Why aren't young people buying homes like they used to?

Discussion in 'Politics, Religion, Social Issues' started by senseless, Aug 9, 2014.

  1. senseless macrumors 68000

    senseless

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    #1
    Interest rates are absurdly low and home prices are historically reasonable. But it seems that young people are not excited about owning a home anymore. They prefer to pay escalating rents instead?
     
  2. noodlemanc macrumors regular

    noodlemanc

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    #2
    I don't know what it's like over there is America, but here in Australasia housing prices are ridiculously high compared to what they used to be. There's no way I'll be buying a house any time soon.
     
  3. samiwas macrumors 65816

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    #3
    The job market isn't nearly as certain as it used to be. And people are shuffled around a lot more these days.

    Buying a house is much more of a commitment, whereas renting gives the freedom you need to be able to move or get out.

    Add to that, that many people no longer work 9-5. Many work until 7. And on weekends. And whenever they feel like they should. So the thought of maintaining a house on top if that is unfavorable.

    And as the guy above me said, housing prices are getting pretty high in many areas. Here in Atlanta, if you want to live anywhere near the center of town and not in a ghetto, you're starting at $300k. And Atlanta's on the cheaper end.
     
  4. sammich macrumors 601

    sammich

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    #4
    I think the world is a smaller place now. You can land jobs in any city in the world as long as you are prepared to move. Owning property (as a primary residence) must feel like settling down to some, and renting allows them the freedom to change their mind at a whim.

    To add to post #2 with a more specific anecdote: housing prices in Sydney have jumped significantly in the last year. Many suburbs near good shopping districts and schools have seen price growth in the 10-30% range in the last year (?). These places (not even near the CBD) and including the metro suburbs are seeing median house prices in the 1m+ range. It's incredible really. And there are still people buying.
     
  5. localoid macrumors 68020

    localoid

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    #5
    Why? Because rising home prices and stagnant incomes are pushing homeownership beyond the reach of middle-class Americans in more and more American cities.

    In 20 of the 100 largest metro areas, the majority of homes on the market are not affordable for middle-income buyers, according to a recent study by the real estate research firm Trulia entitled: Where Buying a Home is Within Reach of the Middle Class

     
  6. Arran macrumors 68040

    Arran

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    #6
    I think they watched their parents struggling to make the mortgage and utility payments on their McMansions.

    And they said, "no thanks". They're not stupid.
     
  7. localoid macrumors 68020

    localoid

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    #7
    Actually, it's about the decline of the middle class and prices being out of reach for them in more and more cities -- 72% of the middle class can afford a home in Atlanta, but only 53% can in Seattle, and only 23% can in Los Angeles.
     
  8. Arran macrumors 68040

    Arran

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    #8
    Yes, and one way to get those silly prices down is for people to stop buying. When saner pricing returns, people will start buying again.

    It will take time, however.
     
  9. localoid, Aug 9, 2014
    Last edited: Aug 9, 2014

    localoid macrumors 68020

    localoid

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    #9
    New housing construction usually brings prices down but we haven't done very much of that since the depression, so with the supply of available housing limited, prices are likely to remain high in many markets.

    [​IMG]
    [graphic source: US Census Bureau]
     
  10. FreemanW macrumors 6502

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    #10
    I would inquire with the original poster, what country are you living in . . . . because, here in the United States, college graduates are finding it extremely difficult to find employment that is sufficient for servicing their obscene student loan debts much less enjoying a life where they can put money aside to begin the home ownership portion of life so many baby-boomers enjoy.

    Wages and income are flat and have been so for over three decades.

    The wealthy and their corporate proxies that have been installed in government have eviscerated, through tax and spending (YES, I'm looking and pointing at YOU REPUBLICANS for your unfunded WARS and TAX CUTS to the Wealthy and Corporate class, none of which were paid for) policies, what had been a healthy middle-class component to society in the U.S.

    To characterize the fact that people are no longer buying homes as though it is a choice is to wonder why everyone does not have a Lamborghini as a second car in their garage.

