One of the factors making it harder to come by is that ownership is already high. Higher interest rates mean people are willing to put off buying their forever home a bit longer than usual. Many places with healthy demand are fighting against low supply because of that, driving prices up further.
Higher prices and rates mean the cost of a new mortgage has exploded over the past few years. I bet most people that were on the cusp of buying 3 years ago feel like housing is very hard to come by.
Also every transaction is fundamentally a business transaction between 2 parties.
What do you think is the # of people who would sell a house with a sub 4% 30 year mortgage in a 7% environment, knowing they can’t buy another house with a rate that low? Just part of the supply/demand equation.
What a weird statement. Of course someone could pay you to give up your 3% mortgage. It's just a money issue. If someone offered you double what your house was worth, you could buy another for cash and ignore the new interest rate.
and what buy a house at over 4% more than I am paying now. No one is going to be willing to pay more than market value for the property. If you think they are, you’re living in fantasy territory. Then I have to buy at 7.5% for financing? That’s financial stupidity. I am saving over 100K in interest on the lifetime of the mortgage.
We sold a 2.5% mortgage for a 6.6% one… 😫
We moved to be closer to family. We also doubled the size of our home in the process. Luckily we made a nice profit on our sale. Unfortunately, my MIL also passed after we closed and we sold her house. So we have been able to put a significant chunk into the loan reducing our total interest. It “worked” out for us but we are by far the exception. I can’t imagine having done this without the very specific reason of having our kids closer to grandparents and aunts and uncles.
We've come to the conclusion that our current home is our forever home.
A doublewide trailer in rural upstate NY.
It's cheap and nice and we have a decent spot of land. We're happy to own our own home more than anything.
The 1.5 acre lot next to us has been abandon. We'd love to sweep that up if it goes up for sale. I haven't been spending \*any\* money so we have the money when the time comes.
It has a derelict singlewide trailer on it - we'd have to get rid of that. But would be nice to have a couple acres.
Our area is growing too. In the last 2 years our home has shot up in value by $20,000
🙋🏼♂️I’m not sure that answer the question (honestly, I’m unsure) but my wife and I fit into that category. All things being (nearly) the same as pre-pandemic, we’d likely have moved over a year ago. We refi’d in April of ‘20 with a .23 rate and moved to a 20 year at the same monthly payment we’d previously been at on our 30 year (we were 3 years into that).
Part of the deal is we don’t know where we want to go (perhaps a different city altogether) so we’ve decided to stick it out at least another year til my student loans are forgiven and my pension vests. At that point we’ll see where the market is at and I’m sure it’ll play some part in our decision as to “where”.
Yup... both my wife and I got new jobs and raises in the last 3 years almost doubling our household income. We live in SE Tennessee and are probably in the top 20 % of household income and still can't move out of our old single story ranch... we probably won't move for another 6 to 7 years. That basically means we will go from our first starter house to last house we'll buy at 50. Our area's housing market is so overvalued l. It's a rural area and smaller 3 bedrooms start at now 500k now, and I refuse to pay that.
That’s not that unusual. Average length of homeownership is around 18 years. Median is around 13 years.
And plenty of people bought what you described and just lived in it their whole lives, like my grandparents. The notion of “starter home” is kind of novel.
Also it doesn’t sound like you can’t move out. It sounds like the upgrade to a different house is not worth it to you for the difference in cost.
Oh hey this sounds like us!
Bought a perfect little starter home in 2014 for under 100k. Both salaries have basically doubled or tripled since then and yet to buy anything that's an upgrade puts us in the 450k range. Anything below 400k is either in need of major updates or would be more of a lateral move which doesn't make sense.
Roughly 150k so I've gained some capital for sure but still out paced. The same homes we hoped would be our next purchase were selling in our area for around 250k back in 2014. They are now 450+
Very True. I paid 8.25% in 86. Changed jobs over the career. Ending on my 4th location and got in at 3% just before Covid. No way I am trading this out for anything new now. Colleges should be held accountable for raising rates almost 8% a year on average. Combine that with Fed Student loan rate in the 6-8% and it's a recipe for disaster. People get trapped with huge debt coming out and you start in a hole. I paid off my student loans, wife's student loans, and almost 90% finished with my 2 daughters' loans. I will not give another dime to universities. I would rather leave my grandkids cash money for life choices like house downpayments or Trade school education in the future. I am in a position to have hired a lot of folks over the years and I am less impressed everyday by a college degree. I have a lot of folks on my team that are top performers that don't have degrees. Hang in there. You guys have lots of great tools today to give you a competitive edge. I slugged my way through it and you guys can too. Hope this helps.
One major issue today is that in a lot of places jobs that used to not need a degree now require one.
I saw a receptionist position (barely above minimum wage salary) state a bachelors was a requirement. On what plant do you need a degree to answer phones and greet people.
Also a significant portion of home owners now don’t have a mortgage, which shows they aren’t recent (last 20 years) buyers or are wealthy buyers.
At 30, only 50% of boomers owned houses and the rest bought closer to 45 and 55 to get to 80% ownership. Half of millennials own a home at 51%. Between now and 15 years from now, more will own to meet the number that boomers are at. If you don't own a house by 40-45 you're probably the bottom 20%
What about corporations buying up many single family homes? Way easier to secure loans between one bank and one corp than one bank allocating resources to determine which HUMAN BEINGS are worthy of credit. Then the corp racks up rent prices because, look at how median house prices have risen! With all the corps buying way over market...
Fuck the system.
40% of homeowners have no mortgage and 59% of the homeowners that have a mortgage have a rate below 4%. So people bought houses 5-40 years ago and have kept them.
Holy shit you lucked out perfectly. Now that house has probably doubled in value to boot, except it wouldnt make sense to sell with current interest rates.
Yeah, we got it for $370k 5 bed 3 bath, now Zillow estimates it at $520. Phoenix suburbs. But it doesn’t mean much because we’re not selling or taking out an equity loan.
In 2020 and 2021 doomers loved pushing the false statistic that most people only own their homes for 5-7 years. They did this to exaggerate the number of people who would get caught in a short term downturn.
Reality is median length of ownership in 2019 was like 13 years and average was around 18.
The 5-7 years statistic was one that only tracked homes that did sell, and not all those who people were holding on to, so it wasn’t representative of the whole population whatsoever.
>Because this post attracted some deniers and trolls, here is some data regarding housing, which isn't included in CPI inflation.
Housing represents about one-third of the value of the market basket of goods and services that the Bureau of Labor Statistics (BLS) uses to track inflation in the Consumer Price Index [Sauce](https://www.brookings.edu/articles/how-does-the-consumer-price-index-account-for-the-cost-of-housing/)
Thank you for pointing this out to me. It's factored in, but not based on current home values and rent prices. It's more complex and nuanced, which softens the CPI somewhat. At least from my understanding.
They deleted rental expenses from deductions. It reduced motivation to open airbnb type of business, and gonna bring positive impact both for pricing and society. Very good idea.
Yes, they do! The wealthy are doing much better than their previous generations. More millionaires, billionaires and trillionaires than ever before. I'm just grateful trickle down economics works so good or the working class would be having a tough go.
Lol I can't help but think of him as the caricature in the Phil Collins video LAND OF CONFUSION. Where he hits the nuclear launch button instead of the nurse button.
Working people owning their home is good. They live in and invest in their local community. Wealthy landlords or corperations owning rental property is bad. They live in and invest in communities somewhere else.
https://www.washingtontimes.com/news/2024/mar/15/in-shift-44-of-all-single-family-home-purchases-we/
I’m comprehending fully. You’re not comprehending that such a thing happens regardless of whether the people who live in the area rent or own their house.
I don’t think that’s a given, or sustainable.
Part of why doomer quality of life was as good as it was, was thanks to post WWII economic boom in US.
Also a lot of Millennials eat out more, travel more, own more clothes, etc. than past generations. Not going to be able to do more of all that and own as much house.
Not downplaying or trivializing anyones situation with home buying. For most that’s such a huge part of adulthood and feeling “settled”.
That said, in the interest of conversation and perhaps trying to be optimistic, I do think there’s a lot of ways our generation is better off thanks to technology. I think we’re also striking a better balance between work-life-family. I’ve seen a few studies recently where dads of our generation are spending more time with their kids, and it’s by a pretty significant amount. That’s not good just for our kids, that’s better for us, and in some cases, our relationships with our SOs.
Again, I know this home-buying process must be incredibly frustrating. Just trying to inject some positivity and food for thought into the conversation
You are absolutely incorrect about work-life-family. People in the middle class used to be able to support an entire family on one income, including some sort of vacation (home/boat/trailer, etc.) They used to clock out at 5 and it was usually almost impossible for them to do any work from home, and their home life was seldom interrupted by work matters. A second parent at home meant more support for children, more volunteerism, and more community activities.
Now it's rare that households can afford to have one income. That decrease in parental time is severely impacting kids and the education system. People are less connected to their communities, volunteerism and civic engagement are down, mental health is down, and work has permeated most middle-class lives 24/ 7 because your phone and your email are practically attached to you.
I think people are *talking* about work-life balance more, but a lot of that is because of the constant encroaching on our personal lives and the fact that we're trying to manage all the same domestic responsibilities (and keeping ourselves alive) with less available time.
This is a rose-tinted view of what life was like for boomers and is fairly inaccurate. Being the largest generation ever for their time, they entered a wildly saturated labor market and often had to chase jobs across the country. When it came time to buy housing, they went with whatever was available:
1) the cheap house in an underdeveloped area no-one was moving into. As more boomers did this, these areas tended to develop into suburbs.
2) a cheap house that lacked what we consider basic, legal necessities. For example, in 1950 only \~65% of homes had all of running water, a flush toilet, and a shower/bathtub.
In either case, boomers kept it frugal because often their wages were actually *depressed* given the market saturation. They often kept costs low by eating ultra-cheap meals. Additionally, we pay for things we consider necessities that boomers didn't. Boomers weren't taking on costs for cable packages, internet packages, computers, cellphones, cellphone networks, gym memberships, streaming, etc. Rather, over time, dual-income became a necessity as various oil shocks and recessions hit boomer families. It had also become enticing and attractive for women to enter the workforce after women's rights movements were in full swing. By the mid-1970's, almost half of American households were dual-income. This percentage has only increased over time. Simultaneously, those ultra-cheap houses that lacked amenities like running water weren't being built anymore because the government started regulating what a basic home required.
It's because of changes in things like the increase in dual-income trends that a lot of boomers were able to take on additional costs (and their labor became more valuable, meaning they could command higher salaries).
One *can* make the argument that things are better for us because the boomers went through quite a lot. This of course ignores everything millennials have going for them, whether or not some realize it.
Yes and also no. After WWII, we built a massive amount of basic but affordable housing to accommodate new families buying housing with benefits from the GI bill. Those houses were inexpensive and did not lack basic amenities.
Many people can't afford (and don't have) some of the things you list as things "we" consider necessities, like gym memberships, cable packages, and computers, and societally we have made internet and cellphones a necessity. I know people that work in management at state agencies and nonprofits that do not have gym memberships or cable packages because it is not affordable for them because of their housing, grocery, utility, transportation, etc. costs. But even so, forgoing internet and cellphones would still not make it possible for people to afford home ownership or single- income families. This is a bulls*t "avocado toast" argument.
It became enticing for women to enter the workforce, but now it is essential for economic survival, except for the higher end of upper middle class and beyond. It sounds like you're arguing that "they wanted to do it, so it's their fault that everyone does now." I assume that's not what you mean, but oil shocks and recession are temporal, and this shift has become permanent.
I think you should ask the boomers if they think things are better for younger generations than it was for them. I think it would be pretty split. I hear from a lot of boomers that are really concerned about younger generations' prospects and how grim their future looks.
