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

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

#111

Post by antihipocrat »

xnx wrote: post #52
HPsquared wrote: post #26

Every year for the last 5 I've thought "this must surely be the top of the market, I'll wait".. And every year they went up. Now interest rates have gone up too, to add insult to injury. Just going to leave for greener pastures, I think.

Home prices tend to decrease when interest rates go up so that monthly payments aren't that different. Unfortunately, there's a lag between rates increasing and sellers realizing their potential buyers can afford less.

Prices are affected by demand and supply. Supply can be constrained enough (through zoning, less construction) to still be less than demand in a high interest rate environment.

Demand is also an interesting one, the population continues to increase and every year a new, larger, cohort of people enter the housing market. Many are seeking to live in the relatively few areas that have strong, dynamic labor markets, and are willing to pay a higher share of income to achieve this.

A lot of housing markets have experienced this effect on both supply and demand and prices have not decreased in line with what the basic models predicted.

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

#112

Post by orwin »

kelseyfrog wrote: post #70
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 hous…

> all other things being equal

That is the case in countries with both access to cheap food and free education: i've heard that Berkeley used to cost 100$/year in the 70s.

Also medical care costs are balooning everywhere (even where it's socialized). I'm not talking about huge cost you can read about US healthcare: when you're young, you will probably be lucky enough to avoid needing critical healthcare, but the price to do regular checkup and preventive care is higher than it was, everywhere in the world. That will have a cost on everybody in the near future imho.

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

#113

Post by gumballindie »

seanmcdirmid wrote: post #73
gumballindie wrote: post #19

Earlier quoted context omitted.

Oh in Europe politicians dont care that the local population is declining. The US tries to solve it by banning abortions, but that’s going to cause more issues than solve. In Europe they just welcome anyone and then put them on benefits. I am not against migration but those poor souls arrive in Europe to escape poverty and end up being poor here because they face the same challenges as the locals.

> The US tries to solve it by banning abortions This is not why the US is, or more accurately some states in the US are, banning abortion. It is very much a moral thing for them: they want to punish sex before marriage, especially for young girls, or maybe they really do believe fetuses are sentient, but it definitely isn't about promoting population growth. America has had a higher immigration rate than most of Euro…

> It is very much a moral thing for them

I think that’s the popular narrative, but the real reason is population decline. Someone somewhere must understand the implications of a small number of people in the US. Not just because there are fewer taxpayers but there also fewer people to support the logistics of war. I dont like the idea but I think that is part of the reason.

Europe is not the US, it’s not a country, and is not made of non European immigrants - though all Europeans are closely related. And that means that population decline is already causing political and social tension. Because to maintain the economy people from the outside are coming in and locals dont like it. There is no European country without tension. Not something I like either.

The only way to solve these issues is to make it possible for people to have children and family life - traditional or not - of their own accord.

Corporate capitalism doesnt allow for that. It causes market anomalies - ie people unable to even dream of owning a house, it causes mental health issues due to forcing people to sit in office settings with office politics, and it damages small businesses. Corporatism is damaging to national security and social cohesion.

I think the way to solve many of the population and independence of the younger generation is an aggressive development of small to medium sized businesses. Free people are more likely to want a family in my view. Basically, we need a return to actual capitalism.

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

#114

Post by genman »

lifestyleguru wrote: post #85
genman wrote: post #75

Earlier quoted context omitted.

And who is going to pay this rent when population will drop?

"supply is limited and people have to live somewhere"

Yes, to live is the key, and there would no supply in absence of it.

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

#115

Post by klipklop »

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…

> unwillingness to make sacrifices that older generations did?

Ah yes the avocado toast theory. What makes you think that people have changed so much in the last 20 years?

The people didn't change, they are mostly the same. The cost changed. It's now no longer sustainable for many or no longer worth it. Renting with roommates means you will see 10%+ rent increases a year in major US cities now. The greed of the landlords cannot be satisfied. Over time this pushes people back home that cannot stay on the fast moving economic treadmill.

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

#116

Post by hehhehaha »

pyrophane wrote: post #53
hehhehaha wrote: post #16

Why should young people leave the house in the first place again? This whole thing of kicking out kids when theyre 18 is new and bad.

I don't think most kids leave because they are being kicked out. They leave because the want to assert their independence from their parents and enjoy the freedoms that come from living on their own.

Sure, but I see that as a matter of privilege in that you are wealthy enough not to pool your resources with people close to you.

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

#117

Post by [deleted] »

gnicholas wrote: post #46
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

I went to an alumni gathering in Palo Alto in 2007 and talked with a middle-aged dad about this. He was very clear-eyed: kids who grow up here do not have a right of return. The people who can pay for property here — largely due to jobs at fast-growing companies — will be the ones who live here in the future. There is some level of parental wealth that will allow children to live here, even in the absence of a job th…

[deleted]

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

#118

Post by gnicholas »

seanmcdirmid wrote: post #95
gnicholas wrote: post #46

Earlier quoted context omitted.

I went to an alumni gathering in Palo Alto in 2007 and talked with a middle-aged dad about this. He was very clear-eyed: kids who grow up here do not have a right of return. The people who can pay for property here — largely due to jobs at fast-growing companies — will be the ones who live here in the future. There is some level of parental wealth that will allow children to live here, even in the absence of a job th…

> He was very clear-eyed: kids who grow up here do not have a right of return. The USA doesn't have a residency system, so this is true throughout the country. Some form of rent control (inheritable) or a hukou system could change that, but I don't see it happening for awhile, and kids who didn't grow up "here" would complain that they weren't allowed to live in that place (either via a legal restriction or a system…

This sort of exists in NYC, and I mostly hear about abuses. For example, people inherit a rent controlled apartment and sublet it to someone else at market rate.

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

#119

Post by HPsquared »

kelseyfrog wrote: post #70
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 hous…

The sale price isn't the full story though, as interest rates were much higher when the prices were super low. The relevant thing is monthly cost (mortgage payment or rent) over hourly (post-tax) wage.

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

#120

Post by trobertson »

paulpauper wrote: post #37
toomuchtodo wrote: post #29

Earlier quoted context omitted.

What is your time horizon? Sure, in 50 years, housing supply might improve. Most of us will be dead by then, but I suppose the problem solves itself.

It would seem like there is a constant tug-of-war between supply and demand. Demand grows to meet supply. There is a finite amount of housing in desirable locations. What makes certain areas desirable also makes them expensive.

> Demand grows to meet supply.

Well, that's where you're wrong (with respect to housing in the USA).

Municipal zoning laws mean that houses are not getting built. Apartment growth is not keeping up either. Nor is condo growth. In the places with jobs, there is no available housing.

This lack of housing is what is keeping houses at top dollar in spite of the mortgage rate tripling over the span of a year.

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