    I don't think I'm going to be participating in threads in this section of the MacRumors Forum any longer.

    There are simply too many people posting in here that are thoroughly programmed to the point of being utterly clueless to the reality of life beyond the end of their own nose.
     
  11. ElectronGuru macrumors 65816

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    Oregon, USA
    #11
    +1 to everything above. Shrinking middle class, stagnant wages (read: declining real income), student debt, prolonged uncertainty (recession), delayed marriages. To all that, I would add:

    Having just watched many go 'under water', foreclosures, and most recently trapment (watching people turn down better jobs so they don't have to give up locked low interest rates on the current house).

    Price increases from financial institutions investing in real estate.

    Reduced preference for suburban living

    Reduced faith in the American Dream™

    Speaking for myself, I've seen how ownership distorts people's thinking. One cuts their food budget for 5 years after a storm damaged the backyard. Another paid off her mortgage after 20 years, panics that she won't be able to write off the interest, and does unnecessary construction, creating a new loan. Buying more house than needed to get a larger increase on investment, then filling it with unneeded furnishings, then selling everything at a loss when the payments go up. Commuting 2-3 hours a day so the same payment gets a larger playground. I could go on...
     
  12. Technarchy macrumors 604

    Technarchy

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    #12
    Wages are stagnant, but real estate has gotten more expensive.

    Put the two together and renting is more financially comfortable for day to day life.

    Plus a 30 year mortgage is a massive commitment in the age of lay-offs and outsourcing for the sake of .0001% stock price increase.

    In metropolitan areas you're looking at a half a million dollar ($500,000) mortgage as well. That many zeros in debt would give any sane person cause for pause.
     
  13. iStudentUK macrumors 65816

    iStudentUK

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    #13
    It's just too expensive. Here in London house prices have been going crazy, the recession didn't impact house prices in London like the rest of the country, and in 2013 prices went up 20% in one year. That is crazy, and things are cooling off now - but that just means prices are going up at a more normal rate.

    My wife and I live in a modest two bed apartment, it's nice but not extravagant. It would go on the market for about £450k (€562k, $755k). Now we are fortunate enough to earn a decent living and may be able to afford a property in a couple of years as we turn 30. However, it will still require a huge amount of saving which many young people have no hope of achieving.

    Moving out of London isn't really an option as (a) we love it here notwithstanding house prices, (b) my job doesn't really exist outside of the City, (c) I work long hours so long distance commuting isn't feasible. Even if we did move out the corresponding drop in salary would put us in the same position.
     
  14. zioxide macrumors 603

    zioxide

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    #14
    Young people can't afford homes because the boomers lead by Hollywood Ronald Reagan destroyed the ****ing economy over the last 30 years.
     
  15. Menel, Aug 10, 2014
    Last edited: Aug 10, 2014

    Menel macrumors 603

    Menel

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    ATL
    #15
    Why aren't young people buying homes like they used to?

    Its all relative. I bought a house in ATL at 28, 2010. And I have 4 coworkers my age who have done similar.

    It requires planning, and saving for a down payment, and building credit.

    Many people these days get education they cant afford and burden themselves with huge student loans.

    And/or spend all they have on the latest tech fads, car fads, rather than saving. Drive through apartments around here and you see late model bmw, benz, infinity, etc. priority is how they look out and about.

    It was hard as hell to get 30k cash saved to blow on downpayment and combine with 10k out of Roth for the 20% down on a 192k house. And that doesn't buy much in Atlanta, 1500sqft.
     
  16. mojolicious macrumors 68000

    mojolicious

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    Sarf London
    #16
    :eek:

    Even in my grotty bit of South East London you'd be lucky to see change from $125 a square foot right now.
     
  17. roadbloc macrumors G3

    roadbloc

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    UK
    #17
    As a 21 year old myself, it's impossible for me to afford a mortgage. I work full-time and write books and it's just not feasible. The money I earn doesn't come close to what I need. Even for renting.

