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Generational Luck in the Housing Market

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Re: Generational Luck in the Housing Market

#21

Post by smallmancontrov »

JumpCrisscross wrote: post #14
CharlieDigital wrote: post #9

Where I live, many of the houses were built by the same builder or at least using the same basic plan (I've even seen houses built 20 years later than mine with the same basic layout). My wife and I purchased in 2015. A short bit after, there was some regret as prices were still falling. I recently went to pick up my child at a classmate's house. They just purchased last year. I walked in and, sure enough, roughly th…

> Not sure how my kids are ever going to own a house in the US (EDIT: Inverse of) Median income to the average house price, across America, is at its highest point since the 80s (when we started measuring) [1]. [1] https://fred.stlouisfed.org/graph/?g=coAW

You dropped the 1/

    1/(Median Household Income in the United States/All-Transactions House Price Index for the United States)

Re: Generational Luck in the Housing Market

#23

Post by silverquiet »

JumpCrisscross wrote: post #7

I'm a Millenial; my partner is on the cusp of Gen X. In terms of fucked generations, I'd argue those born in the early 80s are our currently most fucked (followed shortly by Gen Z). This is the generation that had perfectly-spaced financial crises in the dot-com and then financial crisis that wiped out two decades of aborted starts towards wealth. (In contrast, younger Millenals got the ZIRP era to build wealth and b…

> Alpha will be fine--they'll benefit from boomers unwinding their real estate to pay for senior care.

Huh? I assume a few private equity executives who own vast, national senior care businesses will benefit the most from the passing of the Boomers, followed by Millennial children of Boomers who die with assets (and despite Boomers being the wealthiest generation ever, there's plenty of inequality there as well) and without being drained by the medical industrial complex first.

If watching my grandparents go taught me anything, it's that all deaths suck, but the quick heart attack really rips the bandaid off so to speak.

Re: Generational Luck in the Housing Market

#24

Post by riku_iki »

bluefirebrand wrote: post #20
landedgentry wrote: post #10

Calling it luck makes it sound like there are uncontrollable forces at work. However, these consequences are entirely downstream of artificial, man-made policies.

The year you are born is absolutely an uncontrollable force

But subsequent policies are the choice.

Re: Generational Luck in the Housing Market

#25

Post by testval123 »

DowagerDave wrote: post #8

Probably not a sympathetic audience here, but if you look back more than the relatively short timeframe of 20 years things are far more cyclical. I grew up with double-digit interest rates, so while everything was cheaper, financing was far more costly. The generation that's now looking to buy a house grew up with a financed lifestyle (via their parents) that was essentially interest free and not sustainable in the l…

House prices went down in the 80s (although were still quite unaffordable). Additionally, those who bought in the 80s got the ride the gravy train of lowering rates over the decades which massively boosted prices and allowed them to refinance.

Re: Generational Luck in the Housing Market

#26

Post by JumpCrisscross »

smallmancontrov wrote: post #21
JumpCrisscross wrote: post #14

Earlier quoted context omitted.

> Not sure how my kids are ever going to own a house in the US (EDIT: Inverse of) Median income to the average house price, across America, is at its highest point since the 80s (when we started measuring) [1]. [1] https://fred.stlouisfed.org/graph/?g=coAW

You dropped the 1/ 1/(Median Household Income in the United States/All-Transactions House Price Index for the United States)

Sorry, yes. Meant to say we're at our most unaffordable since just before the financial crisis.

Re: Generational Luck in the Housing Market

#27

Post by oflannabhra »

One thing that this article glosses over is that mortgage rates and the rate of home valuation increase have a loosely inverse relationship, as most people judge what they can afford based on their monthly payment. So, when borrowing is cheap, home valuation increase typically accelerates, and when borrowing is expensive, home valuation increase typically contracts.

Obviously this effect is outweighed by supply/demand, and mortgage rates have a major impact on the size of the pool of buyers (and hence demand) as well.

Re: Generational Luck in the Housing Market

#28

Post by enlyth »

bryanlarsen wrote: post #11
testval123 wrote: post #3

The FED implicitly transferred trillions from poorer renters and young people to wealthy older homeowners.

Why blame the Fed? The low interest rates that made it easy to buy homes (driving up the price) also should have made it cheap to build homes which would have driven down the price. It was local regulations that prevented building homes.

Among other things, I think interest only mortgages are a completely degenerate financial product that shouldn't exist, the only purpose is so someone can leverage themselves to the tits on housing

Re: Generational Luck in the Housing Market

#29

Post by showerst »

JumpCrisscross wrote: post #14
CharlieDigital wrote: post #9

Where I live, many of the houses were built by the same builder or at least using the same basic plan (I've even seen houses built 20 years later than mine with the same basic layout). My wife and I purchased in 2015. A short bit after, there was some regret as prices were still falling. I recently went to pick up my child at a classmate's house. They just purchased last year. I walked in and, sure enough, roughly th…

> Not sure how my kids are ever going to own a house in the US (EDIT: Inverse of) Median income to the average house price, across America, is at its highest point since the 80s (when we started measuring) [1]. [1] https://fred.stlouisfed.org/graph/?g=coAW

EDIT: due to a missing 1/ in the parent I think i was arguing against the opposite of what the parent poster meant to convey, heh.

But that doesn't account for mortgage rates, or competition in down payments right?

If you make 5% more inflation adjusted than the person 5 years ago, but mortgage rates are 2x, than you're still way behind right?

And if all those who bought starter houses 5 years ago have a ton of equity to drop in the down payment to trade up, you might not even be able to buy a house where you can afford the monthly mortgage payment.

Re: Generational Luck in the Housing Market

#30

Post by JumpCrisscross »

silverquiet wrote: post #23
JumpCrisscross wrote: post #7

I'm a Millenial; my partner is on the cusp of Gen X. In terms of fucked generations, I'd argue those born in the early 80s are our currently most fucked (followed shortly by Gen Z). This is the generation that had perfectly-spaced financial crises in the dot-com and then financial crisis that wiped out two decades of aborted starts towards wealth. (In contrast, younger Millenals got the ZIRP era to build wealth and b…

> Alpha will be fine--they'll benefit from boomers unwinding their real estate to pay for senior care. Huh? I assume a few private equity executives who own vast, national senior care businesses will benefit the most from the passing of the Boomers, followed by Millennial children of Boomers who die with assets (and despite Boomers being the wealthiest generation ever, there's plenty of inequality there as well) and…

> assume a few private equity executives who own vast, national senior care businesses will benefit the most from the passing of the Boomers

Sure. But the Boomers will pay them by selling their homes.

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