Why can't today's young adults leave the nest? Blame high housing costs • Hacker News Board

Re: Why can't today's young adults leave the nest? Blame high housing costs

#61

Post by JamesBarney » Fri, Jan 12, 2024, 9:19 PM UTC

nostrebored wrote: post #36

atonse wrote: post #15

(Genuine questions, please don't misinterpret as negative judgement): How much of this is actually new as far as income vs costs, and how much of this is unwillingness to make sacrifices that older generations did? For example, in my 20s (20 years ago), it was very common for 20somethings to live in shared housing with 2-3 roommates. They would share kitchens, fridges, everything. And these houses weren't even that g…

Housing has had a real appreciation at a rate that far outpaces real median wage increases. This is fueled partially by incentives to buy homes, but largely by speculative real estate purchases by older generations. People over the age of 35 own nearly 85% of real estate in the U.S., with people over the age of 55 owning nearly 45%. In both of these categories, ownership is extremely overrepresented and trending up.…

You need to distinguish between the market for houses and the market for housing (which includes rentals). Speculative real estate purchases and home buying incentives have a much larger effect on the market for houses vs the housing market. But the housing market is what drives the cost of leaving home.

With zoning and building codes we've just made it a lot more expensive to build housing. Just building codes probably increase the cost of building an apartment by 1-2% per year, and with zoning added in that could lead to 2-3% appreciation above inflation and wages which over 30 years adds up to quite a bit.

Re: Why can't today's young adults leave the nest? Blame high housing costs

#62

Post by Astraco » Fri, Jan 12, 2024, 9:20 PM UTC

aantix wrote: post #14

I'm surprised with remote work we haven't seen a resurgence of the small town. Towns within an hour of a bigger city, but small enough where the real estate is still reasonably priced. Maybe when this young adult generation starts to consider kids, this option might become attractive.

The problem with small towns, at least where I live, is not prices but the lack of public services, like school or hospitals.

Re: Why can't today's young adults leave the nest? Blame high housing costs

#63

Post by nix0n » Fri, Jan 12, 2024, 9:20 PM UTC

willcipriano wrote: post #30

epiccoleman wrote: post #24

Earlier quoted context omitted.

We were recently considering moving closer to "back home" from our metro area - the biggest problem is that there's just not much going on back there, and the schools are substantially worse. That said, a pretty nice and big house that we were looking at in our "home" area was actually something we could afford - the same house here in the city would probably cost close to double.

School quality is overhyped, what they are really measuring is student quality for the most part.

> what they are really measuring is student quality for the most part

That doesn't make sense to me. What sort of forces do you imagine will cause one school to have better students than another, consistently for decades?

Re: Why can't today's young adults leave the nest? Blame high housing costs

#64

Post by jcadam » Fri, Jan 12, 2024, 9:21 PM UTC

matrix87 wrote: post #28

Imagine being a young adult with parents in the Bay Area, and you didn't happen to major in tech or biotech or anything that pays well What should someone do in that case? Move to a cheaper area? It isn't all that obvious

> tech or biotech or anything that pays well

Go into plumbing. Plumbers around here in my small rural area charge $200 just to show up. It's probably more in the bay area.

Re: Why can't today's young adults leave the nest? Blame high housing costs

#65

Post by aschearer » Fri, Jan 12, 2024, 9:21 PM UTC

atonse wrote: post #15

(Genuine questions, please don't misinterpret as negative judgement): How much of this is actually new as far as income vs costs, and how much of this is unwillingness to make sacrifices that older generations did? For example, in my 20s (20 years ago), it was very common for 20somethings to live in shared housing with 2-3 roommates. They would share kitchens, fridges, everything. And these houses weren't even that g…

Twenty years ago the Case-Shiller index was 140. Today it's 312.[1] The index tracks individual home sales over time -- that is a single home sold repeatedly. I interpret that to mean someone purchasing a home today must have roughly twice the resources to purchase the same home as someone in the past. Which leads me to conclude it's harder to own a home today than in the past all else being equal.

What's your interpretation?

[1] https://fred.stlouisfed.org/series/CSUSHPINSA

Re: Why can't today's young adults leave the nest? Blame high housing costs

#66

Post by atworksorry2024 » Fri, Jan 12, 2024, 9:21 PM UTC

atonse wrote: post #15

(Genuine questions, please don't misinterpret as negative judgement): How much of this is actually new as far as income vs costs, and how much of this is unwillingness to make sacrifices that older generations did? For example, in my 20s (20 years ago), it was very common for 20somethings to live in shared housing with 2-3 roommates. They would share kitchens, fridges, everything. And these houses weren't even that g…

In my area, renting a room in a shared house is less expensive than renting an apartment. Most young adults I speak to that live independently have such an arrangement.

