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A lot of homeowners who bought 5-10 or more years ago are completely ignorant of how impossible it is to get into owning a property within 1-2 hours of most major metro areas right now. They’ll talk about how interest rates were higher when they bought, but ignore how the first starter home they bought is worth 5X what they paid for it now.
If many people took every penny they paid on their mortgage over the entire time they’ve been homeowners and added it all up, it still wouldn’t be enough for a down payment on the first property they bought and they wouldn’t qualify for that mortgage at all. Young people earning six figure incomes can’t even buy 1 bedroom condos in Ontario, Canada right now. The only people in their 20s and 30s buying right now are getting 200, 300, 400k from their parents for a down payment.
You underestimate the number of 20-somethings and 30-somethings who make a lot of money. Perhaps you do not, but many do.
For example, a month ago my daughter closed on a new construction townhouse for about $530K. All cash. No money from parents.
An alternative explanation - not necessarily correct, yet alone complete, but I propose it for purposes of discussion - is that the world's affluent people, of which there are hundreds of millions, tend to shift their affinity between paper assets (stocks and bonds) and real estate.
While you point to changes in affinity among the affluent, I point to asset class reallocation. Many people look at the total value of their overall portfolio in various asset class slices-of-the-pie, and sometimes conclude "the value of my equities has increased so much it is time to re-balance my portfolio by selling equities and using the proceeds to buy more real estate & precious metals." At other times, the re-balance goes in the other direction - selling real estate and buying equities.
The affinity and asset reallocation views are not mutually exclusive, of course.
I'm 62 and have owned since I was 29. I've moved 3 times since. I kinda have a understanding of what is wrong here but, as usual, this is my opinion only.
I get it that the average home cost/income ratio has changed over the years, and not for the better. But there's more to it than just the price.
There's an often expectation that the first home needs to be what their parents owned... more square footage in a great neighborhood/school district. When many of us older generation bought our first home is was humble, smaller, not in the top neighborhoods, and usually needed work (aka fixer-upper). We took our time, taught ourselves how to fix up our own homes to not only make them better but upping it's value (nowadays YouTube is king for this), then in time sold and bought another in a better neighborhood we could afford.
I think a major part of this issue is like many issues today... we think we deserve the best without paying our dues to get there, whether it's jobs/pay/free government handouts/cars/... everything. Many parents have spoiled their children, creating this empowered generation we have today.
I'm so proud of my nephews, all 7 started small. And a number of them are already on their 2nd homes. My daughter will be buying her first next year after saving everything she makes. She also knows her Dad (me) is a carpenter who has upgraded each of our last 3 homes... because that' how you do it when you don't have enough for the home of your dreams right away.
There are plenty of homes out there that are in the right price range for the youth of today starting off but instant gratification doesn't exist for the majority. If they would just lower their expectations and stay within their means, then as they can afford more they can sell and buy better. They will not only succeed but also learn some of the most valuable lessons in life... earning what you want by working for it.
Who are these couples making $150k each? Like a senior lawyer and doctor dual income family?
Again, you underestimate the types of jobs that pay well.
Freshly minted engineers fresh out of university with zero work experience.
Freshly minted MBAs from top-20 schools with minimal work experience.
Freshly minted lawyers straight out of law school with zero work experience -- NALP’s 2023 Associate Salary Survey report notes that as of January 1, 2023, the median base salary for first-year associates was $200,000, which is up $35,000 from 2021, the last time this survey came out.
Here in the United States of America they are likely going to crash the economy to make things affordable again. The Central Planning effects can take some time to be effective. It's all a mad cycle.
Who is the "they" that are going to crash the economy?
Who is the "they" that are going to crash the economy?
The growing share of the US population who depends on someone or something else to support them.
Next up are the The growing share of US 'service economy' jobs; most of which can't ever make up the shortfall.
As far as income, get a job with the VA [Veterans Affairs]. Get your CNA license, and you can get hired, albeit with a lot of documentation. Just know you will have to work nights, weekends, holidays and 12 hour shifts.
A twenty-something's response: "That sounds like a lot of effort. I just want to be a social influencer and play video games."
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