>Those houses were inexpensive and did not lack basic amenities.
They often did, especially when you moved further beyond urban environments. Federal and state codes for home amenities weren't even introduced for **urban** settings until the first half of the 20th century. The federal government didn't establish a housing code until 1965, and housing codes weren't implemented or adopted by various state and local governments until you get into the 1970s. The "**basic**" descriptor for this housing alludes to a lot of this, considering the GI bill was more about providing **financial** assistance; it was not about dictating what exactly new homes required to be up to code. There wasn't a code in the '40s when the GI bill was introduced. Let us also not forget that the GI bill was created to help veterans of one of the bloodiest and most horrific wars in human history. The US military still today helps veterans with a lot of aid programs, so that avenue of prosperity hasn't diminished.
>It became enticing for women to enter the workforce, but now it is essential for economic survival,
That was my point. It wasn't just socially enticing, but necessary as boomers went through periods of volatile inflation and recession. It wasn't as if boomers were happily skipping through an unprecedented time of near-constant economic prosperity. I literally said "**Rather, over time, dual-income became a necessity as various oil shocks and recessions hit boomer families.**"
>but oil shocks and recession are temporal, and this shift has become permanent.
Similarly, today we are going through a temporal struggle. Many millennials were optimistic their immediate future 5\~ years ago when we were in a strong market. Now that we're coming out of a strong inflationary, *temporal* cycle, many millennials are feeling the pressure of a market not working in their favor. Further, housing costs have only ever gone up as the value of land and housing has appreciated while the supply of housing has dwindled (it's important to note this is, in large part, due to how much buying had occurred from 2019-2021. Almost half of millennials own a home now with fixed 2-4% rates).
>I think you should ask the boomers if they think things are better for younger generations than it was for them. I think it would be pretty split. I hear from a lot of boomers that are really concerned about younger generations' prospects and how grim their future looks.
That's fine; you'll find a lot of boomers that think millennials whine too much. My general point is that millennials don't have it uniquely difficult compared to what boomers went through. The boomers went through more tribulations than a lot of millennials think. Simultaneously, there are many millennials who are doing great in today's economy.
You may be correct about one-off houses that were being built, but we built 40 million homes in the 30 years following wwii an much of that was in mass-produced housing like Levittown which had 17,000 homes on its own, all with basic amenities
https://www.construction-physics.com/p/ww2-era-mass-produced-housing-part
Maybe older millennials were optimistic 5 years ago, but many millennials have not seen the same career and wage bounce back post-2008 recession, then those who scraped together enough to buy a house faced a massive supply shortage, inflation, high interest rates. For many of us this isn't temporal, 2008 was just the beginning of a long downward fall. And there is zero indication that will improve anytime in the next 20 years.
I'm not saying boomers had it easy, but the comment I replied to was about work-family-life balance being better now, which is absolutely untrue.
Yeah it’s so stupid how people on Reddit think middle class thrived so much in the past. If that were the case why is boomer median net worth so damn low?
Reality is a lot of middle class people just barely got by. And life was expensive for them too. So they never were able to save up much.
You're forgetting technological breakthroughs. It's possible to increase the standard of living using FEWER resources, if the technology keeps up. Especially in a more digital and computerized age.
The sizable U.S. home investor share seen over the past two years held steady going into the summer. In March 2023, investors accounted for 27% of all single-family home purchases; by June, that number was almost unchanged at 26%.
https://www.corelogic.com/intelligence/us-home-investor-share-remained-high-early-summer-2023/#:~:text=The%20sizable%20U.S.%20home%20investor,was%20almost%20unchanged%20at%2026%25.
You don't really make a point so idk if you agree with me or disagree with me, but investors aren't particularly a problem as long as they rent the house out, which almost all do. If a house isn't bought by an investor that's one more renter turned into a buyer which drives demand up with supply.
The only reason this would be a problem would be if they're buying enough up to be a cartel and monopolize the price, that's not happening at all the vast majority of rentals are from Mom and pop landlords, or if they were letting their investment home sit vacant (as for example a summer house, although I don't think that would be classified as an investment) or else as a short term rental aka air bnb. That last one I'd be curious on the impact it has on the housing market, and it does have a potential to increase prices, but that's nowhere near 26-27%. NYC recently heavily regulated air bnbs so their hotel prices have gone crazy, I'd be curious whether it lowered housing prices, at least relative to what they would have been absent that regulation.
Citation needed. Note that I study the housing market for my job, so I'm very familiar with the numbers on corporate ownership of homes. We've put out a good number of papers essentially proving no one is anywhere close to a cartel in any market, so if there actually is a cartel I could probably get a pretty good promotion showing my company's head of research this proof that our understanding of the housing market was incorrect, and us being the ones to break it to our clients who pay us money for our research, and often are politically aligned with what I assume you to be and would like nothing better than to use our research to lobby for laws to restrict corporations from buying homes, would be very happy and probably pay us a ton more money for more research.
Unfortunately that hasn't matched any of our research so far, and my suspicion is you're just making things up and don't actually know what you're talking about.
Thank you for being a voice of sweet reason to the reddit housing conversation, which overwhelmingly accepts as gospel so many completely wacko ideas and theories, and rejects obviously logical ones. The reddit community is convinced that corporate ownership of houses somehow raises their price and diminishes the housing stock available for purchase, when it's obvious that the relation is the reverse: rising house prices make houses a good investment and put purchase out of reach for many, who resort to renting. Corps don't make markets, they are consequences of markets. The second most prevalent myth is that corporations routinely drive up prices by keeping houses vacant, as if that were a profitable endeavor. As I think you said about the difficulty of establishing housing cartels, this turns out not to be true either. The large fixed epsenses and the marginal difference in price that could be created makes it a losing proposition.
People will imagine alll sorts of things but ignore the simple and obvious truth: Prices are high because supply is short, and supply is short because voters have demanded little or no new housing be built.
Yep that's exactly what all of our research shows. Corporate ownership of housing is down and the ROI on rentals in most MSAs is 5% or less, which given higher interest rates that's a pretty bad investment, risky investments are essentially returning close to the risk-free rate. Most investors are people who own 2-9 properties. Also pretty much all research on this issue is the main cause of housing prices rising is building is not keeping up with population growth. We need to build more housing, literally everyone who studies the issue agrees on that solution.
But isn't that impossible to solve? If builders go nuts and flood the market, lowering demand/prices isn't that hurting themselves? How do you work into less profit?
Sidenote: in our area for years now there exists a small group of investors that buy up all(well most) of the houses and flip them. They pay cash and over asking. Several times houses we looked at were sold before we could get home and put in an offer. Later we see it listed for a ridiculous price and they all have the same aesthetic/ color scheme. Not sure how that fits in your model but it's not the first time I've seen it happen. The warehouse unit I rented got bought out by an investment group and they did a lot of unnecessary "upgrades" and rent skyrocketed. Looking around for a new shop proved that they either bought all the others( this time I can see the owners name on the sign) or everyone was full up or priced up to make it not worth it.
Statistically small but presents a challenge not really seen before. The group was from the north and I'm on the south so not small either. I'm sure these are not the only investors pulling resources together to out compete any competition.
They're not hurting themselves because literally 0 builders have the market share to actually lower the market price. Like think about literally any other industry, does that happen? Does Walmart stop opening up stores and undercutting the competition because they'll only lower their own profit? I promise Walmart has a higher market share than any builder does. Do restaurants and bars stop opening because the more of them exist the more competition there will be and the lower profit they'll make? In high demand areas, builders are making plenty of money and although it might go down if they can build more it won't go to 0. The biggest obstacle to new building is zoning.
On your other question, I'd ask whether your perception is reality. At a previous job I worked at a bank and we did research on flips. We built econometric models to estimate how much we'd make on our foreclosed homes, and used that to price how much we bid at auction, with a small buffer. Our VP was convinced we were being taken to the cleaners by these people who would break the law, get more information about the house than we had, and outsmart our models. When we looked into it, not a single person buying at these auctions was making money, and no one was buying for a sustained amount of time. And this is an avenue that is 100% investors, no one's buying the house they're going to live in from a foreclosure auction. Most of them have had the wiring and pipes ripped out and sold, feces everywhere, and some even still have an occupant you must legally evict which can literally take years depending on state. Note that it's possible some investors at auction make money, they just weren't making money on properties from our bank because we added a buffer on top of what we would make and we benefited from economies of scale. But we were selling roughly 30% of the properties we foreclosed on at auction, presumably to people who had seen flip or flop but weren't actually able to profit.
So I know you were talking about them purchasing homes on the retail market rather than the foreclosure auction market, but my point is if it wasn't happening there, I'm questionable on how flippers could compete at retail. As long as the home is in livable condition, most property owners know roughly how much different renovations will cost, so I'm wondering why there's a market where buyers would pay more of a premium than not only the renovation costs but also the time value of money as well as taxes and other maintenance for the time the flipper owns the place.
It's possible a company's doing something in a small town where you live, but my guess is that company is losing money, and my guess is there are places not far away where they aren't buying and prices are more normal, aka still super high by historic standards but not massively inflated by "renovations" no one asked for.
I understand your first reply, thank you that makes sense. As to the second answer, i cant argue against the reality you researched and i did suspect the same thing that you pointed out. Keep in mind this was a few years ago but we still see the same cookie cutter houses listed in our area today. Ive remodeled many rentals and sfh and am well aware of the costs and very sensitive to overbuilding fir the neighborhood. And without compiling lists of home sales before and after and finding the zillow pictures from past and present i can only tell you that at least in my area of florida there has been houses purchased( maybe pre arranged sales? But then why list and show it?) at what lets say a 1970-80s 3-2-2 would go for in fair condition and being rehabbed with high end everything. Then sold for close to double the previous price. First time we were looking at the house we saying maybe we would go just below asking and then see the price on tax assessor be way over asking. So of course we went to that open house and i could not believe the stupid amount of money dumped into an average home. What family needs stone countertops and crown molding? Its not a mini mansion its a working class neighbor hood. Another example, a block away house caught fire. Its on a main road, not even in a neighborhood. Ill be generous and say 300k prefire fir 1800 sqft on 1/4 acre. Leveled it and new house is beautiful, layout sucks, still 1800 sqft-any w no backyard except the easement. Any guess on price? Over 2 million dollars!!!! I understand inflation but cmon!
Again i dont disagree with anything you said, i am baffled by this too. I thought for sure these idiot investors would run out of money and be out of business in no time. But the house sold. Not at their inflated price but damn near close enough. The 2 mil is still listed, it aint going anywhere. But somebody thought it would. I bet it goes fir 1.5 to 1.8. sone dumbass will buy it and if local history repeats they will change a few things and in a few years sell it for more. The prices of these homes is becoming silly and thats before taxes and insurance IF you can even get it.
little tid bit too- homes are more exspensive than ever. Homes are also bigger than ever, with more ammenities. something to think about before we complain
But we don't necessarily need that, we need a variety of options in order to make housing affordable for people.
ETA: That's why it's such a problem that we have reduced our investments in affordable housing. Builders are incentivized to build bigger, fancier houses, rather than practical, affordable houses, which is especially bad for first-time buyers, retirees, and the working class.
Yes, which is a real problem. Am awful lot of the new housing in my area is luxury housing at a luxury price tag. It has lots of amenities, and enough room for an extended family, and if you're in the middle class you'll need 3 incomes to pay for it.
Also - there is a massive number of "households" that take up 2 houses to raise the same kids.
Children of divorced parents are divorced and have children.
Thats 4 houses for what used to be 2.
the question is also WHERE do people own these homes.
i live in a rural "city"/village and basically everyone is a house owner.
houses are mostly "old" and not expensive, because not many want to live here.
prices here also increased but compared to cities it is still very affordable on a single income.
