In other news (apolitical thread)...

[Cincydawg]

Another factor, maybe, is folks broadly can't deduct mortgage interest on their taxes.  That was a subsidy for many, lost in 2018.  I think there are a lot of various factors involved in this, cost is certainly the top one I suspect (relative to income).  

There is an old saying in Wall Street, "Trees don't grow to the sky", but they can get taller than one thinks possible.  The current housing market does seem in many ways like a bubble.  Corporate buying I think is a significant factor in this.  I recall ca. 2005 individuals were buying up "fixer uppers" and flipping them, often for quick profit, TV shows made it seem lucrative.  I knew one fellow doing this and bragging about it, he got quiet after 2008.

I think it POSSIBLE the tariffs might tip us into recession, and no it hasn't happened yet.  The economy has seemed to me like it was "climbing a wall of worry" for years now.  It might not take much to spiral it down rather dramatically.  Not meant to be political.

[847badgerfan]

There's been no stagnation of wages in my industry.

[Cincydawg]

I think it's certainly a major factor that median incomes have increased a lot less than housing prices have increased.  That isn't really debateable I think.  

I have pondered a car maker who built a "Volkswagen" in the old style, a very basic car, as cheaply as possible.  It still would require investment, design, labor, and parts of course, so you save on parts because it's very basic, maybe it sells for say $15,000.  Your profit margin would be "slim" and probably none.  

Or you could build a $40K vehicle that is "nice" and your profit margin is probably decent, $2-3 K or so.  It's the same with houses, given a plot of land, you make a lot more money obviously on a $500K house than a minimalistic $200 K house.

[847badgerfan]

Builders generally shoot for 10-15% profit.

I dabbled in land development, to the point where I'd get the land entitled and then flip it. Buy the land with bank money, design/entitlement, annex, flip to builder.

That was a good gig. Should have done more of it.

It is much harder now, since the 2008 crash really. Money is not easy to come by. The banks learned their lesson.

[847badgerfan]

Roundabouts are becoming a thing here. They just put one near the downtown in Punta Gorda. 

It's a clown show (I was almost sideswiped yesterday). I thought about maybe just grabbing a six pack and sitting in an adjacent parking lot to watch the free entertainment.

[utee94]

I think what we might be getting at is you're telling younger people to want less, or that you/older folks simply wanted less than they do. Or somewhere in between. And that is what it is.

Edit: I should modify this somewhat. It sounds harsh, and my gut is much of the argument is just being harsh across generations unproductively. It feels like the message is basically, you’re gonna have to move far afield more often than not. Suck up the commute, all that. And if you don’t, well, no good house situation. Sorry.

Shoot, even in Ca. move far enough out and you can get that house. Or live in certain hoods.

(I think that bit about "gig" jobs is a misapplication of that phrase. And usually the inability to commit to location is tied to a high level of commitment to a career. That reads a bit grumpy old man for grumps sake, at least to me)

Your first paragraph is incorrect.  Your edits are more to the point, but I can put it more succinctly.

I'm telling young people to stop complaining that homebuying is impossible, when it's not.  I'm telling them to stop believing they have it so much worse, when they really don't.

For the people who AREN'T complaining, I'm saying nothing.

[utee94]

There's been no stagnation of wages in my industry.

Yeah, you're quoting a starting salary for an engineer of $94,000.

My starting salary in 1994 was $33,000.  In today's dollars that's $65,000.

[847badgerfan]

But engineering is too hard!

You old engineers had it easy!

[FearlessF]

Your first paragraph is incorrect.  Your edits are more to the point, but I can put it more succinctly.

I'm telling young people to stop complaining that homebuying is impossible, when it's not.  I'm telling them to stop believing they have it so much worse, when they really don't.

For the people who AREN'T complaining, I'm saying nothing.

Amen

stop complaining and get to work

[Gigem]

Yeah I think folks on this thread are talking about a couple of different things.

Not to put words in his mouth, but what I think Gigem is getting at, is that in some areas of the country-- perhaps many areas of the country not named California or downtown Atlanta-- there are options for younger people that aren't outrageously expensive.  California is a bit of an outlier here though and I don't really want to discuss it in this post, because even an OLD professional we know, on this very thread, has talked about his tale of loss and not being able to buy back into the market.  So I'd like to remove that type of situation from the discussion because although it has similar drivers, the bubble in California is a bit of its own thing.

So anyway I think Gigem's take might be stemming from a lot of the current complaints I, too,  commonly hear-- that owning housing simply isn't possible for young people, not the way it was for us, or for our parents' generation.  That we were the "lucky" ones and they are just completely shit outta luck.

The reality is, that the above isn't necessarily a true take.  Sure, a young professional or a young couple might not be able to afford something in downtown Atlanta.  But just because living in downtown Atlanta might be desirable for them, it doesn't make it the only option.

