nfinf
25d ago
Given that many of the Boomers were born by the early 50s, how many of them really faced insane 80s interest rates?
If you were born in 1950, earliest you could practically consider buying a house is when you're 22-23, and by then the interest rates are already around 7%. The oldest boomers, born in 1945-49, saw rates around 6%, which starts being reasonable, but then again, "a small group of people born within 5 years interval lucked out into good economy" is not exactly a strong, well fortified position on the frontlines of generational warfare.
Could appreciation feel more important than affordability? I don’t think it’s a stretch to say homeownership looks a lot more appealing when you haven’t just watched your parents’ assets implode.
I'm not sure what you mean by this, can you elaborate? Do you refer to housing bubble collapse in the aftermath of GFC?
How would adding the cost of children possibly help? Even if you ignore the additional costs of (college!) education. Two-income trap aside, there is no way that having a child at 22 gets you more net income than having no child.
Boomers also had kids, had more of them, and at younger ages too. My thinking is that what matters is not your raw net income, but your willingness to commit to homeownership. Once you have kids, you'll be strongly motivated to spend on improving your housing situation, instead of getting a nice new car, going on nice vacation, or hanging out in bars buying heavily marked up booze.
If you could separate out urban sales from suburban or rural ones, would you still see that affordability remain flat?
I don't have easily available data to answer that, but I'm very interested in this question.
Even beyond the metro areas, I suspect the growth in incomes is not happening in the same places as the growth in prices.
But does it really matter? This is why I focus on medians, to completely elide this problem. If half of the homes are affordable to half of the people, what kind of geographic distribution of incomes vs houses would make the practice mismatch the theory so much?
I think you’re making a mistake by dismissing complaints stemming from metro areas. Far more than half the country counts as “urban.”
You're missing the point of taking medians. I do not dismiss urban areas as such (I never even use the word "urban" in my post). I dismiss a handful of very attractive metros, arguing that relatively few people live in those, so even if millennials living there are indeed screwed, they do not represent the experience of a typical millennial.
I think the bigger factor is that due to increased visibility and brand awareness, more millennials want to live in NYC or SFBA or similar, which on the one hand bids the prices there up even more, and on the other contributes to the feeling of unaffordability. If you grow up in Buffalo, NY, and you want to move out, you ask yourself: where? "To NYC" is an entirely obvious answer. Then you look up how much it costs to live there, and despair, but you find a job that allows you to barely make ends meet, staying with some roommates, and hoping for promotion. Of course, you'd be better off if you moved to place like Atlanta or San Antonio, but these places don't have NYC's brand.
Imagine Jeff Bezos sets his resources to scouring the housing markets. (...)
Again, I think you need to come up with a better, more realistic model for this argument to make sense. In this example, Bezos creates artificial gap around the median, so what's left on the market is small cheap houses (e.g. 1bed condos), and expensive unaffordable mansions. In that scenario, yeah, people would be correct that they cannot afford a starter home that's viable to raise a family in. Is this what's actually happening? I am quite certain that the answer is "no".
As an interesting aside, Jeff Bezos is much too poor to affect the housing market significantly. There's something like $500M worth of single family houses just within a mile of where I live. He'd very quickly run out of cash if he started to seriously buy up housing.
nfinf
25d ago
I do talk about it a little, in the "Perceptions" section:
Metro concentration: we focused on medians here, but a lot of griping online comes from the extremely-online group which happens to live at high rates in a bunch of very attractive metro areas, like NYC, SFBA, or DC. In these metros, the housing prices did indeed skyrocket, and it is much less affordable than those same places were to boomers.
The benefit of focusing on medians is that it allows you to say that relatively few people actually live in those metros (compared to the entire country), so while this is huge problem for a very loud, but small group, it's not the experience of a typical millennial.
It seems... counterproductive for the most productive parts of the country to have the most unaffordable housing.
Fully agreed.
That's a very good point, and you could use it to argue that boomers actually ended up well off as they aged, and the prospects of millennials are not so bright. This is most likely true: barring some AI singularity revolution, by the time millennials retire, they'll be pretty screwed relative to today's boomers.
That said, typically complaints about housing affordability come from people who want to buy or upgrade, not people who have been making payments for 5+ years.
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