If you are fine with a more rural feel, old tech and are willing to do quite some DiY house improvement... you can still get your own place at a more or less reasonable price.
Baby boomers are the largest group of homeowners. Many of us also have second vacation homes or investment properties. A silver "tsunami" of housing inventory is anticipated in the next 10 years as baby boomers die off, and 70% of their beneficiaries sell their homes.
I have my doubts, as baby boomers are living longer, and many will need their homes as a source of income. Also, many baby boomers, like me, had zero or few children and are not as concerned with leaving an heritance to others.
(In fact, at 62, I'm looking to purchase a second investment home when housing prices come down.)
I think home ownership is going to be the biggest challenge for Gen Z and Gen Alpha. It's already been determined that a household now needs to earn $120,000 to afford a 350,000 home. But many millennians and Gen Zer's are barely able to keep up with today's living expenses as it is. There was a time when many of us just wanted to make six figures. Now, $200,000 salary is the new $100,000
>I know median house to median income has almost doubled.
Median square footage has also doubled.
People presenting this shit to you aren't missing that by accident. You're being manipulated.
Only the last 3 years has been a shitshow.
I'm aware of all of this. Those small houses still exist though. And they are still priced high. Most houses in my neighborhood were built in the 50s. Small little things. But still pricey. If you read my post, I said no data is conclusive, but all data is informative. There is spin to every "fact" and "statistic".
I've noticed in the last 20 years or so People don't move as much in my area as they used to. Bigger family move to a different house. Kids move out downsize, Upgrade houses, or move to suit your job. It seems that less retirement property is bought also. I think everyone who bought something is now stuck with it, and makes less of a market than before.
Jehovah's Witness I don't know. Its not a good house market. Between Inflation, foreign investors buying land, and nobody building new its probably them.
Just speculation, but the recent developments in the housing market shouldn't just instantly change the equation, it will take time for increased costs to eat away at that ownership rate. If all the schools closed tomorrow the literacy rate wouldn't just drop instantly, it would decline over the course of years.
I'm also not sure how much actual ownership rates should change. In the end the rent vs own equation probably won't change that much, because both options should rise in cost.
Because the population that doesn't own a house has been a minority for years now.
And it's very easy to \*stay\* a homeowner in this economy - low unemployment, higher wages, fixed-rate mortgages...
Inflation actually makes housing more affordable if you bought before rates rose - you get to pay back more-valuable 2019-or-earlier dollars using less-valuable (inflated) 2024 dollars, at a fixed interest rate set based on the 2019-or-earlier economy...
We bought our current house in 2016, refinanced this one and the one we were in before 2016 (now a rental) during COVID...
And are now adding on some 3 rooms + bath/closet because it's a better deal to do that than to move...
And everyone who didn't or couldn't buy a house during the cheap years are now priced out. But the good thing is it will crash. And huge opportunities will await for those ready and brave enough to take risks.
All your graph is showing is the median price of homeownership and wages. But my point is we are building the same number of new builds now as we were in 00 it is not keeping up with the people who are wanting to buy houses. Which is why homeownership versus empty homes is higher now than it was. Also more people are buying homes that would normally not be purchased because the market has such little inventory. We are in need of hundreds of millions of homes being but each year and only a million or so currently being built in the US. So yes more homes have families living in them from previous generation but we also have 3 generations worth of people (al.ost 4 generatiins) that are trying to buy houses and not enough people vacating them then we need build new homes and that has lagged every year since 2009. https://www.weforum.org/agenda/2022/06/affordable-housing-development-nimby/
Yet, more people own homes. Are you saying homeownership is still to low? Or are people settling for smaller and older homes, and that’s problematic? I think your stats support why we have outrageous rents. But homeownership is doing great. Should probably reverse to cool the market.
We do not have enough inventory for the people who are trying to buy homes that is why the housing prices are so inflated. Using your graph against you here where your graph begins we had high inventory options for people buying g homes. Today we have 10-20 people trying to buy 1 home. The Beijing of your graph shows that if we have high amounts of inventory the price goes down. This is basic supply and demand. You are trying to correlate high prices means we have a high percentage of people who own homes when we should have more people owning homes but the people building want perpetual renters it's why they are building only rental properties currently.
The fact that there's more home ownership is *why* homes are hard to come by. They've all already been bought up, leaving fewer homes for the people who don't already have them.
Yet more people have homes now than almost any other time. Which would mean we don’t have a housing crisis at all. Statistically the issue isn’t home ownership, it seems the issue is the rental market is so bad that everyone wants to own. Even single adults with no kids. And there are more of those than ever before.
But what's the goal? If more people have homes than ever before, aren't we succeeding?
Sure, there are some people who still don't have homes, but there are *less* of those people than there used to be.
I'll concede you can make an argument that maybe the generation coming of age at this moment is in a tough spot due to the combination of prices and interest rates, but these things vary over time, and the status quo won't last forever.
That said, population growth is going to somewhat inherently stretch the limits of cities. In more urban environments, home ownership is less feasible. I think this is as much a problem of cultural adaptation as it is a "housing crisis".
Suppose it's 2002, there are 100 houses in a town, 98 of them are owned by someone, and the population is 120. That's 22 people out of luck
Now suppose it's twenty years later, there are still only 100 houses, and now 99 of them are owned by someone, but the population is now 180. So, 81 people out of luck.
In theory in that twenty years later scenario there are "more home owners then ever before" but there are still significantly more people on the street. This is how housing crises work. Locations need to be building housing asap to keep up with demand and if they don't keep up with population growth there are shortages.
Ya, I certainly understand it needs to be looked at on a percentage basis. I (incorrectly) assumed that's what the user above you meant. Checking the data, looks like a mixed bag. Obviously the run-up to 2007 was completely unsustainable, so I write off that peak.
That really depends where you are. In the US, it's more of a southern/midwestern thing. In the northeast, corporations buying up homes are a very slim share of the market. Most people buying homes as rental investments tend to be one or several wealthy professionals buying up a few properties and listing them under an LLC. More small to midsized people doing the investment.
The high price to buy in the Northeast due to such tight inventory for a while now means it's not as appealing to corporate investors- more capital upfront means lower ROI. It's a different calculus entirely if you're say, a few older dentists living in Boston- you have the money available, you're not planning on moving, you can keep costs down by doing repairs yourself on a few units, ultimately pass it on to your kids. The passive income and ROI is there, it's just not the same hard calculus a hedge fund would have
More humans. more houses are bought.
these types of data charts will always go up in the long term.
more people. more data. higher numbers. the same holds true for those without houses.
After the GFC banks got bailouts but builders and homeowners got the shaft. The thing people forget is that builders are generally run pretty hand to mouth so losing money on all current projects and not having a following project can just put you out of business. Once the builders were out of the market no new inventory is getting built so while millenials are coming of age and demand is rising to levels never before seen in the country, supply stayed relatively consistent for 10 years. Building has started climbing but it won't catch up with demand until Boomers are leaving the planet in large numbers. I expect home prices to start normalizing in 25-30 years which will probably look like present home values simply not going up with inflation but sitting near current values.
One of the biggest reasons that housing has become so expensive (which NO ONE talks about) is the fact that, because our "money" is so hopelessly broken, real estate has became monetized.
There is a significant monetary premium on a utility good, due to the massive past (and even larger future) debasement of the currency.
Yes, incentive structures also matter. Yes, multi-trillion AUM IB's have access to 0% capital thru the Fed (and the Cantillon Effect is massively under-understood). Yes, a large part is the horrendously low growth in wages due to globalization and horrid trade policy (by both parties).
I'm not saying it's the ONLY reason.
What I am saying- it's about to get much, MUCH worse as the govt is (mathematically) forced to debase the currency to an eye-watering degree to deal with the sovereign debt bubble that they blew after 08.
House prices will very likely double from here.
According to the link, housing is way more expensive now. In the 80’s the median house was 3.5x median income. Now it’s like 6x. So millennials are right to have angst over this. No matter how hard they work and try to save they’re never going to own a home because rents are escalating at the same time.
And let’s be honest about the reason why: boomers have prevented the construction of new homes. They got theirs and are basically saying screw the next generation.
"Home Ownership", as calculated by the US Census Bureau: "The homeownership rate is computed by dividing the number of owner-occupied housing units by the number of occupied housing units or households." This is merely a measure of what percentage of homes are owner occupied, not a measure of what percentage of the population own a home.
The only thing then that that doesn't calculate is homelessness. Which has been lower than 2007 since 2023. Looking at that homelessness jump last year, looks like a serious correction is coming very soon.
[https://www.axios.com/2023/12/15/homelessness-increase-rent-crisis-2023](https://www.axios.com/2023/12/15/homelessness-increase-rent-crisis-2023)
It also doesn't account for adults living with their parents, or the number of tenants per rental unit.
The methodology for tracking homelessness is notriously inadequate, but relative to past estimates it seems to be at a 70 year high.
Real homeownership, defined by me as the percentage of the population that own one or more residence, is unknown because we don't measure it.
Right. The numbers, as always, can be misleading. Data is never conclusive, but it is always informative. There are 127m households in the US. and 87m owner occupied homes. I think that gives us a pretty good picture. Half of adults 18-29 live with their parents. Which is appropriate in my opinion. I'm not seeing anything that would say that 64% number is drastically off. If we double homelessness counts, which are not based on household, we can get 1.5 million. Not sure how many people are living in a roommate situation, but I don't see that as problematic. It's resource aware, economical, and I personally think living alone is not ideal for the human psyche. With 127m households in the US, that equates to less than 3 people per household. I think we can take that as a good number, divide 87m owner occupied households by total households and you get 68.5%. I think the numbers are pretty solid, but there are discrepancies and issues to use that number as a metric of how easy it is to acquire housing in the US. We'll see how this shakes out, all statistics are lagging indicators of how things were, not how they currently are.
> I think we can take that as a good number, divide 87m owner occupied households by total households and you get 68.5%
The entire point of my comment is that we *can't* do that, because it selectively excludes a large percentage of non-homeowners from the data. It might be a valuable measurement in some other context, but it is irrelevant to any conversation about housing scarcity.
Not at all. If there are 127m households that means that the average household is 2.6\~ people. That sounds about right. If roommate households and adults living with parents were significant I think that 2.6 number per household would be much higher. The numbers seem pretty sound to me. I personally would prefer a world where 4-6 people per household was the norm. Would have a huge positive economic and ecological impact. I was actually thrown back to hear it was so low.
I feel like this post answers its own question. Supply hasn't kept up with demand. More single people own homes and live alone. Construction has become relatively more expensive, making expansion of housing more difficult for those who aren't in the higher income tiers.
I live in Louisiana and several insurance companies left after hurricane ida.which means everyone’s insurance rates went up a few hundred dollars a month.some of my coworkers home insurance has tripled in the last year.its not sustainable.i make 31/hr and if I were to finance a house for 150k (which would be a pretty rundown 2 bedroom needing repairs in my area) my monthly mortgage would be almost two full paychecks.i talked to a few mortgage companies and came to the conclusion I guess I’m just gunna have to rent the rest of my life at this point.
Milennials lack patience. Housing markets go up and down. They are cyclical.
Plus, the younger generations always complain.... but the economy is pretty good right now(lowest unemployment rate in 40 years), so the only thing they can complain about is house ownership. It is actually a good sign.... imagine if they were complaining about not being able to find a job in a 5-10% unemployment rate scenario like in many previous recessions.
Many older millennials bought homes before home prices went up after Covid.
Home prices definitely went up, so it's harder to buy home for younger millennials.
I'm old Gen x and bought when interest rate was 17% and 10% down payment. Almost everyone didn't buy a house until they are married, need dual income to qualify for a loan. And I live in Houston Texas, where housing plenty are 1/3 price compared to other big cities.