Cincy brought up the point that they might have to commute if they bought further out.

Well, duh.

My wife and I were young professionals making plenty of money and couldn't afford to live in downtown Austin, or anywhere near downtown Austin.  We had to buy in the suburbs and commute.  When I was working at AMD my commute was 45 minutes each way at peak traffic times.  This is true for pretty much everyone I know who is my age.  To varying degrees, we all had to move further away from the center of town than we would have liked, in order to be able to afford a house that fit within our budgets.

I looked up "average home price in Austin" and the internet tells me it's $550,000 - $600,000.  Sure, that's a lot.  That's even more than my current house cost me 13 years ago.

But I just found this listing for a house in Pflugerville-- a suburb just outside of Austin proper, between Austin and Round Rock.  $220,000 for a 1051 sqft 3-2.

https://www.zillow.com/homedetails/16012-Windermere-Dr-Pflugerville-TX-78660/29452004_zpid/?

Sure that's not huge or glamorous.  It's a STARTER home.  It's sufficient for any young professional or young couple that would like to own rather than rent.  It's 15 miles away from downtown Austin, 28 minutes in current rush-hour traffic.  My first house was also 15 miles away from downtown Austin.  It cost $125,000 and that was 25 years ago.  $220,000 doesn't seem all that unreasonable given the increase in starting salaries since then.

Thanks Marcus, you captured my thinking perfectly. 

[FearlessF]

It could be interesting to see the median age of first time home buyers over the years.  This is pretty telling.  One factor might be that some folks think the market is over heated and will collapse "soon" (some probably  have been thinking that for a decade).



Many first-time homebuyers are pushing 40 as millennials wait in vain for a better market

The median age of first-time homebuyers hit 38 last year, up from 35 in 2023 and almost a decade older than in the 1980s, when the typical homebuyer was just 29, the National Association of Realtors reported late last year. Homeownership rates for Gen Z and millennials stalled in 2024, Redfin found, while older generations continued to make “fairly standard” gains despite the high costs.
The jump in the average age of first-time buyers is shocking, said Daryl Fairweather, chief economist at Redfin.
“We typically think of a first-time homebuyer as somebody in their early 30s, not late 30s,” she said.

they are possibly starting families later, getting married and most of all having children later

[Cincydawg]

We walk about a lot and see a ton of people out of course.  The majority are younger couples late 20s early 30s, usually with a dog, less often with a child, nearly always a baby/toddler in stroller.  We rarely see a family with 2-3 kids in their teens, except over in the park.  I think those families don't live around here, they just visit the park for a picnic etc.

I'd say 80% of the residences here are apartments, so many of these young couples live in apartments, most are new and quite luxurious apartments with amenities.  It's a pretty good lifestyle for young couples making solid incomes, nothing to fix, no grass to mow.  They can afford it, but they aren't building equity of course, and rents go up.

They could jump into a condo, but nearly all condos here are 1-2 bedroom, the newer ones are nice of course, but you have HOA fees and have to repair anything that breaks inside your condo.  So, I think they get child 2 and look to jump to single family which means going further out, driving everywhere, mowing grass, etc.

[847badgerfan]

Welcome to life.

It's better than the alternative.

Make the most of it while you can.

Live the dream.

[betarhoalphadelta]

they are possibly starting families later, getting married and most of all having children later

I think this has an effect both on "real household income" and on housing prices.

For real household income, this means that statistically getting married later (or getting divorced) will lead to an increase in the number of one-adult households relative to the population. Whether that's kids or no-kids. You could have a case where individual incomes of workers are consistently going up, even outpacing inflation, but that average household income is declining, if you have an increase in the number of one-earner households relative to two-earner households. 

Think about it in my case: in 2015 my family was one household that was 5 people, with a specific household income. In 2016 my family was two households with an average household size of 2.5 and an average household income effectively half of what it was in 2015. My (and my ex's) incomes didn't change appreciably, but our average household characteristics changed massively. 

This has an equal impact on housing. Let's say our average household size in a country of 340M is 3.4 people per (to make the math easy). 3.4 is *close* to the average household size in 1960. If that's the case, you need 100M housing units--1 per household. Now let's say you use an average household size of 2.5 people per household--the actual number today. For the same 340M people, you'll need 136M housing units. 

Likewise in my case, in 2015 my family required one housing unit for 5 people. In 2016 it now required two housing units for 5 people. 

These are areas where you have to think more deeply about stats as demographic composition changes. You can make a statement like "real household incomes are stagnant" and it be true, but that doesn't mean that individual wages paid to individual workers are stagnant. 

(Obv in my specific case it was different because I met my now-wife, she moved in, and that complicates the math because between my ex, my kids, myself, and my new wife we were two households comprising 6 people in 2015 and by 2017 after she moved in we were... 2 households comprising 6 people. But had I not found her...)