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It's not that they have no net worth...its that they have little to zero chance of ever accumulating any, unlike any prior generation. I'm sure you have heard that this is the first generation to not do as well as their parents......this is taking place in Europe as well, where, for example, in Greece, close to half(49%) of all adults between 18-34 are unemployed.
That means few will have a chance to buy a home, and most will struggle to even raise a family....put another
way, most are struggling now just to support themselves, whether they are still living at home or not, and this into their 30's.....
That being said, the 18-34 cohort in the 60's and 70's were already buying homes and raising families in that cohort(18-34)....so the answer to your first question would be, as recently as the 70's most of that age cohort was raising families, and many were buying their first homes....
My parents bought their first home in 1966 in a Chicago suburb, when they were 24 and 23......
Your answer to the other question, "Why shouldn't the oldest generation have the most cash?"......That was not always the case....up to as recently as 1963(just before Medicaid), seniors were the poorest generation, and saved little.....they made little, few lived as long as now, and med bills, pre medicaid, ate up their savings......People told jokes about old people eating Alpo dog food back then(which many did as they could not afford regular meat)....
It is unheard of for seniors to have more savings than other cohorts, as they generally outlive their saving, and cannot work to generate more income anymore, thru history, till the 70s, when that started changing.
Now, we live in a topsy-turvy world, where the age groups that are traditionally the biggest spenders, the young adults, and middle-aged ones raising families, have the least net worth, and seniors, traditionally the tightest with their savings for good reasons, having the most...
I disagree. By the time you retire, you should be mortgage free and your pension and SS covers your living expenses. Hopefully you invested well and now can travel the world spending it.
I'm sure you've done well for yourself, but you're completely overlooking the fact that millennials have large barriers to accumulating wealth that you simply didn't face. At the risk of oversimplifying the issue, I'll highlight just a few:
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- When you were in your 20s and 30s, there was a much broader job market for people without any education; Now, you wouldn't be competitive for most entry-level jobs without a college degree, and you'd be competing with a much larger population. Maybe you could work in a factory, but you'd have to move to Asia first.
I am not a Gen Xer - I'm a BBer. I was part of the largest generation ever born, so please don't lecture me about competing with a large population for jobs.
My son has dyslexia and struggled in school. College is not a good option for him, even though he has a high IQ and great verbal skills. He is currently enrolled in a trade school and studying welding. He LOVES it.
My son in law is in his early thirties. He did not finish college. He also went into the trades and is doing well.
I worked in the staffing industry for over ten years. Many companies are DESPERATE for trades people. But for some reason, I guess many people think that those types of jobs are beneath them. They don't realize just how much money is available in those fields.
By the way, in spite of all this focus on the necessity of obtaining a college degree, or the belief in that necessity - bachelor degree graduation rates for those over 29 years old have hovered around the 35 percent mark nationwide for decades.
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When you were in your 20s and 30s, if you wanted to go to a four-year college to make yourself more marketable, it wouldn't cost you well north of $100K; Now, it would.
People do not have to spend $100k or more on a four year degree. There are plenty of community colleges that don't cost NEARLY that much.
By the way, adjusted for inflation, the community college I went to back in the early 1980s costs about the same now as it did then. You can attend classes full time all year round and the total cost including fees is around $11k a year. https://academics.columbusstate.edu/...ition-fees.php CPI Inflation Calculator
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When you were in your 20s and 30s, it was still possible to find jobs with pensions that would continue paying you while you did crosswords puzzles and played cribbage; Now, you're more likely to find a unicorn. On a related note, you also have the luxury of a Social Security system that won't run out before you die; the future is far less certain for millennials, who will likely have to pay into the system at a higher rate in order to recoup just a fraction of the benefits you will receive.
LOL about pensions. Pensions were rare to non existent in my working world during my 20s and 30s so I really don't know where you're getting that idea. I've never worked anywhere that offered pensions - they've been basically unheard of in my working lifetime.
Also, I am 54. My social security benefits are already forecast to run out just about the time I desperately need them - when I'm in my early 70s. And in fact, I recently received a letter from the SS department, which informed me that I will most likely have reduced benefits even at the start of when I'm eligible. So yeah - I've paid into the system all my life and my benefits are going to be reduced right along with yours and everyone else's born after 1960 or so. You're not having to pay into anything at a higher rate yet and don't have any news on exactly how your benefits may be cut - but what I know is that I HAVE paid in all my working life, expecting promised benefits that I now will not receive. So, quitcherbitchin.