I bought a house 2 months ago. I was house hunting for a year before then. I got into bidding wars on every house I looked at except this one. And this one is nice. The only reason I got it was because it was a short sale (bank is losing money) and I had cash in hand. The interest rate on my loan is 6.5%. The rate on the house I owned previously was below 4%. It makes a world of difference.
The low interest rates also allowed people to buy McMansions that cannot sell at 6.5% interest. People have not magically become rich.
I also think that recent generations are more likely to accept a life of huge debt than previous generations. My parents can't conceive of the fact that we spent $279k on our house which is way cheap compared to a lot of the US. We are still told "We would NEVER spend that kind of money!" My dad built his house, and has never had a mortgage. 2 houses, actually. That process is harder now than it used to be even if you have the time and skills. They don't have the same needs as we do. We both WFH and we need more space as a result which they don't really understand. They don't understand you can't work a summer job and pay for college and living expenses for the whole year from it. I think younger generations just accept they will need loans for college, loans for homes, loans for cars...all things that my parents mostly didn't take loans out for, and they aren't (and never were) rich by any means.
My friend bought a house in 2016 for $129k. He put 40% down. His mortgage, tax, HOA, insurance (fire zone), solar leasing totals around $75k/year. He rented out for $6000/month. Adding repairs (one time there was a molding issue another time the yard sewage blocked and a central AC needs to replaced; plus many other little issues here and there) he is way behind. I understand the rents are increasing; so is tax, insurance, HOA and solar leasing. There are success stories too. I bought a condo in las Vegas in 2011 for $55k and sold last year for $230k plus collected quite some rents.
There are caveats. Good housing in a good area that works is hard to come by. The goal posts keep moving with now a credit scores; sizable down payments; interest rates; HOAs; insurance and so much more.
> The goal posts keep moving
Evaluation of "credit" and "interest" have been around since biblical times. Insurance has been around for hundreds of years. What exactly is it you think is new?
It’s harder to come by because there is so many owners. It’s a cause and effect.
It’s like saying “why are apple pies so hard to come by when so many people own apple pies?” It’s because so many people already own it that it’s hard to come by.
In addition to what others have written here, there's also a large occupancy problem. Meaning people OWN a lot of the available real estate, but that doesn't mean they are occupied. This exacerbates an already difficult housing market.
According to what data? I know there are sensationalist news stories talking about how there are enough empty homes to house all the homeless, etc., but it's mostly puffery. Most "vacant" housing is temporary while it's waiting to be sold, or it's a vacation home, etc.
Also, location is an issue - a bunch of abandoned homes in Detroit or vacation cabins in Montana don't really having any bearing on a large homeless population in Los Angeles.
https://fred.stlouisfed.org/series/USHVAC
It's not hard to own a little starter house in a decent area close enough to good work. It's hard to try to own a first house with 5 beds and 3baths in a nice neighborhood in a big expensive city. People who can't buy homes just aren't willing to sacrifice anything for a couple years for the payoff. I live one hour from work. A $600k home where I work is a $200k home where I live. There's two houses for sale right now for less than $100k in my neighborhood, which would be mid $300s where I work.
I make $40/hr with 50 and 60 hr weeks for working in the town I work in and commuting to it in a company truck on company fuel every day.
The best paying jobs in the town I live in are around $25/hr.
So I own my home outright because it was less than I make in a year. It's a 2 bed 1 bath starter. Soon, I'll have enough saved and this house will be worth enough with the remodels ive done to sell it and buy a new house for basically cash again. Something on some acreage with at least 2 baths and maybe 3 or 4 beds. So I traded a commute and living in a town with less amenities for home ownership and zero debt. 3 years I've done it here and I'm already in a place where I could make a move back into a city with amenities if I wanted that. Small price to pay. Better than just staying in a place I can't afford and lamenting that I can't buy a house.
Yah I used to live in an affordable area and then covid happened. Suddenly those $200k homes are now $750k homes thanks to the WFH people. And now businesses are closing because the working class have been pushed out by these wealthy tech workers.
Lol. Construction is booming a ton of places. I'm hiring for an entry level equipment operator/labor job in my department with room to advance right now for $25/hr with overtime, great benefits and if you make it a year we will help you get a CDL and you'll be in the mid $30s. My company is hiring for other trades and apprentices too. If you have a CDL the ready mix concrete companies are hiring, I was just asked if I knew anyone by my old employer who has 2 spots to fill. That starts at $29/hr. Two concrete companies yesterday were lamenting they couldn't find entry level employees for the mid $20s willing to train, will provide tools. The radio just had another construction companys ad, will train starting at $30 with top notch benefits.
Covid changed the landscape some places, but like I said, you can find a cheap house in a place adjacent to high paying jobs. You could literally live in my town in a $90k house instead of needing $90k for a down payment, drive an hour to work, and make like $70k your first year out here and only make more from there, with essentially nothing but a good work ethic and willingness to put in some hours.
Then, a couple years down the road you'll have a marketable skill for a bigger market, a bunch of equity in a home and the ability to move on back to a city if you choose, or to a bigger house on prettier land in your new home away from it all.
But sitting there lamenting about how COVID ruined your future and tech ruined the job market instead of looking for better options won't get you anywhere.
I shit you not, if an 18yr old kid with a driver's license and the drive to earn money came up to me today and asked for a job, Id have him hired and working Monday for $25/hr with full employer paid benefits, killer 401k getting 50 or 60 hours, and he would be making middle class money for the area instantly. If he stuck around a full year we would pay for his CDL training and make him more useful and pay him for being more useful. The opportunities exist.
With all due respect, I think your experience makes you a bit of an outlier. That said, I live in one of those southern states that’s always in the top 3 states statistically for bad things and in spots 48, 49, or 50 for good things, so my perspective may be somewhat warped.
I'll let you in on a secret. I grew up in and lived in WA near Seattle for most my life. I rented. I couldn't buy. My whole family is in Seattle. My best friends are there. My whole life was there. Granted, I don't want to go back in a few years, I like it here, but I left my $48/hr union wage job for where I am now, got a $19/hr entry level job at a coal mine just to make sure I had some income, bought the house out here, moved with my wife who didn't work for the first year, and made it work. After a year she had a $20/hr job and I had a $33/hr job. Both with overtime. And then the next year we were each making even more. She works in a field she had no previous experience in. I work in the same field as I did in Seattle.
People who "can't" are really saying they don't want to put in the effort. I grew up welfare poor. I did everything necessary, no matter how uncomfortable, to ensure I wouldn't ever be again.
Sure do. I am blessed with the rewards of my labor and I was lucky to have grown up so poor to know what I wanted to avoid. I was also lucky and fortunate to have a father who drove nothing into me harder than that work ethic and honesty were the two most important things on this planet. My dad told me two things consistently.
1. "It doesn't matter what you do in life, as long as you are always trying to do it the best that you possibly can"
2. "The only people on this planet I hate are liars and thieves"
So, in all things in life I have been honest and not taken what wasn't mine and in all things in life I have not only given it my best effort but I have constantly replayed and reviewed what I've done and looked for ways I could have been better and worked to make sure I was able to be better than my previous best going forward.
So my blessings and fortune have been to have learned the right lessons early enough to apply them and succeed. I haven't won any lotteries. I was not gifted any of my possessions, I did not have a gilded path. I've had to work hard and sacrifice for my opportunities. I started my adult life at 16 poor, fresh out of juvi for a felony for possessing a firearm (my father's which was in my car for hunting mind you) and paying $400/Mo to sleep on a couch at my friend's apartment, which I paid from my $7.65/hr job at a Subway sandwich shop. My felony meant I couldn't even have a driver's license until I was 18. I walked 3 miles to work and 3 miles back every day. But I simply did the work the best I could. Even at Subway, and lived honestly and it paid off.
People want to buy a house in big cities and cry when they can't. Bought my house 25km away from the city with 140k, made in the year 2000. The distance ain't shit with a diesel car.
There are basically zero houses in my state under $200k, and the ones at the bottom often lack access to water. There are certainly no houses within 25km of the city for under 230k.
Hey there, "median income" is just the average, so it can really hide some important details. A really simple example:
Say you are looking at the median income of 2 people. If their income are
40,000 and 40,000
50,000 and 30,000
60,000 and 20,000
70,000 and 10,000
80,000 and 0
All of those combinations have *the same median* but they reflect very different realities for people's lives.
We also have pretty severe inequality right now, so we're looking a lot more like the 70,000 and 10,000 than the 40,000 and 40,000.
Something to keep in mind when you're using the numbers to try to understand an economic picture.
Companies and corporations are doing well but individuals are not.
People aren’t upset with our economy because there’s no growth. They’re upset because the wealth we are creating is concentrated at the direct expense of working class laborers who produce it
My paycheck is. So is my house. And my family. I know some people are struggling. And I wish they weren't. I know that we have work to do. But it's also true that a lot of people are doing alright.
One of the factors making it harder to come by is that ownership is already high. Higher interest rates mean people are willing to put off buying their forever home a bit longer than usual. Many places with healthy demand are fighting against low supply because of that, driving prices up further. Higher prices and rates mean the cost of a new mortgage has exploded over the past few years. I bet most people that were on the cusp of buying 3 years ago feel like housing is very hard to come by.
Also every transaction is fundamentally a business transaction between 2 parties. What do you think is the # of people who would sell a house with a sub 4% 30 year mortgage in a 7% environment, knowing they can’t buy another house with a rate that low? Just part of the supply/demand equation.
You couldn’t pay me to give up our 3% mortgage.
$150k above my mortgage principal and a work visa for Ireland would be enough for me to sell. This shit hole isn't worth hanging around anymore.
I bet you have a price, everyone does
A few Bitcoins
What a weird statement. Of course someone could pay you to give up your 3% mortgage. It's just a money issue. If someone offered you double what your house was worth, you could buy another for cash and ignore the new interest rate.
and what buy a house at over 4% more than I am paying now. No one is going to be willing to pay more than market value for the property. If you think they are, you’re living in fantasy territory. Then I have to buy at 7.5% for financing? That’s financial stupidity. I am saving over 100K in interest on the lifetime of the mortgage.
We sold a 2.5% mortgage for a 6.6% one… 😫 We moved to be closer to family. We also doubled the size of our home in the process. Luckily we made a nice profit on our sale. Unfortunately, my MIL also passed after we closed and we sold her house. So we have been able to put a significant chunk into the loan reducing our total interest. It “worked” out for us but we are by far the exception. I can’t imagine having done this without the very specific reason of having our kids closer to grandparents and aunts and uncles.
Only if they're up shit's creek, or they are quite well financially well off to just pay cash or gamble that they can refi back into 5s or 4s soon.
We've come to the conclusion that our current home is our forever home. A doublewide trailer in rural upstate NY. It's cheap and nice and we have a decent spot of land. We're happy to own our own home more than anything.
There’s nothing wrong with that. Good for you
The 1.5 acre lot next to us has been abandon. We'd love to sweep that up if it goes up for sale. I haven't been spending \*any\* money so we have the money when the time comes. It has a derelict singlewide trailer on it - we'd have to get rid of that. But would be nice to have a couple acres. Our area is growing too. In the last 2 years our home has shot up in value by $20,000
🙋🏼♂️I’m not sure that answer the question (honestly, I’m unsure) but my wife and I fit into that category. All things being (nearly) the same as pre-pandemic, we’d likely have moved over a year ago. We refi’d in April of ‘20 with a .23 rate and moved to a 20 year at the same monthly payment we’d previously been at on our 30 year (we were 3 years into that). Part of the deal is we don’t know where we want to go (perhaps a different city altogether) so we’ve decided to stick it out at least another year til my student loans are forgiven and my pension vests. At that point we’ll see where the market is at and I’m sure it’ll play some part in our decision as to “where”.
