all their apartments, years ago, with a handshake and an understanding they had word. After they realized things had changed, they were happy to help, but it took a while. I think there are many people, who are divorced from the experience of being a young adult, who think "kids today" aren't achieving like their parents did. They're right - we aren't living in the post-war prosperity - but I think young people are also achieving differently. Even if the things our parents did were the same price, how many of us would do them?

deleted 15y ago

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moxiemk1 15y ago

I am about to graduate college (taking second to last final at 1730 this evening). I will very soon start working full-time at a job that puts the household of just me into the top 25% of Americans. My gross paycheck for a year isn't enough to cover all the loans I had to take out in order to pay for college. Because of what schools of what quality have what financial aid programs, there is essentially little way I could have spent less on college and gotten a similar benefit. Despite that, I am by far one of the luckiest ones - hopefully I'll have it payed down in 5 years comfortably. It is worth noting that in my parents generation, the ratio of expected debt to typical wages made the idea of paying your way through school a commonly reachable thing. Now, it certainly is not if you are planning on actually getting an education, rather than a piece of paper.

captobvious 15y ago

It's funny how most comments here are dancing around the issue trying to point out factual errors and counterexamples. Bottom line: Young adults today have it way worse than their parents. In most developed countries in the world. How should this issue be dealt with? In my opinion you can't just call it bad luck, and tell people to deal with it and adapt. Personally I think the biggest motivation of all is the sense of change for the better, and a future to look forward to. I simply can't accept that my generation got the bad future, and all the good future was used up by our parents. Looking at my parents generation I think they lived pretty subservient lives, which were also quite stressful, with lots of stress related disease, heart attacks, blood pressure issues etc.. And if I work really hard and study, best case scenario is that I get the same jobs as my parents, only twice the workload and half the pay.

jdminhbg 15y ago
> best case scenario is that I get the same jobs as my parents, only twice the workload and half the pay Unless you're way out of the target demographic for HN, this is preposterous. Even semi-competent programmers are way under-supplied; you can name your price, location, and working conditions.
- captobvious 15y ago
  Ok I'll name my working conditions: A work environment with peace and quiet to be able to concentrate. Have enough time to be able to deliver though-out quality work. Having reasonably specified tasks, and if not, have the decision power to fill in the blanks as I see fit. Not being constantly interrupted. Not being under constant stress and pressure to the point where I feel that my health might be suffering. From my experience these (common sense?) demands on working conditions would rule out pretty much most programming jobs.
  - jlgreco 15y ago
    Do you think low stress heart surgeon jobs exist? Work conditions in tech have more to do with what those jobs are than economic conditions. Companies are desperate to fill positions and you see many going out of their way to create as low stress office environments as possible but after a certain point you just have to come to grips with that's just what the job is. That said, low stress programming jobs do exist, but in my experience they tend to exist in companies you would not normally look at for programming jobs. Damn near every sizeable company has programmers but we tend to only look for jobs "in industry" at the Googles, Microsofts, Facebooks, etc. Think east coast, foundations of the company not in tech, non-glamorous. Basically the equivalent of your heart surgeon working in some sort of research instead of in a hospital on live patients.

moocow01 15y ago

We should be burning the financial system to the ground... well maybe not literally but pretty damned close. The despicable thing is that the insanely rising cost of education is just plain class warfare under a veil of financial hocus pocus and it takes aim at what I see as developed society's achilles heel. Education is the root of everything that underpins our current and future society. You kill that and you are tinkering with killing just about everything of social value in X years. Look at any country that has a weak education system and the correlation is extremely clear. Our current education system is/was a very very good one that now is largely unaffordable and increasingly inaccessible. Complaints about the impractical value of certain degrees has merit but on the whole the US education system has provided an environment that has fostered a class that by enlarge has been one of the most creative, productive, and compassionate of this past century. I really fear that our current trajectory in the opportunities for one to receive rich educational experiences is going to inevitably lead to our society being stagnant at best.

