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Generational Luck in the Housing Market

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Re: Generational Luck in the Housing Market

#51

Post by gosub100 »

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…

Price is only part of the story, what about in the mid 80s when the house was $105k but interest rates were double digits? I'm curious what kind of buying power the average household needed back then and how that compares to today.

Re: Generational Luck in the Housing Market

#52

Post by i80and »

Der_Einzige wrote: post #35
bluefirebrand wrote: post #20

Earlier quoted context omitted.

The year you are born is absolutely an uncontrollable force

Buddhists at least believe this to be controllable. It's the ultimate victim blaming religion - you're poor because you were a bad person in a previous life. Very awkward to jokingly say "I wish I were a puppy" when I play with my dog and to see the look of abject horror on my Buddhist partners face. I'm told even wishing for something like that significantly increases my chances of becoming a dog in the next life -…

Sounds like a great faith for therians to get into, ngl, if just wishing you were a given species increases the odds of getting to be that species

Re: Generational Luck in the Housing Market

#53

Post by rndmize »

I feel this was largely predictable, and for one reason I almost never see mentioned - the millennial generation just being larger than the one before or after. Millennials are noted as being the largest generation since the boomers, and their coming of age as far as prime home-buying time coincided with the collapse of housing construction post-2008.

There's other things at fault, of course - zoning, economy, interest rates, etc. etc., but the current stress on the housing market lines up pretty nicely 80s-born millennials (particularly those that graduated into the great recession) finally hitting their stride and having the wealth to move out/stop renting/have kids, after most of a decade of that being suppressed.

I'd expect this to continue being a problem for the rest of the decade and peter off in the 30s - it feels like governments are taking action (years late as usual, but better than not); movements like YIMBY have matured, boomers are hitting the age where they start to pass, and housing construction has ramped up slowly in the last 8-10 years, and millennials will have mostly bought by then, with gen Z being the new, smaller crop of buyers by that point.

Re: Generational Luck in the Housing Market

#55

Post by dangles »

testval123 wrote: post #18
bryanlarsen wrote: post #11

Earlier quoted context omitted.

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.

It takes years to plan, get permits / financing, and build homes. It takes days/weeks to submit a bid or refinance a house.

It takes under 8 months to get permits and build homes end-to-end in parts of the US. It taking years is a local problem. As long as demand runs much higher than supply, prices will keep growing.

Re: Generational Luck in the Housing Market

#56

Post by thaumasiotes »

layer8 wrote: post #45
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

Shouldn’t that be compared to the median house price instead of the average?

Why? Not everybody has a house. A house going for the median price is going to be purchased by someone well above the median income.

Re: Generational Luck in the Housing Market

#57

Post by JumpCrisscross »

silverquiet wrote: post #48
JumpCrisscross wrote: post #30

Earlier quoted context omitted.

> 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.

And who do you imagine will buy these homes? Alphas struggling to save a down payment, or investment firms looking for more real estate to add to their portfolios?

> who do you imagine will buy these homes? Alphas struggling to save a down payment, or investment firms looking for more real estate to add to their portfolios?

Where do you think the investment firms get their money? Pensions. Pensions are the principal institutional investor's source of capital. As Boomers retire, pensions wind down. We're already starting to see them dump private equity [1].

[1] https://www.ipe.com/pension-funds-expected-to-become-largest...

Re: Generational Luck in the Housing Market

#58

Post by layer8 »

thaumasiotes wrote: post #56
layer8 wrote: post #45

Earlier quoted context omitted.

Shouldn’t that be compared to the median house price instead of the average?

Why? Not everybody has a house. A house going for the median price is going to be purchased by someone well above the median income.

> Not everybody has a house.

I’m pretty sure that’s correlated to income.

> A house going for the median price is going to be purchased by someone well above the median income.

Which proves the point?

Re: Generational Luck in the Housing Market

#59

Post by Workaccount2 »

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.

A fixed 30 yr mortgage is insane.

Insanely good if you have a home and a low rate (or refi into one)

Insanely bad if you don't have a home.

It's not a natural construct, it's an artificial loan that only exists because the fed is the counter party.

In an natural economy, mortgages would all be variable rate, or fixed rate but much higher than what is available today.

This would also mean that the housing rush of 2021 would have been crushed by rate increases in 2022/23. In fact there probably wouldn't have been much of a rush at all.

Re: Generational Luck in the Housing Market

#60

Post by Ancapistani »

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…

> I feel like I am locked into this house and mortgage forever.

Same.

We bought in Dec 2017, and were really conservative in choosing a home that we could easily afford - it was less than my annual income, on a half acre. It's five bedrooms but we really need more storage and just more "space" in general.

We don't plan to sell it in the foreseeable future. Even if we could find the home and property that we want, it just makes no sense. It would be a better financial decision to use the equity as a down payment on our next home and rent this one. Given that home prices have doubled since we bought, renting it at market rates here would pay for our existing mortgage, an equity loan, and ~$400 of positive cashflow per month.

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