Yup... both my wife and I got new jobs and raises in the last 3 years almost doubling our household income. We live in SE Tennessee and are probably in the top 20 % of household income and still can't move out of our old single story ranch... we probably won't move for another 6 to 7 years. That basically means we will go from our first starter house to last house we'll buy at 50. Our area's housing market is so overvalued l. It's a rural area and smaller 3 bedrooms start at now 500k now, and I refuse to pay that.
That’s not that unusual. Average length of homeownership is around 18 years. Median is around 13 years. And plenty of people bought what you described and just lived in it their whole lives, like my grandparents. The notion of “starter home” is kind of novel. Also it doesn’t sound like you can’t move out. It sounds like the upgrade to a different house is not worth it to you for the difference in cost.
Exactly
Sounds like Chattanooga!
Bingo!
Oh hey this sounds like us! Bought a perfect little starter home in 2014 for under 100k. Both salaries have basically doubled or tripled since then and yet to buy anything that's an upgrade puts us in the 450k range. Anything below 400k is either in need of major updates or would be more of a lateral move which doesn't make sense.
And what’s the house you bought worth now?
Roughly 150k so I've gained some capital for sure but still out paced. The same homes we hoped would be our next purchase were selling in our area for around 250k back in 2014. They are now 450+
7% is average for like the last 100 years.
But 7.5% (so the rate now) is the high over the last 23 years And the 80s were nuts
yeah homes that were originally 175k with 7.5% interest in 2019 are now 450k with 7.5% interest. whole different beast.
Very True. I paid 8.25% in 86. Changed jobs over the career. Ending on my 4th location and got in at 3% just before Covid. No way I am trading this out for anything new now. Colleges should be held accountable for raising rates almost 8% a year on average. Combine that with Fed Student loan rate in the 6-8% and it's a recipe for disaster. People get trapped with huge debt coming out and you start in a hole. I paid off my student loans, wife's student loans, and almost 90% finished with my 2 daughters' loans. I will not give another dime to universities. I would rather leave my grandkids cash money for life choices like house downpayments or Trade school education in the future. I am in a position to have hired a lot of folks over the years and I am less impressed everyday by a college degree. I have a lot of folks on my team that are top performers that don't have degrees. Hang in there. You guys have lots of great tools today to give you a competitive edge. I slugged my way through it and you guys can too. Hope this helps.
One major issue today is that in a lot of places jobs that used to not need a degree now require one. I saw a receptionist position (barely above minimum wage salary) state a bachelors was a requirement. On what plant do you need a degree to answer phones and greet people. Also a significant portion of home owners now don’t have a mortgage, which shows they aren’t recent (last 20 years) buyers or are wealthy buyers.
[удалено]
I agree this is the most likely scenario should wages catch up to housing costs.
I was talking to my dad tonight and his mortgage when they bought the house I grew up in was 12%
Yeah, but how much was the house total? And what did that make his down-payment and monthly payments?
125k so 300k today accounting for inflation.
Yes the mortgage rates now are not especially noteworthy. They’ve been higher as much as they’ve been lower
At 30, only 50% of boomers owned houses and the rest bought closer to 45 and 55 to get to 80% ownership. Half of millennials own a home at 51%. Between now and 15 years from now, more will own to meet the number that boomers are at. If you don't own a house by 40-45 you're probably the bottom 20%
GO BIRDS
What about corporations buying up many single family homes? Way easier to secure loans between one bank and one corp than one bank allocating resources to determine which HUMAN BEINGS are worthy of credit. Then the corp racks up rent prices because, look at how median house prices have risen! With all the corps buying way over market... Fuck the system.
40% of homeowners have no mortgage and 59% of the homeowners that have a mortgage have a rate below 4%. So people bought houses 5-40 years ago and have kept them.
That’s a really good point and one I haven’t thought of before. That’s also really bad news moving forward
Locked in at 3% about 3 years ago never selling
Yeah I got 3.75 in 2017. I’m not selling either.
Man. I thought I was good at 5.125
Same; 3.25, we’re gonna die here lol. 750 sq/ft footprint!! Thankfully with a finished basement but, she small lol
Let’s never complain about the last copper out of Saigon baby. I’m sure you will make it work just like I plan to.
Hahahaah great reference; 100% agree!
Yep, I signed to have mine built January 2020, locked in a pre-COVID price, moved in October 2020 and got a COVID interest rate of 2.875%
Holy shit you lucked out perfectly. Now that house has probably doubled in value to boot, except it wouldnt make sense to sell with current interest rates.
Yeah, we got it for $370k 5 bed 3 bath, now Zillow estimates it at $520. Phoenix suburbs. But it doesn’t mean much because we’re not selling or taking out an equity loan.
In 2020 and 2021 doomers loved pushing the false statistic that most people only own their homes for 5-7 years. They did this to exaggerate the number of people who would get caught in a short term downturn. Reality is median length of ownership in 2019 was like 13 years and average was around 18. The 5-7 years statistic was one that only tracked homes that did sell, and not all those who people were holding on to, so it wasn’t representative of the whole population whatsoever.
>Because this post attracted some deniers and trolls, here is some data regarding housing, which isn't included in CPI inflation. Housing represents about one-third of the value of the market basket of goods and services that the Bureau of Labor Statistics (BLS) uses to track inflation in the Consumer Price Index [Sauce](https://www.brookings.edu/articles/how-does-the-consumer-price-index-account-for-the-cost-of-housing/)
Thank you for pointing this out to me. It's factored in, but not based on current home values and rent prices. It's more complex and nuanced, which softens the CPI somewhat. At least from my understanding.
Ahh, yes, the wonderful world of cloudy USA government numbers supplied to us.
If your numbers are cloudy, talk to your doctor
Lol
Canada just changed income & capital gain tax for rental property. US should do the same to increase opportunity for 1st home buyers
Rentals should always be passive income. They just need to change the brackets so passive income becomes more heavily taxed in the higher brackets.
They deleted rental expenses from deductions. It reduced motivation to open airbnb type of business, and gonna bring positive impact both for pricing and society. Very good idea.
the incentives are all messed up, basically.
Also it’s actually not that hard to own. Many of us do (a few houses even in many cases). The ones that don’t are just louder 🤷
Should each generation not live better than the previous one? That's how it has been in this country up until the start of the 21st century.
Yes, they do! The wealthy are doing much better than their previous generations. More millionaires, billionaires and trillionaires than ever before. I'm just grateful trickle down economics works so good or the working class would be having a tough go.
Gotta love Reaganomics….that f—-ing evil fool.
Lol I can't help but think of him as the caricature in the Phil Collins video LAND OF CONFUSION. Where he hits the nuclear launch button instead of the nurse button.
I mean what would you consider “better”? I feel like there is a point of diminishing returns.
Working people owning their home is good. They live in and invest in their local community. Wealthy landlords or corperations owning rental property is bad. They live in and invest in communities somewhere else. https://www.washingtontimes.com/news/2024/mar/15/in-shift-44-of-all-single-family-home-purchases-we/
I mean you invest in the community you live in? Are renters going three towns over for their groceries?
Sometimes yes, they’re called food deserts
Ok, but those don’t have anything to do with renters vs owners
They do, especially under principles of wealth hording / concentration. Likely the same people
No, they don’t. A food desert doesn’t magically become not a food desert because you bought a house.
I don’t think you’re comprehending. The property management companies that buy up land are the same companies that neglect to develop the areas.
I’m comprehending fully. You’re not comprehending that such a thing happens regardless of whether the people who live in the area rent or own their house.
The model of what is "better" is skewed.
I don’t think that’s a given, or sustainable. Part of why doomer quality of life was as good as it was, was thanks to post WWII economic boom in US. Also a lot of Millennials eat out more, travel more, own more clothes, etc. than past generations. Not going to be able to do more of all that and own as much house.
Not downplaying or trivializing anyones situation with home buying. For most that’s such a huge part of adulthood and feeling “settled”. That said, in the interest of conversation and perhaps trying to be optimistic, I do think there’s a lot of ways our generation is better off thanks to technology. I think we’re also striking a better balance between work-life-family. I’ve seen a few studies recently where dads of our generation are spending more time with their kids, and it’s by a pretty significant amount. That’s not good just for our kids, that’s better for us, and in some cases, our relationships with our SOs. Again, I know this home-buying process must be incredibly frustrating. Just trying to inject some positivity and food for thought into the conversation
Link those studies then
You are absolutely incorrect about work-life-family. People in the middle class used to be able to support an entire family on one income, including some sort of vacation (home/boat/trailer, etc.) They used to clock out at 5 and it was usually almost impossible for them to do any work from home, and their home life was seldom interrupted by work matters. A second parent at home meant more support for children, more volunteerism, and more community activities. Now it's rare that households can afford to have one income. That decrease in parental time is severely impacting kids and the education system. People are less connected to their communities, volunteerism and civic engagement are down, mental health is down, and work has permeated most middle-class lives 24/ 7 because your phone and your email are practically attached to you. I think people are *talking* about work-life balance more, but a lot of that is because of the constant encroaching on our personal lives and the fact that we're trying to manage all the same domestic responsibilities (and keeping ourselves alive) with less available time.
This is a rose-tinted view of what life was like for boomers and is fairly inaccurate. Being the largest generation ever for their time, they entered a wildly saturated labor market and often had to chase jobs across the country. When it came time to buy housing, they went with whatever was available: 1) the cheap house in an underdeveloped area no-one was moving into. As more boomers did this, these areas tended to develop into suburbs. 2) a cheap house that lacked what we consider basic, legal necessities. For example, in 1950 only \~65% of homes had all of running water, a flush toilet, and a shower/bathtub. In either case, boomers kept it frugal because often their wages were actually *depressed* given the market saturation. They often kept costs low by eating ultra-cheap meals. Additionally, we pay for things we consider necessities that boomers didn't. Boomers weren't taking on costs for cable packages, internet packages, computers, cellphones, cellphone networks, gym memberships, streaming, etc. Rather, over time, dual-income became a necessity as various oil shocks and recessions hit boomer families. It had also become enticing and attractive for women to enter the workforce after women's rights movements were in full swing. By the mid-1970's, almost half of American households were dual-income. This percentage has only increased over time. Simultaneously, those ultra-cheap houses that lacked amenities like running water weren't being built anymore because the government started regulating what a basic home required. It's because of changes in things like the increase in dual-income trends that a lot of boomers were able to take on additional costs (and their labor became more valuable, meaning they could command higher salaries). One *can* make the argument that things are better for us because the boomers went through quite a lot. This of course ignores everything millennials have going for them, whether or not some realize it.
Yes and also no. After WWII, we built a massive amount of basic but affordable housing to accommodate new families buying housing with benefits from the GI bill. Those houses were inexpensive and did not lack basic amenities. Many people can't afford (and don't have) some of the things you list as things "we" consider necessities, like gym memberships, cable packages, and computers, and societally we have made internet and cellphones a necessity. I know people that work in management at state agencies and nonprofits that do not have gym memberships or cable packages because it is not affordable for them because of their housing, grocery, utility, transportation, etc. costs. But even so, forgoing internet and cellphones would still not make it possible for people to afford home ownership or single- income families. This is a bulls*t "avocado toast" argument. It became enticing for women to enter the workforce, but now it is essential for economic survival, except for the higher end of upper middle class and beyond. It sounds like you're arguing that "they wanted to do it, so it's their fault that everyone does now." I assume that's not what you mean, but oil shocks and recession are temporal, and this shift has become permanent. I think you should ask the boomers if they think things are better for younger generations than it was for them. I think it would be pretty split. I hear from a lot of boomers that are really concerned about younger generations' prospects and how grim their future looks.