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Housing prices rose exponentially near the twilight of your career, particularly for those who were fortunate enough to have bought in the right areas. Meanwhile, inflation-adjusted wages have remained stagnant for all but the upper class. These days, a "middle class" millennial couldn't even afford the downpayment on your generation's starter homes, much less the mortgage.
Oh please. Most Millennials I know wouldn't dream of living in the first house I bought, which was only 1300 square feet. And guess what - I'm not some old codger just trying to play cribbage or do crossword puzzles - My husband and I are energetic, active, working, tax paying adults who have been and continue to be affected by the ups and downs of the real estate market. For instance, we lost a chunk of our equity when the housing market crashed in 2008. We also lost a chunk of our retirement funds, but I digress. Anyway, fluctuations in the housing market affect us just like they affect you.
But back to the housing costs. There are lots of variables but I have an interesting statistic for you. Did you know that PER SQUARE FOOT, and adjusted for inflation, housing costs today are no higher than they were forty years ago? I've already posted the links to this information repeatedly so I'm going to let you look that up yourself, but I promise you that it's true.
The thing is, back when BBers were buying their first homes, they were buying true starter homes. Tiny little places - no luxury finishes or "master suites" or playrooms or home offices or even two car garages in most instances. Tiny bathrooms, tiny kitchens.
I worked in real estate for several years and the thing that invariably struck me about first time home buyers in their 20s and 30s was that their expectations were incredibly high. They invariably shopped at the very top of their approved limits. They often thought it was reasonable to put zero or maybe 5 percent down and buy a house the minute they got engaged - heck, forget about even waiting to get married and SURELY no one expected them to (gasp) RENT now that they were "real adults!" They often had their parents along with them house shopping - parents about my age. I continually heard comments such as, "Wow, this is nicer than OUR house and we've worked all our lives," or "Gee, honey, remember the first house WE bought - it sure didn't look anything like this!"
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Bear in mind that many working millennials pay taxes, too. There's no credit or deduction for being born between 1980 and 2000. In fact, because millennial problems don't really interest Baby Boomers or Generation Xers, Congress hasn't exactly rushed to ease any of the burden.
What? I understand that many millennials pay taxes too. I also understand that over 50 percent of Americans receive more in tax refunds and government benefits than they pay in.
I understand a LOT about taxes because I've been paying them for 39 years. And I haven't received a tax refund in probably twenty years. In fact, I send in huge checks to the IRS every year. So please don't lecture me about taxes. Oh, and by the way - my husband and I pay $1000 a month for health insurance - with a $5000 deductible (each) and a plan that basically means that we pay for everything up to $5000 before the plan kicks in. It was the best plan we could find. But hey, good news - we have pregnancy and pediatric dentistry coverage - which we don't need but which we are forced to pay for every month. (Hint - we're paying for someone else's coverage, not ours - and that someone is significantly younger than we are.)
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Consider: Married tax filers can deduct mortgage interest in their first AND second homes secured by up to $1 million in debt. That's a nice chunk of change, especially when you consider that no one needs to spend $1 million on a home, and second homes are clearly a luxury item.
Nice, but the reality is that not many people own two homes - at least not two homes that are used for their leisure. A second home as an investment property/income producing property is a business venture and more common - and is not a "luxury item." And may I suggest - that if a younger person wants to invest in a second home, maybe their first home needs to be scaled back a bit. I could buy two homes too, since I bought exactly HALF of what we were qualified to buy - rather than buying the absolute max we were qualified to buy. Of course, my home isn't nearly as luxurious as some of the homes of my younger friends and acquaintances.
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The National Association of Realtors estimated about a year ago that there were about 44 million second homes in the United States — about 7 million private vacation homes and 37 million investment units.
Home ownership has remained at about 64 percent of Americans by the way since the 1960s (but peaked about five or ten years ago and has sunk back down to the mid 60s percentile). Meaning that about 64 percent of Americans can deduct mortgage interest on their homes (and second homes if they own one). And home ownership rates have dropped about five percent ACROSS THE BOARD, ACROSS ALL AGE GROUPS except the very elderly, over the past five years of financial instability. This financial instability has affected EVERYONE, not just Millennials. http://www.census.gov/housing/hvs/fi...nthvspress.pdf
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But if you want to deduct student loan interest, you're capped at $2,500. So if you have an effective tax rate of 25%, and you pay $15,000 in interest on $120K worth of student loans, you only get to write off $625. Also, the student loan interest deduction is gradually phased out depending on income. In the midst of all this, don't forget that the federal student loan rate is 6.8% (nearly twice the rate of some private loans), and those loans are not dischargeable via bankruptcy.
