Is Generation Y holding back the housing market? (Acton: sales, apartment) - Massachusetts (MA) - City-Data Forum

Parsec · 07-26-2013, 05:51 PM

I saw an video on boston.com about this. Prior to the recession there were about 1.1 million new households created each year, either due to young people moving out of their parents house or due to immigration. More recently, there have only been 450,000 new households created each year due to the large number of 18-34 year olds living with their parents or with roommates. People in this age group are either scared or financially unable to venture out on their own, which is required to help stimulate the economy. What do you guys think? I'm in that age group and I'm already on my 3rd house so maybe I'm the exception, lol.

xo_kizzy_xo · 07-26-2013, 06:50 PM

I would say they definitely play a part, but I don't think they're the #1 reason.

There's also the whole housing bubble, the recession where many middle-aged people lost their jobs and have either been unable to find another or they've had to take drastic pay cuts, the whole mortgage scandal, and, right now, the rising mortgage rates. The banks are also trying to get around the limits set by the Feds in trying to foreclose on properties or selling off their mortgages (my in-laws are involved in such right now and I don't think they quite realize how close they may be to losing their home).

You also have the people who are trying to sell and potential buyers are far and fewer between, thanks to the current mortgage rates.

It's a mess. I don't even know how much longer I'll be able to stay in my own home.

pennyone · 07-26-2013, 06:51 PM

I think the days of buying condos, then starter houses, then moving up to bigger houses for the growing families are OVER. Most young people, smartly, now realize that buying a house is for the long haul, not for life stage flipping. So many are renting with friends, saving their money for a nice down payment, and only buying something when they are ready...and usually for houses that are intended to be lived in for decades.

This is what is suppose to be. Not everyone is destined or deserve to be homeowners (it is not a right), and there is no shame in renting if that makes conservative financial sense. The days of getting a 700K loan on a hotel staff salary are over, and thank heavens! Of course, this is bad news for those who are hoping to see a "return" of the housing market so that they can grow rich quick.

mdovell · 07-26-2013, 08:25 PM

Well the reason why this is more concerning is frankly we have a bit of a paradox with baby boomers retiring.

In order to retire they have to liquidate assets in order to pay for bills. Medicare does not pay for everything (there is nothing on dental for example).So realistically at some point stocks, bonds, 401k's, IRA's, 403b's, houses, cars, boats etc will have to be sold for this. Not all at once but gradually. Even if we factored out the house flipping concept there were many people that assumed they'd buy a big house, watch the value go up and worst comes to worse sell the house, move to a smaller one and the difference could help in retirement. Well that's not happening.

Making matters worse is that the longer that baby boomers put of retirement the fewer jobs there are for younger generations and thus less money paying into social security and medicare etc.

In order to accommodate the liquidation of the market to another generation that does not have that much they simply have to sell it for less and less. I know of a geopolitical situation where some people sold their luxury cars (Benz) for $50! Now I'm not saying it would get to that point but we have seen some concepts of wealth invert due to liquidity or efficiency (large SUV sales tanked after Katrina).

I know a women selling her house. It's 4.5ksq and at about 1.1 million. Well the market for anything that range is so much smaller. That 7th digit alone might act as a deterrence. Big isn't cool anymore. No need for a ton of albums, get a ipod, no need for a desktop get a laptop or smartphone, no need for a ton of books get a kindle. It just gets to be less and less needed.

Technically speaking everybody rents, we just don't always call it that. If a owner does not pay property taxes eventually the town will take the property. They might not want to but it is still done.

kingeorge · 07-26-2013, 08:25 PM

Quote:

Originally Posted by pennyone

I think the days of buying condos, then starter houses, then moving up to bigger houses for the growing families are OVER. Most young people, smartly, now realize that buying a house is for the long haul, not for life stage flipping. So many are renting with friends, saving their money for a nice down payment, and only buying something when they are ready...and usually for houses that are intended to be lived in for decades.