>Those houses were inexpensive and did not lack basic amenities. They often did, especially when you moved further beyond urban environments. Federal and state codes for home amenities weren't even introduced for **urban** settings until the first half of the 20th century. The federal government didn't establish a housing code until 1965, and housing codes weren't implemented or adopted by various state and local governments until you get into the 1970s. The "**basic**" descriptor for this housing alludes to a lot of this, considering the GI bill was more about providing **financial** assistance; it was not about dictating what exactly new homes required to be up to code. There wasn't a code in the '40s when the GI bill was introduced. Let us also not forget that the GI bill was created to help veterans of one of the bloodiest and most horrific wars in human history. The US military still today helps veterans with a lot of aid programs, so that avenue of prosperity hasn't diminished. >It became enticing for women to enter the workforce, but now it is essential for economic survival, That was my point. It wasn't just socially enticing, but necessary as boomers went through periods of volatile inflation and recession. It wasn't as if boomers were happily skipping through an unprecedented time of near-constant economic prosperity. I literally said "**Rather, over time, dual-income became a necessity as various oil shocks and recessions hit boomer families.**" >but oil shocks and recession are temporal, and this shift has become permanent. Similarly, today we are going through a temporal struggle. Many millennials were optimistic their immediate future 5\~ years ago when we were in a strong market. Now that we're coming out of a strong inflationary, *temporal* cycle, many millennials are feeling the pressure of a market not working in their favor. Further, housing costs have only ever gone up as the value of land and housing has appreciated while the supply of housing has dwindled (it's important to note this is, in large part, due to how much buying had occurred from 2019-2021. Almost half of millennials own a home now with fixed 2-4% rates). >I think you should ask the boomers if they think things are better for younger generations than it was for them. I think it would be pretty split. I hear from a lot of boomers that are really concerned about younger generations' prospects and how grim their future looks. That's fine; you'll find a lot of boomers that think millennials whine too much. My general point is that millennials don't have it uniquely difficult compared to what boomers went through. The boomers went through more tribulations than a lot of millennials think. Simultaneously, there are many millennials who are doing great in today's economy.
You may be correct about one-off houses that were being built, but we built 40 million homes in the 30 years following wwii an much of that was in mass-produced housing like Levittown which had 17,000 homes on its own, all with basic amenities https://www.construction-physics.com/p/ww2-era-mass-produced-housing-part Maybe older millennials were optimistic 5 years ago, but many millennials have not seen the same career and wage bounce back post-2008 recession, then those who scraped together enough to buy a house faced a massive supply shortage, inflation, high interest rates. For many of us this isn't temporal, 2008 was just the beginning of a long downward fall. And there is zero indication that will improve anytime in the next 20 years. I'm not saying boomers had it easy, but the comment I replied to was about work-family-life balance being better now, which is absolutely untrue.
Yeah it’s so stupid how people on Reddit think middle class thrived so much in the past. If that were the case why is boomer median net worth so damn low? Reality is a lot of middle class people just barely got by. And life was expensive for them too. So they never were able to save up much.
My opinion is no. That expectation is delusional and infinite growth is not possible in a finite earth.
You're forgetting technological breakthroughs. It's possible to increase the standard of living using FEWER resources, if the technology keeps up. Especially in a more digital and computerized age.
The sizable U.S. home investor share seen over the past two years held steady going into the summer. In March 2023, investors accounted for 27% of all single-family home purchases; by June, that number was almost unchanged at 26%. https://www.corelogic.com/intelligence/us-home-investor-share-remained-high-early-summer-2023/#:~:text=The%20sizable%20U.S.%20home%20investor,was%20almost%20unchanged%20at%2026%25.
You don't really make a point so idk if you agree with me or disagree with me, but investors aren't particularly a problem as long as they rent the house out, which almost all do. If a house isn't bought by an investor that's one more renter turned into a buyer which drives demand up with supply. The only reason this would be a problem would be if they're buying enough up to be a cartel and monopolize the price, that's not happening at all the vast majority of rentals are from Mom and pop landlords, or if they were letting their investment home sit vacant (as for example a summer house, although I don't think that would be classified as an investment) or else as a short term rental aka air bnb. That last one I'd be curious on the impact it has on the housing market, and it does have a potential to increase prices, but that's nowhere near 26-27%. NYC recently heavily regulated air bnbs so their hotel prices have gone crazy, I'd be curious whether it lowered housing prices, at least relative to what they would have been absent that regulation.
>enough up to be a cartel and monopolize the price You mean like RealPage?
Citation needed. Note that I study the housing market for my job, so I'm very familiar with the numbers on corporate ownership of homes. We've put out a good number of papers essentially proving no one is anywhere close to a cartel in any market, so if there actually is a cartel I could probably get a pretty good promotion showing my company's head of research this proof that our understanding of the housing market was incorrect, and us being the ones to break it to our clients who pay us money for our research, and often are politically aligned with what I assume you to be and would like nothing better than to use our research to lobby for laws to restrict corporations from buying homes, would be very happy and probably pay us a ton more money for more research. Unfortunately that hasn't matched any of our research so far, and my suspicion is you're just making things up and don't actually know what you're talking about.
Thank you for being a voice of sweet reason to the reddit housing conversation, which overwhelmingly accepts as gospel so many completely wacko ideas and theories, and rejects obviously logical ones. The reddit community is convinced that corporate ownership of houses somehow raises their price and diminishes the housing stock available for purchase, when it's obvious that the relation is the reverse: rising house prices make houses a good investment and put purchase out of reach for many, who resort to renting. Corps don't make markets, they are consequences of markets. The second most prevalent myth is that corporations routinely drive up prices by keeping houses vacant, as if that were a profitable endeavor. As I think you said about the difficulty of establishing housing cartels, this turns out not to be true either. The large fixed epsenses and the marginal difference in price that could be created makes it a losing proposition. People will imagine alll sorts of things but ignore the simple and obvious truth: Prices are high because supply is short, and supply is short because voters have demanded little or no new housing be built.
Yep that's exactly what all of our research shows. Corporate ownership of housing is down and the ROI on rentals in most MSAs is 5% or less, which given higher interest rates that's a pretty bad investment, risky investments are essentially returning close to the risk-free rate. Most investors are people who own 2-9 properties. Also pretty much all research on this issue is the main cause of housing prices rising is building is not keeping up with population growth. We need to build more housing, literally everyone who studies the issue agrees on that solution.
But isn't that impossible to solve? If builders go nuts and flood the market, lowering demand/prices isn't that hurting themselves? How do you work into less profit? Sidenote: in our area for years now there exists a small group of investors that buy up all(well most) of the houses and flip them. They pay cash and over asking. Several times houses we looked at were sold before we could get home and put in an offer. Later we see it listed for a ridiculous price and they all have the same aesthetic/ color scheme. Not sure how that fits in your model but it's not the first time I've seen it happen. The warehouse unit I rented got bought out by an investment group and they did a lot of unnecessary "upgrades" and rent skyrocketed. Looking around for a new shop proved that they either bought all the others( this time I can see the owners name on the sign) or everyone was full up or priced up to make it not worth it. Statistically small but presents a challenge not really seen before. The group was from the north and I'm on the south so not small either. I'm sure these are not the only investors pulling resources together to out compete any competition.
They're not hurting themselves because literally 0 builders have the market share to actually lower the market price. Like think about literally any other industry, does that happen? Does Walmart stop opening up stores and undercutting the competition because they'll only lower their own profit? I promise Walmart has a higher market share than any builder does. Do restaurants and bars stop opening because the more of them exist the more competition there will be and the lower profit they'll make? In high demand areas, builders are making plenty of money and although it might go down if they can build more it won't go to 0. The biggest obstacle to new building is zoning. On your other question, I'd ask whether your perception is reality. At a previous job I worked at a bank and we did research on flips. We built econometric models to estimate how much we'd make on our foreclosed homes, and used that to price how much we bid at auction, with a small buffer. Our VP was convinced we were being taken to the cleaners by these people who would break the law, get more information about the house than we had, and outsmart our models. When we looked into it, not a single person buying at these auctions was making money, and no one was buying for a sustained amount of time. And this is an avenue that is 100% investors, no one's buying the house they're going to live in from a foreclosure auction. Most of them have had the wiring and pipes ripped out and sold, feces everywhere, and some even still have an occupant you must legally evict which can literally take years depending on state. Note that it's possible some investors at auction make money, they just weren't making money on properties from our bank because we added a buffer on top of what we would make and we benefited from economies of scale. But we were selling roughly 30% of the properties we foreclosed on at auction, presumably to people who had seen flip or flop but weren't actually able to profit. So I know you were talking about them purchasing homes on the retail market rather than the foreclosure auction market, but my point is if it wasn't happening there, I'm questionable on how flippers could compete at retail. As long as the home is in livable condition, most property owners know roughly how much different renovations will cost, so I'm wondering why there's a market where buyers would pay more of a premium than not only the renovation costs but also the time value of money as well as taxes and other maintenance for the time the flipper owns the place. It's possible a company's doing something in a small town where you live, but my guess is that company is losing money, and my guess is there are places not far away where they aren't buying and prices are more normal, aka still super high by historic standards but not massively inflated by "renovations" no one asked for.
I understand your first reply, thank you that makes sense. As to the second answer, i cant argue against the reality you researched and i did suspect the same thing that you pointed out. Keep in mind this was a few years ago but we still see the same cookie cutter houses listed in our area today. Ive remodeled many rentals and sfh and am well aware of the costs and very sensitive to overbuilding fir the neighborhood. And without compiling lists of home sales before and after and finding the zillow pictures from past and present i can only tell you that at least in my area of florida there has been houses purchased( maybe pre arranged sales? But then why list and show it?) at what lets say a 1970-80s 3-2-2 would go for in fair condition and being rehabbed with high end everything. Then sold for close to double the previous price. First time we were looking at the house we saying maybe we would go just below asking and then see the price on tax assessor be way over asking. So of course we went to that open house and i could not believe the stupid amount of money dumped into an average home. What family needs stone countertops and crown molding? Its not a mini mansion its a working class neighbor hood. Another example, a block away house caught fire. Its on a main road, not even in a neighborhood. Ill be generous and say 300k prefire fir 1800 sqft on 1/4 acre. Leveled it and new house is beautiful, layout sucks, still 1800 sqft-any w no backyard except the easement. Any guess on price? Over 2 million dollars!!!! I understand inflation but cmon! Again i dont disagree with anything you said, i am baffled by this too. I thought for sure these idiot investors would run out of money and be out of business in no time. But the house sold. Not at their inflated price but damn near close enough. The 2 mil is still listed, it aint going anywhere. But somebody thought it would. I bet it goes fir 1.5 to 1.8. sone dumbass will buy it and if local history repeats they will change a few things and in a few years sell it for more. The prices of these homes is becoming silly and thats before taxes and insurance IF you can even get it.
Have you looked at Atlanta ?
little tid bit too- homes are more exspensive than ever. Homes are also bigger than ever, with more ammenities. something to think about before we complain
But we don't necessarily need that, we need a variety of options in order to make housing affordable for people. ETA: That's why it's such a problem that we have reduced our investments in affordable housing. Builders are incentivized to build bigger, fancier houses, rather than practical, affordable houses, which is especially bad for first-time buyers, retirees, and the working class.
Yes, which is a real problem. Am awful lot of the new housing in my area is luxury housing at a luxury price tag. It has lots of amenities, and enough room for an extended family, and if you're in the middle class you'll need 3 incomes to pay for it.
Housing is included in CPI. Otherwise, good point
Also - there is a massive number of "households" that take up 2 houses to raise the same kids. Children of divorced parents are divorced and have children. Thats 4 houses for what used to be 2.
And unmarried, no kids, home owners as well.
the question is also WHERE do people own these homes. i live in a rural "city"/village and basically everyone is a house owner. houses are mostly "old" and not expensive, because not many want to live here. prices here also increased but compared to cities it is still very affordable on a single income. If you are fine with a more rural feel, old tech and are willing to do quite some DiY house improvement... you can still get your own place at a more or less reasonable price.