All the more reason to avoid student loans as much as possible, especially federally funded student loans. And it IS possible if students attend less expensive schools, work part time, take out grants, earn scholarships, etc etc.
By the way, if you own a home you get to take the student loan deduction AND your other home ownership deductions, if you qualify income wise.
The obvious retort is that millennials shouldn't have taken on so much debt. Perhaps not. But without a college education, it's far less likely that someone starting out in 2016 will be able to achieve the same professional success that you and your husband eventually were able to enjoy in the '90s and '00s.
Look, my I am a BBer and my youngest brother who is ten years younger than me is a Gen Xer. I worked 30 hours a week and paid for half my college education. My husband worked at least 30 hours a week and paid for his own college education too. We took out grants but no loans. We didn't carry a full load because we knew we couldn't work enough hours to pay for a full load and actually do well in the classes. We went to community colleges. Lest you think that's not particularly lucrative, my husband, with his community college degree, earns more than many doctors. And lest you think that's because of his age, people with the same background as him, in their thirties, are also making the same amount of money as he is.
The griping about income disparity seems mostly to come from considerably younger people, who simply do not have the time on the job, the experience, the career stability YET that older people have. They seem quick to discredit or ignore or push aside the very real struggles that earlier generations had as we were building our lives and careers. My gosh, it's not like we graduated from high school, took a trade school class or two, and began making tons of money in our twenties and thirties. We have WORKED HARD FOR DECADES to get where we are today. We've sacrificed, gone without, sweated, paid taxes, been laid off, lost homes, stood in long lines waiting for exorbitantly priced gas, weathered several crippling recessions, lost retirement funds, and now many of us are spending money on both kids in college and elderly parents - and we realize that we will be working till we are probably in our seventies.
I'm not complaining. I'm just saying that life hasn't been a walk in the park for most people - even older people you see around you with retirement accounts, homes, nice cars, etc. When you get bitter, ask yourself if you'll still feel the way you do now after you've worked for 40 or 50 years, saved for retirement, paid your home off (FINALLY), and earned every bit of every thing you've got. Wouldn't you look askance at some 20 something year old who was jealous of what you had, but who hadn't done much to actually earn what you have earned?
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Eventually, young people will develop new job skills to meet society's new demands, but right now there's a very large contingent of older millennials caught in limbo. When the government was extolling the virtues of a college education and giving out subprime student loans like candy, these millennials didn't foresee that they would be graduating into oversaturated job markets, or that unemployment and lower wages would throw them into a cycle where every cent of disposable income goes toward student loan payments, leaving nothing for home ownership or retirement savings. If you want to judge them for failing to predict the future, that's fine... but let's make sure we're comparing apples to apples when we lecture them for not being as plucky and resourceful as their elders.
And for the record, I have five Millennial kids (including my youngest - my stepson, who is still in college). Without exception, the four who have already "launched" are doing well - they are self sufficient, building careers, growing their families, etc. Most of them (and their spouses - two are married), have some college but have not graduated with a four year degree. In the mix we do have a couple of college grads and one more on the way. A few of them have trade school certifications and training. They're not wealthy - but of course they're not from a wealthy family (we were definitely middle class while they were living at home). They're from a family of entrepreneurs and military and tradesmen and those are the fields they've gone into as well, and are doing well in. They all have comfortable homes, decent vehicles, they go on vacations, they are involved in their communities, and most importantly of all - they are all healthy and happy and so are their kids. Each year they do a little better, get a little more financially secure. My youngest daughter is going back to school in fact - she has the time and money to do so, even though she's married and has kids (she doesn't have to work so she's a stay at home mom while her kids are little - her millennial husband has a decent job that supports the family). Not a one has student loan debt or really ANY significant debt.
They seem to be pretty normal and as you know, birds of a feather flock together, so I've met many of their friends and peers along the way, and they seem fine too. You know what they seem like? They seem like young people just starting out, building families and careers and occasionally struggling - just like I did at their age.
Last edited by KathrynAragon; 02-11-2016 at 10:41 AM..
Not all millennials are web designers for google. Just like not all baby boomers were advertising executives for Proctor & Gamble or all Xers were programmers for Apple.