fennecfoxen 15y ago
The financial system has tons of problems, but it's a hell of a lot better and more democratic than a world where there is no avenue for the wealthy and the middle-class to share in ventures. You and I and our neighbors can buy stocks in big companies and earn returns to save for retirement; we can (at our discretion) have rich jerks fund our little startup and launch businesses we couldn't otherwise. We can borrow money to buy a house, and enjoy the stability and independence that such a purchase provides for the next couple of decades while we pay it off, instead of saving up while we're renting and enjoying none of that. But of course no one who's been through an introductory economics course should be surprised that subsidizing the purchasers of a good or service (like education) makes the price rise. :)
- moocow01 15y ago
  What you describe is also my definition of a healthy financial system but IMHO we are increasingly moving away from that description and I think the fact that socio-economic mobility has been decreasing in the US somewhat verifies this. Just about everyone can "share" in economic growth in the US. That is positive. But the problem is that the financial vehicles accessible to most are increasingly weighted to capture less of the percentage of capital gains.

larrys 15y ago

Cars are a bargain relatively. An example low end of the Mercedes line in 85 was a 190E about 30k. That's $58k in today's dollars. Current low end is MB C-Class MSRP about 34,800 (so you are probably talking a few thousand more with options but less a discount brings you back to that amount approx.). A much better car for only a little more.

afterburner 15y ago
Mercedes prices actually did go down relative to standard car prices. Pointing at Mercedes alone doesn't really show much.

tosseraccount 15y ago

He's picking on a couple of numbers: cost of education and cost of housing. Both have outpaced inflation. Canada's had the same commodities boom as Australia, Chile and Russia. Housing bubble obviously hadn't hit. yet. ( I hear they balance their budget and don't give away tax deductions for going into debt so maybe they won't have as bad a one). Other obvious question is : have houses improved over almost 30 years making the question of average priced house then vs average prices house now a bit cloudy. $6000 for tuition??? Not a bad deal. Canadian government must be subsidizing it. Maybe it was higher subsidies back then. Bottom line cherry picking your comparisons are hard. Unemployment was worse then: http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=UNRATE&scale=Left&range=Max&cosd=1948-01-01&coed=2012-04-01&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Monthly&fam=avg&fgst=lin&transformation=lin&vintage_date=2012-05-11&revision_date=2012-05-11 http://research.stlouisfed.org/fred2/graph/fredgraph.png?&#3... But duration was better : http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=UEMPMEAN&scale=Left&range=Max&cosd=1948-01-01&coed=2012-04-01&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Monthly&fam=avg&fgst=lin&transformation=lin&vintage_date=2012-05-11&revision_date=2012-05-11 http://research.stlouisfed.org/fred2/graph/fredgraph.png?&#3...

mattmiller 15y ago
I hear the argument about how products have improved over time and how that justifies their increased price and I don't buy it. It makes sense if people still have the option of buying the 1980s house in which case purchasing a 2012 house would be an expensive luxury. But people can't get the 1980s house for the 1980s price so we must conclude that housing prices have inflated.

medell 15y ago

Similar tone to an excellent article about last year's hockey riots in Vancouver from an angle most of the media did not take. It's by no means an excuse, but I agree most of the troublemakers were youth from the suburbs disenchanted by many of the same economic reasons: "What does the future look like for the average 20 year old? It's a depressing, empty place where they can't get decent-paying (let alone secure) jobs or ever have a hope of owning property." http://www.straight.com/article-399635/vancouver/vancouver-hockey-riot-symptom-larger-problem http://www.straight.com/article-399635/vancouver/vancouver-h...

joshuahedlund 15y ago

But... but... today's young adults have the Internet! I'm being slightly facetious, but technological advance has gotta count for something, right? (ex. new cars may be expensive, but is it easier to find used cars these days with Craigslist, etc?)

mattmiller 15y ago
If you look at the numbers as percentage of income instead of dollars then we can see the percentage of income that an item costs go up if the item has advanced (ie better cars, better refrigerators, better houses). If the percentage of income for one item goes up it must go down for another. Since no technologies get worse over time which expenditure is suppose to become less of a percentage of income over time?
meric 15y ago
>> But... but... today's young adults have the Internet! Sometimes I feel this is the only thing we got, and even then the government is trying to take it away also with censorship legislation.

gpapilion 15y ago

the author highlights the higher interest rate, but neglects to give a mortgage payment as a percentage of monthly income. current rates are as sometimes a third of what they were in the 80s.