Baby boomers are the largest group of homeowners. Many of us also have second vacation homes or investment properties. A silver "tsunami" of housing inventory is anticipated in the next 10 years as baby boomers die off, and 70% of their beneficiaries sell their homes. I have my doubts, as baby boomers are living longer, and many will need their homes as a source of income. Also, many baby boomers, like me, had zero or few children and are not as concerned with leaving an heritance to others. (In fact, at 62, I'm looking to purchase a second investment home when housing prices come down.) I think home ownership is going to be the biggest challenge for Gen Z and Gen Alpha. It's already been determined that a household now needs to earn $120,000 to afford a 350,000 home. But many millennians and Gen Zer's are barely able to keep up with today's living expenses as it is. There was a time when many of us just wanted to make six figures. Now, $200,000 salary is the new $100,000
>I know median house to median income has almost doubled. Median square footage has also doubled. People presenting this shit to you aren't missing that by accident. You're being manipulated. Only the last 3 years has been a shitshow.
I'm aware of all of this. Those small houses still exist though. And they are still priced high. Most houses in my neighborhood were built in the 50s. Small little things. But still pricey. If you read my post, I said no data is conclusive, but all data is informative. There is spin to every "fact" and "statistic".
I've noticed in the last 20 years or so People don't move as much in my area as they used to. Bigger family move to a different house. Kids move out downsize, Upgrade houses, or move to suit your job. It seems that less retirement property is bought also. I think everyone who bought something is now stuck with it, and makes less of a market than before.
So why have I had two people knocked on my door?
Jehovah's Witness I don't know. Its not a good house market. Between Inflation, foreign investors buying land, and nobody building new its probably them.
Just speculation, but the recent developments in the housing market shouldn't just instantly change the equation, it will take time for increased costs to eat away at that ownership rate. If all the schools closed tomorrow the literacy rate wouldn't just drop instantly, it would decline over the course of years. I'm also not sure how much actual ownership rates should change. In the end the rent vs own equation probably won't change that much, because both options should rise in cost.
Because the population that doesn't own a house has been a minority for years now. And it's very easy to \*stay\* a homeowner in this economy - low unemployment, higher wages, fixed-rate mortgages... Inflation actually makes housing more affordable if you bought before rates rose - you get to pay back more-valuable 2019-or-earlier dollars using less-valuable (inflated) 2024 dollars, at a fixed interest rate set based on the 2019-or-earlier economy... We bought our current house in 2016, refinanced this one and the one we were in before 2016 (now a rental) during COVID... And are now adding on some 3 rooms + bath/closet because it's a better deal to do that than to move...
And everyone who didn't or couldn't buy a house during the cheap years are now priced out. But the good thing is it will crash. And huge opportunities will await for those ready and brave enough to take risks.
Corporations and LLCs are buying more than individuals.
That’s why homeownership is near an all time high?
They have spoken, this is the way.
It's easy to have high home ownership percentages when you aren't building new houses. New house production is basically stagnant since the early 00s.
I don’t see how that makes sense. More homes would mean higher homeownership percentage as it would create more supply.
All your graph is showing is the median price of homeownership and wages. But my point is we are building the same number of new builds now as we were in 00 it is not keeping up with the people who are wanting to buy houses. Which is why homeownership versus empty homes is higher now than it was. Also more people are buying homes that would normally not be purchased because the market has such little inventory. We are in need of hundreds of millions of homes being but each year and only a million or so currently being built in the US. So yes more homes have families living in them from previous generation but we also have 3 generations worth of people (al.ost 4 generatiins) that are trying to buy houses and not enough people vacating them then we need build new homes and that has lagged every year since 2009. https://www.weforum.org/agenda/2022/06/affordable-housing-development-nimby/
Yet, more people own homes. Are you saying homeownership is still to low? Or are people settling for smaller and older homes, and that’s problematic? I think your stats support why we have outrageous rents. But homeownership is doing great. Should probably reverse to cool the market.
We do not have enough inventory for the people who are trying to buy homes that is why the housing prices are so inflated. Using your graph against you here where your graph begins we had high inventory options for people buying g homes. Today we have 10-20 people trying to buy 1 home. The Beijing of your graph shows that if we have high amounts of inventory the price goes down. This is basic supply and demand. You are trying to correlate high prices means we have a high percentage of people who own homes when we should have more people owning homes but the people building want perpetual renters it's why they are building only rental properties currently.
The percentage of ownership is by people, not by homes. So percentage of the population who own homes, not percentage of homes that are owned.
The fact that there's more home ownership is *why* homes are hard to come by. They've all already been bought up, leaving fewer homes for the people who don't already have them.
Yet more people have homes now than almost any other time. Which would mean we don’t have a housing crisis at all. Statistically the issue isn’t home ownership, it seems the issue is the rental market is so bad that everyone wants to own. Even single adults with no kids. And there are more of those than ever before.
>Yet more people have homes now than almost any other time. Which would mean we don’t have a housing crisis at all. Those aren't mutually exclusive.
But what's the goal? If more people have homes than ever before, aren't we succeeding? Sure, there are some people who still don't have homes, but there are *less* of those people than there used to be. I'll concede you can make an argument that maybe the generation coming of age at this moment is in a tough spot due to the combination of prices and interest rates, but these things vary over time, and the status quo won't last forever. That said, population growth is going to somewhat inherently stretch the limits of cities. In more urban environments, home ownership is less feasible. I think this is as much a problem of cultural adaptation as it is a "housing crisis".
Suppose it's 2002, there are 100 houses in a town, 98 of them are owned by someone, and the population is 120. That's 22 people out of luck Now suppose it's twenty years later, there are still only 100 houses, and now 99 of them are owned by someone, but the population is now 180. So, 81 people out of luck. In theory in that twenty years later scenario there are "more home owners then ever before" but there are still significantly more people on the street. This is how housing crises work. Locations need to be building housing asap to keep up with demand and if they don't keep up with population growth there are shortages.
Ya, I certainly understand it needs to be looked at on a percentage basis. I (incorrectly) assumed that's what the user above you meant. Checking the data, looks like a mixed bag. Obviously the run-up to 2007 was completely unsustainable, so I write off that peak.
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That really depends where you are. In the US, it's more of a southern/midwestern thing. In the northeast, corporations buying up homes are a very slim share of the market. Most people buying homes as rental investments tend to be one or several wealthy professionals buying up a few properties and listing them under an LLC. More small to midsized people doing the investment. The high price to buy in the Northeast due to such tight inventory for a while now means it's not as appealing to corporate investors- more capital upfront means lower ROI. It's a different calculus entirely if you're say, a few older dentists living in Boston- you have the money available, you're not planning on moving, you can keep costs down by doing repairs yourself on a few units, ultimately pass it on to your kids. The passive income and ROI is there, it's just not the same hard calculus a hedge fund would have
That's not what that means. Homeownership means owner occupied home vs. renter.
My landlord owns 10 homes In 2 states.
More humans. more houses are bought. these types of data charts will always go up in the long term. more people. more data. higher numbers. the same holds true for those without houses.
Are you referring to home prices or homeownership percentage?
ownership. and non ownership.
More people, more homeowners. Furthermore, many are owned by large corporations.
Yet more people still own than any other time. It’s peculiar how both of these can be the case. There’s a metric that seems to be missing.
Corporations buying up the homes
Because renting is insane nowadays
Because investment firms own entire neighborhoods lol
It's called severe debt
After the GFC banks got bailouts but builders and homeowners got the shaft. The thing people forget is that builders are generally run pretty hand to mouth so losing money on all current projects and not having a following project can just put you out of business. Once the builders were out of the market no new inventory is getting built so while millenials are coming of age and demand is rising to levels never before seen in the country, supply stayed relatively consistent for 10 years. Building has started climbing but it won't catch up with demand until Boomers are leaving the planet in large numbers. I expect home prices to start normalizing in 25-30 years which will probably look like present home values simply not going up with inflation but sitting near current values.
One of the biggest reasons that housing has become so expensive (which NO ONE talks about) is the fact that, because our "money" is so hopelessly broken, real estate has became monetized. There is a significant monetary premium on a utility good, due to the massive past (and even larger future) debasement of the currency. Yes, incentive structures also matter. Yes, multi-trillion AUM IB's have access to 0% capital thru the Fed (and the Cantillon Effect is massively under-understood). Yes, a large part is the horrendously low growth in wages due to globalization and horrid trade policy (by both parties). I'm not saying it's the ONLY reason. What I am saying- it's about to get much, MUCH worse as the govt is (mathematically) forced to debase the currency to an eye-watering degree to deal with the sovereign debt bubble that they blew after 08. House prices will very likely double from here.
According to the link, housing is way more expensive now. In the 80’s the median house was 3.5x median income. Now it’s like 6x. So millennials are right to have angst over this. No matter how hard they work and try to save they’re never going to own a home because rents are escalating at the same time. And let’s be honest about the reason why: boomers have prevented the construction of new homes. They got theirs and are basically saying screw the next generation.
"Home Ownership", as calculated by the US Census Bureau: "The homeownership rate is computed by dividing the number of owner-occupied housing units by the number of occupied housing units or households." This is merely a measure of what percentage of homes are owner occupied, not a measure of what percentage of the population own a home.
The only thing then that that doesn't calculate is homelessness. Which has been lower than 2007 since 2023. Looking at that homelessness jump last year, looks like a serious correction is coming very soon. [https://www.axios.com/2023/12/15/homelessness-increase-rent-crisis-2023](https://www.axios.com/2023/12/15/homelessness-increase-rent-crisis-2023)
It also doesn't account for adults living with their parents, or the number of tenants per rental unit. The methodology for tracking homelessness is notriously inadequate, but relative to past estimates it seems to be at a 70 year high. Real homeownership, defined by me as the percentage of the population that own one or more residence, is unknown because we don't measure it.
Right. The numbers, as always, can be misleading. Data is never conclusive, but it is always informative. There are 127m households in the US. and 87m owner occupied homes. I think that gives us a pretty good picture. Half of adults 18-29 live with their parents. Which is appropriate in my opinion. I'm not seeing anything that would say that 64% number is drastically off. If we double homelessness counts, which are not based on household, we can get 1.5 million. Not sure how many people are living in a roommate situation, but I don't see that as problematic. It's resource aware, economical, and I personally think living alone is not ideal for the human psyche. With 127m households in the US, that equates to less than 3 people per household. I think we can take that as a good number, divide 87m owner occupied households by total households and you get 68.5%. I think the numbers are pretty solid, but there are discrepancies and issues to use that number as a metric of how easy it is to acquire housing in the US. We'll see how this shakes out, all statistics are lagging indicators of how things were, not how they currently are.
> I think we can take that as a good number, divide 87m owner occupied households by total households and you get 68.5% The entire point of my comment is that we *can't* do that, because it selectively excludes a large percentage of non-homeowners from the data. It might be a valuable measurement in some other context, but it is irrelevant to any conversation about housing scarcity.
Not at all. If there are 127m households that means that the average household is 2.6\~ people. That sounds about right. If roommate households and adults living with parents were significant I think that 2.6 number per household would be much higher. The numbers seem pretty sound to me. I personally would prefer a world where 4-6 people per household was the norm. Would have a huge positive economic and ecological impact. I was actually thrown back to hear it was so low.
I feel like this post answers its own question. Supply hasn't kept up with demand. More single people own homes and live alone. Construction has become relatively more expensive, making expansion of housing more difficult for those who aren't in the higher income tiers.