Speaking for myself compared to my parents at my age (33), I'm in a similar spot, but somewhat behind. I'm on almost the same career track as my mom was, but at my age she was able to afford a significantly better house with more or less the same proportional income.
They had to deal with ridiculously high interest rates. That was not fun. However, their overall costs were lower. There are 3 things that I would trade for my parents problems.
1) Lower housing costs. Partly this is because detached homes have gotten significantly larger. Developers like to build "luxury" units these days, not "entry level" units. The "starter homes" of the 1960s-80s are now in either crime ridden neighborhoods or trendy expensive neighborhoods. I would choose paying 12% on 75,000 over paying 4% on 380,000.
2) Health care costs far less significant. Health insurance was barely even a thing before the 1980s. My dad never bought it until the late 80s sometime. My mom had it through work but it was not consequential. You could still buy "hospital indemnity" plans and things like that. In the last 25 years health care costs have gone insane. Now we are forced to buy health insurance or risk instant bankruptcy if anything goes the slightest bit wrong with our health. (Ie: one of my college roommates rolled over in his jeep (not drunk or anything), he needed surgery on his shoulder, INSTANT 60K of debt).
3) College costs not significant. Even adjusting for inflation college is about 700% more expensive than in the 1970s. That is a fact. My mom attended University of Notre Dame from 1971-75. It cost her dad about $3000 a year - at that time what seemed like big money, but nothing compared to the 50K+ it costs now. I could not even think about taking advantage of legacy admissions there. I went to a mediocre state school 2001-07 and it cost me $36K of debt, although that was for a double major AND a master's. Compared to today - that same school is 100% more expensive than even when I went! Today's kids are even more screwed.
I would trade my college costs for my parents' interest rates ANY DAY.
As for the job situation... well... manufacturing jobs did start going away in the late 70s. I'd say our job situation is a little tougher now just by virtue of more competition.... but based on my parents experience it was not like they just got any job they asked for.
There are some older people that are just jerks I guess. Both my parents seemed very aware of how young people of my generation were getting screwed, but didn't know what else they could do. My mom especially seemed to get it, more than my dad.... my dad did sometimes think that maybe I wasn't hustling enough. Although he also had serious trouble operating a computer so did not fully understand the economy by the time I hit middle school, let alone the workforce. I remember him being amazed at our Apple II's and Macintoshes in elementary school.
Completely agree with all your points.
I'm 29 and started college in 2004 at a state university, paying roughly $2500 a semester in tuition, with each credit hour pass the 15th being free - no difference if you took five vs. six/seven classes. By the time I left in spring 2010, it was almost $3500 a semester. Today, it's roughly $4500 for just 15 credit hours. Throw in the incidentals for the restarted football team, relatively new dorms, etc., and you're looking at double what the total package was only a decade ago. FWIW, other than medical care, I can't think of anything else that has significantly increased in price in that area since then.
Here in Indiana, housing costs aren't at all prohibitive, but I have a few friends and peers who are in high-earning fields in NYC and SF, in a relationship, and still can't afford to buy. These people are basically at the mercy of the out of control rental market, probably spending an ever increasing share of income on housing.
When my parents were my age, many small towns and rural areas had at least decent employment options. Today, that just isn't the case - manufacturing, farming, mining, and other jobs that were traditionally done in rural areas have either been eliminated entirely, automated significantly, and don't require as many personnel as in the past. Jobs are concentrating in major metros, which is squeezing more people into those areas, further increasing rents and home prices.
The world has been fundamentally transformed and not for the better.
This thread is incredibly confusing. Most people referencing how hard millennials have it are speaking in absolutes, like college costing "100k", "It's not that they have no net worth...its that they have little to zero chance of ever accumulating any, unlike any prior generation.", etc.
Then we have a few millennials like BostonMike and others talking about how well they are doing and that gets relegated to, "well not all millennials are as lucky as you".
So we either need to speak in averages or absolutes, you can't have your cake and eat it too. I am a millennial with a family and IMO I have fairly healthy positive net worth for my age. So this statement: "It's not that they have no net worth...its that they have little to zero chance of ever accumulating any, unlike any prior generation." is blatantly false as I am one of the "THEYS".
