We could do things to make housing cheaper, and we should. But I fear that the underlying problem is a prosperity crisis, not just a housing crisis. The decades of prosperity after World War II established an unrealistic norm, based on historical events that won't be repeated.
As a millennial HENRY(the Y is never coming), this article hits. The institutions benefit the incumbent, whether it's the existing homeowner or the Old. Benefits have also gone to capital and not labor (which is the right thing economically, capital takes risks that labor doesn't). So, if you're young you don't have capital and you have the institutions working against you.
Thinking of myself, I do relatively the same "job" my grandfather did and my uncle did. Three generations. I'm far more "productive", mostly due to technology, but my income in real terms is less. My purchasing power is even lower. And I'm a skilled professional. If you're a kid just graduating college, it's even worse. You cannot build wealth with just labor today. It's impossible for even the above average person. That's why the young are dropping out.
The answer isn't clear. The Progressive push a "wealth tax" without addressing the role government and the Fed play in protecting and subsidizing the incumbent (whether it's bailouts, ZIRP, QE, corporate welfare, etc.) I don't know what the Right or MAGA types offer other than less freedom and liberty.
Thanks for the read, Hanna. The math just doesn't work for most young people, and everyone knows it. It's not surprising that young people will optimize for the present when the future is priced out of their reach. I'm honestly pessimistic that anything will change here in any meaningful timeframe. What does a replacement script even look like when the structural problem isn't going anywhere?
Financial nihilism is anything but rational, and I find it difficult to pin the list issues (doom spending, gambling, opting out, status games, comparison spiral) squarely on housing. I would be surprised to find most Gen Zers thinking about the purchase price of a home as the root cause of their angst given that roughly half of them are under the age of 21.
There are certainly other issues at play. The COVID lockdowns destroyed a lot of younger people's social lives and mental health. It's easier to trace a line from that societal disruption to those issues you named than it is from housing unaffordability. This may be the defining challenge for Gen Z, as the financial crisis was for many Millennials, the Dot-com/9/11 bust was for Gen X, and 80s inflation and unemployment was for Boomers. It is not insurmountable.
Social media warps what 'on track' means, and having worked with many millennials who sought financial advice during the pandemic, most don't feel on track because they lack a definition. The most common question I've gotten from Millennials seeking advice is "what should my goals be"? When resources are tallied, plans created, and paths mapped, success follows. Gen Z will find that the same is true for them.
I think we need to decenter home ownership as the be-all and end-all. The costs of maintenance and upkeep are never-ending. It takes a lot of time and energy. I owned a house for 12 years, and I NEVER want to again.
Being able to afford a home is about where you want to live. I live in Fort Worth. You can buy a home in the low $200,000, which is the same or less than rent. Wages here are the same as in CA. You're going to bring more money home after tax.
The ratio you refer to, is a migration incentive. As Fort Worth attracts labor, it also attracts rentiers.
You have presented an opportunity, a valid opportunity. The entropy inherent in demographics and the business cycle, will bring that opportunity to a saturation point, after which the underlying dynamic of capital migration and concentration obtains.
Our two kids (25, and 28; Security Technical Program Manager and Structural Engineer respectively) could not afford a house in the Seattle Metropolitan area on their own - something that was at least somewhat possible a generation ago. So they bought one together. And they share a used VW in combination with bicycles, buses, and a motorcycle for transportation. Yes, they are housepoor and life will get more interesting when one or the other of them marries, but they have a reasonable start - and it definitely gives them a practical long term focus that is different than most of their peers. We are providing guidance as needed - and serving as a tool loan center and practical guides as they tackle the problems and responsibility of home ownership and maintenance. They provide muscle for some of our home / yard issues at times as we are well up in age. It works out.
We could do things to make housing cheaper, and we should. But I fear that the underlying problem is a prosperity crisis, not just a housing crisis. The decades of prosperity after World War II established an unrealistic norm, based on historical events that won't be repeated.
As a millennial HENRY(the Y is never coming), this article hits. The institutions benefit the incumbent, whether it's the existing homeowner or the Old. Benefits have also gone to capital and not labor (which is the right thing economically, capital takes risks that labor doesn't). So, if you're young you don't have capital and you have the institutions working against you.
Thinking of myself, I do relatively the same "job" my grandfather did and my uncle did. Three generations. I'm far more "productive", mostly due to technology, but my income in real terms is less. My purchasing power is even lower. And I'm a skilled professional. If you're a kid just graduating college, it's even worse. You cannot build wealth with just labor today. It's impossible for even the above average person. That's why the young are dropping out.
The answer isn't clear. The Progressive push a "wealth tax" without addressing the role government and the Fed play in protecting and subsidizing the incumbent (whether it's bailouts, ZIRP, QE, corporate welfare, etc.) I don't know what the Right or MAGA types offer other than less freedom and liberty.
Felt every word. Positional precarity I think has even more of an impact on our behavior than actual economic precarity
Thanks for the read, Hanna. The math just doesn't work for most young people, and everyone knows it. It's not surprising that young people will optimize for the present when the future is priced out of their reach. I'm honestly pessimistic that anything will change here in any meaningful timeframe. What does a replacement script even look like when the structural problem isn't going anywhere?
Financial nihilism is anything but rational, and I find it difficult to pin the list issues (doom spending, gambling, opting out, status games, comparison spiral) squarely on housing. I would be surprised to find most Gen Zers thinking about the purchase price of a home as the root cause of their angst given that roughly half of them are under the age of 21.
There are certainly other issues at play. The COVID lockdowns destroyed a lot of younger people's social lives and mental health. It's easier to trace a line from that societal disruption to those issues you named than it is from housing unaffordability. This may be the defining challenge for Gen Z, as the financial crisis was for many Millennials, the Dot-com/9/11 bust was for Gen X, and 80s inflation and unemployment was for Boomers. It is not insurmountable.
Social media warps what 'on track' means, and having worked with many millennials who sought financial advice during the pandemic, most don't feel on track because they lack a definition. The most common question I've gotten from Millennials seeking advice is "what should my goals be"? When resources are tallied, plans created, and paths mapped, success follows. Gen Z will find that the same is true for them.
I think we need to decenter home ownership as the be-all and end-all. The costs of maintenance and upkeep are never-ending. It takes a lot of time and energy. I owned a house for 12 years, and I NEVER want to again.
Being able to afford a home is about where you want to live. I live in Fort Worth. You can buy a home in the low $200,000, which is the same or less than rent. Wages here are the same as in CA. You're going to bring more money home after tax.
Not being “ able” to afford a home is a choice.
The regional advantage is always temporary, Mark.
The ratio you refer to, is a migration incentive. As Fort Worth attracts labor, it also attracts rentiers.
You have presented an opportunity, a valid opportunity. The entropy inherent in demographics and the business cycle, will bring that opportunity to a saturation point, after which the underlying dynamic of capital migration and concentration obtains.
Our two kids (25, and 28; Security Technical Program Manager and Structural Engineer respectively) could not afford a house in the Seattle Metropolitan area on their own - something that was at least somewhat possible a generation ago. So they bought one together. And they share a used VW in combination with bicycles, buses, and a motorcycle for transportation. Yes, they are housepoor and life will get more interesting when one or the other of them marries, but they have a reasonable start - and it definitely gives them a practical long term focus that is different than most of their peers. We are providing guidance as needed - and serving as a tool loan center and practical guides as they tackle the problems and responsibility of home ownership and maintenance. They provide muscle for some of our home / yard issues at times as we are well up in age. It works out.