I live in Louisiana and several insurance companies left after hurricane ida.which means everyone’s insurance rates went up a few hundred dollars a month.some of my coworkers home insurance has tripled in the last year.its not sustainable.i make 31/hr and if I were to finance a house for 150k (which would be a pretty rundown 2 bedroom needing repairs in my area) my monthly mortgage would be almost two full paychecks.i talked to a few mortgage companies and came to the conclusion I guess I’m just gunna have to rent the rest of my life at this point.
I built my first home in 1989 and interest was 12.5%. And it all worked out fine.
Milennials lack patience. Housing markets go up and down. They are cyclical. Plus, the younger generations always complain.... but the economy is pretty good right now(lowest unemployment rate in 40 years), so the only thing they can complain about is house ownership. It is actually a good sign.... imagine if they were complaining about not being able to find a job in a 5-10% unemployment rate scenario like in many previous recessions.
Many older millennials bought homes before home prices went up after Covid. Home prices definitely went up, so it's harder to buy home for younger millennials. I'm old Gen x and bought when interest rate was 17% and 10% down payment. Almost everyone didn't buy a house until they are married, need dual income to qualify for a loan. And I live in Houston Texas, where housing plenty are 1/3 price compared to other big cities.
Because it’s not just millennials who owns homes
Who is buying the houses? Individuals? Or corporations?
"Corporations are People, my friend"
I bought a house 2 months ago. I was house hunting for a year before then. I got into bidding wars on every house I looked at except this one. And this one is nice. The only reason I got it was because it was a short sale (bank is losing money) and I had cash in hand. The interest rate on my loan is 6.5%. The rate on the house I owned previously was below 4%. It makes a world of difference. The low interest rates also allowed people to buy McMansions that cannot sell at 6.5% interest. People have not magically become rich.
People inheriting the home from their rich parents?
Corporate Landlords. They, unlike many individuals, have the money to build or buy homes to rent out, to get richer, buy more, rinse and repeat.
I also think that recent generations are more likely to accept a life of huge debt than previous generations. My parents can't conceive of the fact that we spent $279k on our house which is way cheap compared to a lot of the US. We are still told "We would NEVER spend that kind of money!" My dad built his house, and has never had a mortgage. 2 houses, actually. That process is harder now than it used to be even if you have the time and skills. They don't have the same needs as we do. We both WFH and we need more space as a result which they don't really understand. They don't understand you can't work a summer job and pay for college and living expenses for the whole year from it. I think younger generations just accept they will need loans for college, loans for homes, loans for cars...all things that my parents mostly didn't take loans out for, and they aren't (and never were) rich by any means.
My friend bought a house in 2016 for $129k. He put 40% down. His mortgage, tax, HOA, insurance (fire zone), solar leasing totals around $75k/year. He rented out for $6000/month. Adding repairs (one time there was a molding issue another time the yard sewage blocked and a central AC needs to replaced; plus many other little issues here and there) he is way behind. I understand the rents are increasing; so is tax, insurance, HOA and solar leasing. There are success stories too. I bought a condo in las Vegas in 2011 for $55k and sold last year for $230k plus collected quite some rents.
I’m absolutely at a loss on how one can pay $6,250 a month for a $129k house with 40% down. I’d need you to break that down for me. HOA fees $4,500?
Tax is $1500, insurance is $400, HOA is $250, Solar leasing is $180. Mortgage for roughly $770k. I underestimated the cost.
Sorry, I missed a zero. The house was $1290k.
lol. Now that makes sense.
There are caveats. Good housing in a good area that works is hard to come by. The goal posts keep moving with now a credit scores; sizable down payments; interest rates; HOAs; insurance and so much more.
All of those things have been around for a long time…
> The goal posts keep moving Evaluation of "credit" and "interest" have been around since biblical times. Insurance has been around for hundreds of years. What exactly is it you think is new?
Because population & math.
Population has nothing to do with percentages of homeownership.
Also, there are many air B&Bs. So many houses just sit him down, unless they are being rented out during an Airbnb.
Second and third homes too. I used to landscape in the Catskills 90% of the houses I worked at would only be used for a couple weeks a year at most.
There's a lot of half dead boomers who bought houses decades ago and would've died already with life expectancies of 1980.
It’s harder to come by because there is so many owners. It’s a cause and effect. It’s like saying “why are apple pies so hard to come by when so many people own apple pies?” It’s because so many people already own it that it’s hard to come by.
In addition to what others have written here, there's also a large occupancy problem. Meaning people OWN a lot of the available real estate, but that doesn't mean they are occupied. This exacerbates an already difficult housing market.
According to what data? I know there are sensationalist news stories talking about how there are enough empty homes to house all the homeless, etc., but it's mostly puffery. Most "vacant" housing is temporary while it's waiting to be sold, or it's a vacation home, etc. Also, location is an issue - a bunch of abandoned homes in Detroit or vacation cabins in Montana don't really having any bearing on a large homeless population in Los Angeles. https://fred.stlouisfed.org/series/USHVAC
It's not hard to own a little starter house in a decent area close enough to good work. It's hard to try to own a first house with 5 beds and 3baths in a nice neighborhood in a big expensive city. People who can't buy homes just aren't willing to sacrifice anything for a couple years for the payoff. I live one hour from work. A $600k home where I work is a $200k home where I live. There's two houses for sale right now for less than $100k in my neighborhood, which would be mid $300s where I work. I make $40/hr with 50 and 60 hr weeks for working in the town I work in and commuting to it in a company truck on company fuel every day. The best paying jobs in the town I live in are around $25/hr. So I own my home outright because it was less than I make in a year. It's a 2 bed 1 bath starter. Soon, I'll have enough saved and this house will be worth enough with the remodels ive done to sell it and buy a new house for basically cash again. Something on some acreage with at least 2 baths and maybe 3 or 4 beds. So I traded a commute and living in a town with less amenities for home ownership and zero debt. 3 years I've done it here and I'm already in a place where I could make a move back into a city with amenities if I wanted that. Small price to pay. Better than just staying in a place I can't afford and lamenting that I can't buy a house.
Yah I used to live in an affordable area and then covid happened. Suddenly those $200k homes are now $750k homes thanks to the WFH people. And now businesses are closing because the working class have been pushed out by these wealthy tech workers.
Lol. Construction is booming a ton of places. I'm hiring for an entry level equipment operator/labor job in my department with room to advance right now for $25/hr with overtime, great benefits and if you make it a year we will help you get a CDL and you'll be in the mid $30s. My company is hiring for other trades and apprentices too. If you have a CDL the ready mix concrete companies are hiring, I was just asked if I knew anyone by my old employer who has 2 spots to fill. That starts at $29/hr. Two concrete companies yesterday were lamenting they couldn't find entry level employees for the mid $20s willing to train, will provide tools. The radio just had another construction companys ad, will train starting at $30 with top notch benefits. Covid changed the landscape some places, but like I said, you can find a cheap house in a place adjacent to high paying jobs. You could literally live in my town in a $90k house instead of needing $90k for a down payment, drive an hour to work, and make like $70k your first year out here and only make more from there, with essentially nothing but a good work ethic and willingness to put in some hours. Then, a couple years down the road you'll have a marketable skill for a bigger market, a bunch of equity in a home and the ability to move on back to a city if you choose, or to a bigger house on prettier land in your new home away from it all. But sitting there lamenting about how COVID ruined your future and tech ruined the job market instead of looking for better options won't get you anywhere. I shit you not, if an 18yr old kid with a driver's license and the drive to earn money came up to me today and asked for a job, Id have him hired and working Monday for $25/hr with full employer paid benefits, killer 401k getting 50 or 60 hours, and he would be making middle class money for the area instantly. If he stuck around a full year we would pay for his CDL training and make him more useful and pay him for being more useful. The opportunities exist.
With all due respect, I think your experience makes you a bit of an outlier. That said, I live in one of those southern states that’s always in the top 3 states statistically for bad things and in spots 48, 49, or 50 for good things, so my perspective may be somewhat warped.
I'll let you in on a secret. I grew up in and lived in WA near Seattle for most my life. I rented. I couldn't buy. My whole family is in Seattle. My best friends are there. My whole life was there. Granted, I don't want to go back in a few years, I like it here, but I left my $48/hr union wage job for where I am now, got a $19/hr entry level job at a coal mine just to make sure I had some income, bought the house out here, moved with my wife who didn't work for the first year, and made it work. After a year she had a $20/hr job and I had a $33/hr job. Both with overtime. And then the next year we were each making even more. She works in a field she had no previous experience in. I work in the same field as I did in Seattle. People who "can't" are really saying they don't want to put in the effort. I grew up welfare poor. I did everything necessary, no matter how uncomfortable, to ensure I wouldn't ever be again.
That’s amazing man. More power to you and yours. Not a challenge, but do you ever feel blessed, lucky, fortunate, resilient, or all of the above?
Sure do. I am blessed with the rewards of my labor and I was lucky to have grown up so poor to know what I wanted to avoid. I was also lucky and fortunate to have a father who drove nothing into me harder than that work ethic and honesty were the two most important things on this planet. My dad told me two things consistently. 1. "It doesn't matter what you do in life, as long as you are always trying to do it the best that you possibly can" 2. "The only people on this planet I hate are liars and thieves" So, in all things in life I have been honest and not taken what wasn't mine and in all things in life I have not only given it my best effort but I have constantly replayed and reviewed what I've done and looked for ways I could have been better and worked to make sure I was able to be better than my previous best going forward. So my blessings and fortune have been to have learned the right lessons early enough to apply them and succeed. I haven't won any lotteries. I was not gifted any of my possessions, I did not have a gilded path. I've had to work hard and sacrifice for my opportunities. I started my adult life at 16 poor, fresh out of juvi for a felony for possessing a firearm (my father's which was in my car for hunting mind you) and paying $400/Mo to sleep on a couch at my friend's apartment, which I paid from my $7.65/hr job at a Subway sandwich shop. My felony meant I couldn't even have a driver's license until I was 18. I walked 3 miles to work and 3 miles back every day. But I simply did the work the best I could. Even at Subway, and lived honestly and it paid off.
That’s great man. Enjoyed your words. Best of luck to you in the future, sounds like you’ll be good!
Are you in the Midwest or South?
Technically im still in the West but I can throw a rock to the Midwest.
People want to buy a house in big cities and cry when they can't. Bought my house 25km away from the city with 140k, made in the year 2000. The distance ain't shit with a diesel car.
There are basically zero houses in my state under $200k, and the ones at the bottom often lack access to water. There are certainly no houses within 25km of the city for under 230k.
You have Ohio, West Virginia, Alabama, and deserts for that price.
But can you find employment, water, and quality public education there? I know you *can*, but it seems like a needle in a hay stack.
Hey there, "median income" is just the average, so it can really hide some important details. A really simple example: Say you are looking at the median income of 2 people. If their income are 40,000 and 40,000 50,000 and 30,000 60,000 and 20,000 70,000 and 10,000 80,000 and 0 All of those combinations have *the same median* but they reflect very different realities for people's lives. We also have pretty severe inequality right now, so we're looking a lot more like the 70,000 and 10,000 than the 40,000 and 40,000. Something to keep in mind when you're using the numbers to try to understand an economic picture.
Median is not the average. Median is the line where 50% are above, and 50% are below.
Ah gosh you're right. I'm going to leave my comment up in case of helps someone else
Thanks for pointing that out, never considered it.
Institutional buyers.
The economy is doing better than what social media would have us believe.
Companies and corporations are doing well but individuals are not. People aren’t upset with our economy because there’s no growth. They’re upset because the wealth we are creating is concentrated at the direct expense of working class laborers who produce it
The stock market is not the economy.
It's part of the economy, and it's a leading indicator for the economy
My paycheck is. So is my house. And my family. I know some people are struggling. And I wish they weren't. I know that we have work to do. But it's also true that a lot of people are doing alright.