In some ways we have it harder in other ways we have it easier. It has never been easier to get a quality education with the advent of the internet and all the free courses/courseware offered. Interests rates are at an almost all-time low. In other areas, college is more expensive, but it isn't 100k unless you choose to go to an elite private university, I know plenty of people that did 2 years at a CC for less than 3k/yr and 2 years at a local state university for for less than 10k/yr. That's about 30k all in. Expensive, definitely, 100k expensive, no. I think that a lot of millennials want to live in the most expensive parts of the US too, which doesn't help. Living in San Fran if you are working in tech and making good money makes sense. Living in San Fran if you are an administrative assistant or a project manager probably doesn't make sense.
If people lived today like families in the 50-70s they'd get ahead too. One car per family, one TV, home phone(you could sub a single cell phone) at dinner at home every night, bought a 1200 sqft house that was 3/1 etc
You have the right idea. It is not the items themselves, but monthly fees. You might have three TVs, but cut the cable! Have one telephone bill. One car payment and try to limit monthly services.
I pay one utility bill; it is electric, water, sewer and garbage on one bill. Then I have one phone bill and my internet bill. My house is more than twice the square foot you suggest, yet I live is the lower deep south and do not, or very seldom do use air conditioning. Where my neighbors have over $300 a month summer utility bills, mine averages about $100 and that is because it has all the other services.
Younger people I know, my kids and grand kids included do not seem to realise how much they spend on monthly service bills!
Eating at home is another money saver; although I well understand how inconvenience it is for them when they are both working. I never eat out!
If people lived today like families in the 50-70s they'd get ahead too. One car per family, one TV, home phone(you could sub a single cell phone) at dinner at home every night, bought a 1200 sqft house that was 3/1 etc
Vastly unrealistic. You NEED dual income today to equal take home pay as you did in the 1950's-70's. Period. I'm not saying everyone in a family of four needs a phone, let a lone a smart phone but mom and dad need one. Because both mom and dad need to work and likely do not work hours that they can share a car, they need separate cars. Many in this thread have stated we don't see "starter homes" anymore either. I'm all for cutting back including ditching cable packages but let's be realistic when making cuts.
It's not that they have no net worth...its that they have little to zero chance of ever accumulating any, unlike any prior generation. I'm sure you have heard that this is the first generation to not do as well as their parents......this is taking place in Europe as well, where, for example, in Greece, close to half(49%) of all adults between 18-34 are unemployed.
That means few will have a chance to buy a home, and most will struggle to even raise a family....put another
way, most are struggling now just to support themselves, whether they are still living at home or not, and this into their 30's.....
That being said, the 18-34 cohort in the 60's and 70's were already buying homes and raising families in that cohort(18-34)....so the answer to your first question would be, as recently as the 70's most of that age cohort was raising families, and many were buying their first homes....
My parents bought their first home in 1966 in a Chicago suburb, when they were 24 and 23......
Your answer to the other question, "Why shouldn't the oldest generation have the most cash?"......That was not always the case....up to as recently as 1963(just before Medicaid), seniors were the poorest generation, and saved little.....they made little, few lived as long as now, and med bills, pre medicaid, ate up their savings......People told jokes about old people eating Alpo dog food back then(which many did as they could not afford regular meat)....
It is unheard of for seniors to have more savings than other cohorts, as they generally outlive their saving, and cannot work to generate more income anymore, thru history, till the 70s, when that started changing.
Now, we live in a topsy-turvy world, where the age groups that are traditionally the biggest spenders, the young adults, and middle-aged ones raising families, have the least net worth, and seniors, traditionally the tightest with their savings for good reasons, having the most...
Vastly unrealistic. You NEED dual income today to equal take home pay as you did in the 1950's-70's. Period. I'm not saying everyone in a family of four needs a phone, let a lone a smart phone but mom and dad need one. Because both mom and dad need to work and likely do not work hours that they can share a car, they need separate cars. Many in this thread have stated we don't see "starter homes" anymore either. I'm all for cutting back including ditching cable packages but let's be realistic when making cuts.
Both my daughters are Millennials. Both of them are married and have little kids. Both their Millennial husbands have good jobs - not uber professional, oddly lucrative jobs but just good, solid jobs.
Both my daughters were able to quit working and stay home to have and raise babies.
They have smartphones. They have high speed internet. They have two cars. They have friends and good social lives.
They also cut out cable TV (streaming is cheaper and better suited for their families), and they are driving older vehicles. They cut out partying on the weekends. They don't own their dream house yet - why should they, when they are so young? Their homes (and their monthly utility bills, rent, etc) are modest. They cook most of their meals at home. They shop for bargains, including at resale shops. But they are NOT poor or struggling. They're comfortable. They go on the occasional vacation, they buy new furniture sometimes, that sort of thing.