This is what is suppose to be. Not everyone is destined or deserve to be homeowners (it is not a right), and there is no shame in renting if that makes conservative financial sense. The days of getting a 700K loan on a hotel staff salary are over, and thank heavens! Of course, this is bad news for those who are hoping to see a "return" of the housing market so that they can grow rich quick.

I think this is a nice summary. People are quite more careful nowadays, young and old. I do not think that we are truly out of recession officially yet. People tend to marry older as well, so that is probably helping the idea about low family formation numbers.Good luck to all the folks just starting out. May you be the generations who get it right, and dig the US out of this mess.

Hemlock140 · 07-26-2013, 09:24 PM

You cannot generalize a whole generation. I have two employees in that age group, middle 20s. One is married with a child and bought a brand new house, the other is single but just bought a triplex.

charolastra00 · 07-27-2013, 05:37 AM

It very much depends on where you live. In eastern Mass, it's not common for people in their 20s to buy. Why? When condos cost over $300,000, it's difficult to justify the purchase when you're looking at having to upgrade a few years down the road to make room for kids anyway. Buying a more affordable condo or home in Acton or wherehaveyou doesn't make sense in the context of career or current life stage.

Meanwhile, I grew up in Georgia where you can buy a nice condo a little out of the city for 100,000 (and in some cases, you could buy a house for that!). Many of my friends from high school are getting married at 22 or 23, buying their first homes, and even have children on $50,000 a year. You can barely afford to rent a 1 bedroom apartment in Eastern Mass for that salary, assuming you didn't have student loans or other debt.

Entry level wages in many fields have stagnated, and the higher pay in Massachusetts does not actually match the higher cost of living. I work in higher ed (one of the biggest aggregate employers in the state) and my starting wage was the same in 2010 as it was when a coworker started the same position in 2000. Nonprofits have it even harder.

The people I know buying houses before their 30s tend to fall into a few categories:
1. Family help for the down payment (or were able to live rent-free at home and saved toward a down payment)
2. 1 earner in the high 6 figures
3. 2 higher than average incomes
4. Siblings buying together (know several families doing this with condos thinking forward for family rental properties)

As for me, I'm 25 and don't really plan on ever buying. I'm one of the many of my generation who does not see home ownership as a goal post, and I don't know that it makes as much financial sense as it once did. Our society is so much more transient than we were even 20 years ago. I watched many of the homes in the neighborhood I grew up in sit empty for months for years during this recession while the owners were not able to sell but had to move for job opportunities. Still others were foreclosed on. My generation is going to continue to rent more frequently, seek smaller houses closer to urban centers (none of this McMansion business), and delay marriage, family, and moving out due to financial constraints (stagnant wages, student loans, etc).

Amontillado · 07-27-2013, 06:30 AM

As some people have pretty much said--maybe it's not so much Generation Y holding back the housing market, as the housing market holding back Generation Y. Even if buying houses is what everyone should aspire to, the economics right now don't clearly point that way.

Beachcomber4 · 07-27-2013, 07:30 AM

I think the Generation Y buyers have high expectations and aren't as willing or capable as previous generations to put sweat equity into a house. Not many can afford a fixer upper and pay to have it fixed up. And those who can might not be satisfied with what they can afford.

I have kids in high school and it amazes me how many of their friends don't have jobs or do chores around their houses. Does not bode well for home ownership when a generation can't even perform basic home maintenance. This is also a generation who has been raised to think college is a must. Many have a great deal of debt to pay off and their salaries don't justify that debt. I've heard the 20-30 something making 55k a year expressing horror having to pay a plumber who attended a vocational school $85 per hour.

Fiddlehead · 07-27-2013, 07:47 AM

I find this a bit rich. The boomers bubble up all assets, including housing, cut their own taxes repeatedly, voted to screw the worker, and tanked the economy through their sleazy schemes. Then they wonder why millenials, who are saddled with student loan debt and no prospects won't rush in to buy their overpriced pos homes. The boomers popped the seed corn and then claim the other guy stole it. It is no mystery. Look in the mirror.