Mechanization of labor has destroyed the economies of small towns. My wife's father is a farmer, and the small town she grew up in shrinks every year as young people leave. The families that remain buy up all the available land and are able to farm it all. Their only limitation is availability of land. Those without land may eek out a meager existence dressing hair or something, but in general it's not necessary for humans to do anything.

The costs of housing prevent people from moving to other cities. I could earn double my current salary by moving to California, but that wouldn't cover the cost of living differential. This actually reduces net economic output, since I and many others are not working at places where our output would be highest. Please read the article "The housing theory of everything" by Bowman, Myers, and Southwood.

The unfortunate reality is that income is much lower now than when you were young. Rent seeking behavior has become the path to wealth, and rent seeking reduces net economic output. You should listen to Peter Turchin's discussion of wealth inequality and the wealth pump, it's very enlightening.

Re: Why can't today's young adults leave the nest? Blame high housing costs

#67

Post by Freedom2 » Fri, Jan 12, 2024, 9:21 PM UTC

aantix wrote: post #14

I'm surprised with remote work we haven't seen a resurgence of the small town. Towns within an hour of a bigger city, but small enough where the real estate is still reasonably priced. Maybe when this young adult generation starts to consider kids, this option might become attractive.

What remote work? A large percentage of companies have moved back to in-office, or at least requiring a certain number of days in office.

Not every job also supports a remote work lifestyle.

Re: Why can't today's young adults leave the nest? Blame high housing costs

#68

Post by mikestew » Fri, Jan 12, 2024, 9:22 PM UTC

wait_a_minute wrote: post #40

wvenable wrote: post #6

Earlier quoted context omitted.

The later one starts in life to have children the fewer, if any, they will have. > Not leaving so soon and investing into your career and saving up money will eventually enable more people to choose parenthood. That might be true if it was a choice made to save money but instead it's not a choice and there isn't any money.

> The later one starts in life to have children the fewer, if any, they will have. How do you know this? > That might be true if it was a choice made to save money but instead it's not a choice and there isn't any money. I’m betting savings rates will go up.

Not parent commenter, and no offense intended, but some things one should be able to mentally walk through on your own without someone feeding you a link. In this particular case, for example, there’s an upper bound on how late in life a couple can conceive. Take it from there.

Re: Why can't today's young adults leave the nest? Blame high housing costs

#69

Post by jmclnx » Fri, Jan 12, 2024, 9:22 PM UTC

atonse wrote: post #15

(Genuine questions, please don't misinterpret as negative judgement): How much of this is actually new as far as income vs costs, and how much of this is unwillingness to make sacrifices that older generations did? For example, in my 20s (20 years ago), it was very common for 20somethings to live in shared housing with 2-3 roommates. They would share kitchens, fridges, everything. And these houses weren't even that g…

>How much of this is actually new as far as income vs costs, and how much of this is unwillingness to make sacrifices that older generations did?

Joking right ? Where I live, you cannot get a 1 bedroom apartment for less than $2000. When I moved out on my own, one year's rent was 10 to 15% of my yearly salary, and that was a 2 bedroom. In today's dollars, my salary was 50,000. I could have easily bought a single family house at the time.

Based upon those numbers, my rent would now be a bit over 50% of my salary for a 1 bedroom. Never mind even thinking about buying a house if you are young.

Also Medical Insurance in the US comes into play. Back then, my insurance contribution was almost nothing. Now it would be around 10% of my salary, if I even was allows to get Medical.

Re: Why can't today's young adults leave the nest? Blame high housing costs

#70

Post by kelseyfrog » Fri, Jan 12, 2024, 9:22 PM UTC

atonse wrote: post #15

(Genuine questions, please don't misinterpret as negative judgement): How much of this is actually new as far as income vs costs, and how much of this is unwillingness to make sacrifices that older generations did? For example, in my 20s (20 years ago), it was very common for 20somethings to live in shared housing with 2-3 roommates. They would share kitchens, fridges, everything. And these houses weren't even that g…

If you chart Case-Shiller housing price index vs median income over time[1] you can start to see that housing as a proportion of income has increased. Versus the 1960s and 70s, housing costs today are twice the proportion of income they used to be.

In other words, all other things being equal, someone today is being asked to sacrifice twice as much with respect to housing.

If the goal is to get young people into houses, that line needs to go down substantially. That's much easier said than done when many people's wealth depends on that line being high.

1. https://www.longtermtrends.net/home-price-median-annual-inco...