They chose not to live in huge, expensive metro areas - instead they live in mid size towns.
Their marriages are stable and their kids are healthy and they are both one income families of millennials.
I'm a BBer and I didn't buy my first house (1300 square feet - 7 percent interest by the way) till I was in my mid thirties. I couldn't afford it till then because the interest rates were above 10 percent and as high as 19 percent when I was younger! That was freaking ridiculous. Thank goodness my kids don't have to deal with that sort of thing.
I am not a Gen Xer - I'm a BBer. I was part of the largest generation ever born, so please don't lecture me about competing with a large population for jobs.
Understood -- you were on the tail end of the BB generation instead of the front end of Gen X. The point remains that outsourcing labor had not yet begun in earnest when you were starting out. There were simply more ways for people to earn a living without investing in an education than there are now.
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Originally Posted by KathrynAragon
LOL about pensions. Pensions were rare to non existent in my working world during my 20s and 30s so I really don't know where you're getting that idea. I've never worked anywhere that offered pensions - they've been basically unheard of in my working lifetime.
I suppose we will just have to agree to disagree, because this is just a battle of anecdotes. My parents worked in the automotive industry as an engineer and a systems analyst, respectively. Both were grandfathered into pension plans that those companies no longer offer. Neither had a college degree. Now, both companies require a bachelor's degree as a minimum qualification. I don't think it's remotely controversial to say that there were more jobs with pensions available before than there are now.
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Originally Posted by KathrynAragon
Also, I am 54. My social security benefits are already forecast to run out just about the time I desperately need them - when I'm in my early 70s. And in fact, I recently received a letter from the SS department, which informed me that I will most likely have reduced benefits even at the start of when I'm eligible. So yeah - I've paid into the system all my life and my benefits are going to be reduced right along with yours and everyone else's born after 1960 or so. You're not having to pay into anything at a higher rate yet and don't have any news on exactly how your benefits may be cut - but what I know is that I HAVE paid in all my working life, expecting promised benefits that I now will not receive. So, quitcherbitchin.
The latest Trustees report forecasts that there are enough reserves to fully fund retirees until 2034. At that point, current revenues would be sufficient to fund approximately 80% of the scheduled benefits. I'm not sure why you think that continuing to kick the can down the road won't have an adverse impact on millennials. And frankly, as long as there are enough of you folks and Gen Xers alive to vote by 2034, Congress will almost certainly lift the social security cap or do some more creative accounting with the trust funds and CPI calculations to make sure that you receive 100% of benefits due. Those policies will disproportionately affect younger workers, particularly as you folks continue to live (and collect) well beyond their actuarial expiration date.
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Originally Posted by KathrynAragon
Oh please. Most Millennials I know wouldn't dream of living in the first house I bought, which was only 1300 square feet. And guess what - I'm not some old codger just trying to play cribbage or do crossword puzzles - My husband and I are energetic, active, working, tax paying adults who have been and continue to be affected by the ups and downs of the real estate market. For instance, we lost a chunk of our equity when the housing market crashed in 2008. We also lost a chunk of our retirement funds, but I digress. Anyway, fluctuations in the housing market affect us just like they affect you.
Your point about housing expectations is valid -- people are increasingly hungry for more space, in a world where there's less space to go around than ever. I grew up in a 1,000 square-foot house; now, you can't even build anything under 2,500 square feet in many places. That said, the point remains that millennials who have too much student loan debt or who have been shut out of the job market are not able to finance homes (even 1,300 square-foot ones) as early in their careers as their parents did.
With regard to the effect of the housing crash on your equity, I'd just ask whether you're comparing the lost equity to the point where the market peaked a few years earlier, or to the point where you bought. In other words, did you actually lose equity from the time of purchase, or did you merely lose some of the equity that you had at the peak? I think it's relevant, because in some areas with better job markets - like Boston - the crash didn't return homes to their pre-bubble value. In fact, we're in another bubble, and empty-nesters who are willing to move and downsize are making out like bandits.
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Originally Posted by KathrynAragon
What? I understand that many millennials pay taxes too. I also understand that over 50 percent of Americans receive more in tax refunds and government benefits than they pay in.
....