    Hence why I still live with my parents :/
     
  18. Happybunny macrumors 68000

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    Sep 9, 2010
    #18
    I don't think there is one easy answer.

    House prices sky rocketed in the years 1970-2007, some times as much as 300%. mortgages were ease to get, and in the Netherlands we had a system were the mortgage rent was tax deductible. Controls over income and expenditure were by 1999 nearly non existent, if you had a job the idea was you could have a property.
    There had been one small dip in the economy back in 1982-1985, but because the bankers had found the holy grail the Derivative. House prices were always going to go up, like the US we also had TV programs like Flip that house.

    Then in 2009 the fantasy started to fall to pieces, people found that their property was worth less, and as more people lost their jobs, and couldn’t afford mortgage payments. House prices dropped by nearly 30%, but in certain areas of the Netherlands by 50%.

    This is were life in the US and Europe splits sharply, here in mainland Europe if your house is repressed or you have to sell for less than the mortgage, you are stuck with a rest debt. This debt is for life, and means that you cannot get another mortgage. There are people who have been forced to sell their property and have a debt of more than € 100,000.

    Today the mortgage market is back to how it was in the 1970’s you have to have a down payment of at least 15/20%. The mortgage is always based on one partners salary, this also has to be verified.

    Young people have seen all this happening, to people in their neighbourhoods, and to family.
     
  19. Solomani macrumors 68030

    Solomani

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    Alberto, Canado
    #19
    You might love it or hate it, but the FACT is that many current Millenials do still live with their parents. I'm somewhat older than these Millenials (I'm a Generation Xer myself) but I do have many friends and coworkers who are in the Millenial category. And many of them have zero embarrassment/guilt telling anyone that they still live with their parents, or that they moved back in with their parents right after college.

    It is a statistical fact known for a few years now. So why buy a house when they can live rent-free with their parents for several more years (while they can still save all their money)?

    ----------

    So long as your parents don't mind you being with them, you shouldn't feel guilt about that. Just make sure you keep saving up your money while you are still rent-free with your parents.
     
  20. roadbloc macrumors G3

    roadbloc

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    #20
    Heh, I'm not that quite lucky, but I am saving. Albeit very slowly, but by the time I'm 31 I may have enough for a first deposit on a freddo. :p
     
  21. TechGod macrumors 68040

    TechGod

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    New Zealand
    #21
    Average pricing of a house in my city costs 700k. That's insane, and thats for like 2 or 3 bedroom houses.
     
  22. Zombie Acorn macrumors 65816

    Zombie Acorn

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    Toronto, Ontario
    #22
    Houses are about $800k in my area for a shoebox.

    Signs down the street show townhouses starting at "only 1.8 million" and are almost sold out.

    If I ever buy it will have to be outside the city
     
  23. Solomani macrumors 68030

    Solomani

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    #23
    Ehhhh… well I don't think rent (in a big metropolitan area) is that much cheaper than paying for a mortgage. Your monthly bill might be slightly lower than the mortgage on a comparable house.

    I do agree that renting is more flexible, since you are not stuck with an inescapable mortgage prison for half of your adult life.

    If you are unhappy with your rent, or unhappy with your apartment, then you move out and look somewhere else (when your lease expires). Simple as that.
     
  24. Bug-Creator macrumors 6502

    Bug-Creator

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    Germany
    #24
    That depends on what you compare with what and where....

    A flat about the same size&quality then the one I rent atm would come down to 60000Euro (*) (it's a rather cheap town around here), but the "cold rent" is only 250/month. In other words, it would take 20 years to make up the buy... doesn't sound that bad. But.....
    Add interest, the extra upkeep of owning and so on and would easily take 30+ years to break even. And thats only when all works out nicely, and I haven't (been) moved to a retirement home by than.

    * if I would buy, I'd buy something a bit bigger, but thats not the point
     
  25. satcomer macrumors 603

    satcomer

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    #25
    That's the problem with traffic. Most people can't afford housing close to their work and are fored farther and farther away from work. Housing cost inside cities has gotten out of hand!
     

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