Nice, but the reality is that not many people own two homes - at least not two homes that are used for their leisure. A second home as an investment property/income producing property is a business venture and more common - and is not a "luxury item." And may I suggest - that if a younger person wants to invest in a second home, maybe their first home needs to be scaled back a bit. I could buy two homes too, since I bought exactly HALF of what we were qualified to buy - rather than buying the absolute max we were qualified to buy. Of course, my home isn't nearly as luxurious as some of the homes of my younger friends and acquaintances.
I think you missed the larger point about taxes, which was simply that there is no meaningful relief right now for the financial burdens that millennials face. That's a separate question from whether you think they deserve relief. Whether they do or not, Congress has largely ignored them.
Regardless of whether we characterize second homes as "luxury items" or "investment properties," can we agree that the tax code looks far more favorably upon home ownership than it does upon student borrowing? Can we also agree that the relative costs of home ownership are higher for this generation than for previous generations?
I disagree with your implication that a younger person can acquire a second home simply by scaling back on the first home. That presumes that the younger person can obtain the cash or financing for a modest first home, as well as a second home. That's simply not realistic. You bought half of what you were qualified to buy, which was clearly a smart option for you. As it happens, I needed the entire amount for which I was pre-approved to buy a small fixer-upper with no yard on a busy road that is nearly 40 miles my job. Times have changed, and supply and demand have made the urban sprawl even sprawlier.
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Originally Posted by KathrynAragon
The griping about income disparity seems mostly to come from considerably younger people, who simply do not have the time on the job, the experience, the career stability YET that older people have. They seem quick to discredit or ignore or push aside the very real struggles that earlier generations had as we were building our lives and careers.....
Full disclosure: My income is in the top-10th percentile. I gripe about income disparity, even though I'm closer to the "winning" side of it, because it's a real thing, and that Rockwellian "middle class" that my parents raved about has all but disappeared.
It's easy to advise people to forego an expensive education and, say, learn a trade. But the flipside of that coin is that, if everyone took your advice, the market would be saturated with tradespeople underbidding each other for work, instead of lawyers. I don't have a long-term solution, but I'm fairly confident that sending everyone to community college or trade school is not it.
You seem to feel that millennials shouldn't complain because BBs have also faced obstacles. I think we both get to complain for different reasons. Perhaps some of the disagreement centers on the fact that there are different breeds of millennials, and at opposite ends of the spectrum are: (1) hard-working but poor people who took out loans to put themselves through college, but underestimated how little they would be able to earn in the current job market; and (2) the big-house-loving, high-earning hipsters who graduated debt-free because their parents paid for school and/or gave them a place to live rent-free while they socked away cash. I know a LOT of the second category, and I don't think their charmed existence in any way diminishes the barriers to accumulating wealth that the first category faces.
Both my daughters are Millennials. Both of them are married and have little kids. Both their Millennial husbands have good jobs - not uber professional, oddly lucrative jobs but just good, solid jobs.
Both my daughters were able to quit working and stay home to have and raise babies.
They have smartphones. They have high speed internet. They have two cars. They have friends and good social lives.
They also cut out cable TV (streaming is cheaper and better suited for their families), and they are driving older vehicles. They cut out partying on the weekends. They don't own their dream house yet - why should they, when they are so young? Their homes (and their monthly utility bills, rent, etc) are modest. They cook most of their meals at home. They shop for bargains, including at resale shops. But they are NOT poor or struggling. They're comfortable. They go on the occasional vacation, they buy new furniture sometimes, that sort of thing.
They chose not to live in huge, expensive metro areas - instead they live in mid size towns.
Their marriages are stable and their kids are healthy and they are both one income families of millennials.
I'm a BBer and I didn't buy my first house (1300 square feet - 7 percent interest by the way) till I was in my mid thirties. I couldn't afford it till then because the interest rates were above 10 percent and as high as 19 percent when I was younger! That was freaking ridiculous. Thank goodness my kids don't have to deal with that sort of thing.
Yup very feasible for most people to live in most parts of the US with 1 income, especially if that is a college grads income. Your talking about 40-50k/yr starting out even in the midwest for most grads, so by the time you are having kids you are talking 50-60k/yr. Where I live a 50k/yr income could support a family of 4 pretty easily. You wouldn't have 2 brand new cars, be maxing out your retirement accounts, etc. But you would be fine
I have an infant and if we didn't have to pay for daycare even with 2 car payments and a mortgage we could get by on a take home of 3.5k/month. This is with paying for 2 brand new cars and a newer home mortgage.
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