> I'm a dad who is happy to have his daughter and fiancé living with me. They pay the utilities and make me nice meals, and it makes it a lot less lonely here. ... I like the multi-generational thing. I know it won't last forever, but it makes life better for now.
It's so easy to get into that cold statistical mindset about these large-scale trends, but it's good to remember that these statistics are the aggregation of a large number of very human stories.
It's also useful to note that the "nuclear family" is a very Western thing, and the US takes it to an extreme. In other parts of the world it's abnormal for adults in their 20s to be living anywhere but with their parents, often even with a fiance or new spouse in the mix.
The idea that having a multi-generational household means that the younger members haven't "grown up" and need to "learn to live on their own" is a completely manufactured attitude. I think many American families would have much stronger, more healthy inter-generational relationships if we lived together (at least for a bit) as adults. As it is now, most US kids leave home just when they're starting to be able to meaningfully contribute to the household as equals.
(Having said that, I definitely feel the pull of childhood and societal expectations. When I was a new adult I was thrilled to be out of my parents' house, and could never have imagined moving back there. I'm nearly 40 now, and thinking about the possibility of living in my parents' house during my 20s still feels weird to me.)
While it's true this seems like a strong US thing, I haven't heard many happy long-term stories of folks living intergenerationally.
In my experience (talking to people from a variety of countries), most couples in their 20s/30s want their own place (even in the countries where it's not common). It seems it can even lead to happier intergenerational relationships when the roomate-type fights don't need to happen.
It would seem to me that it's most common in the US to move out because they can afford to... The US is just an incredibly rich place, even compared to much of western Europe (ex. the US has 40% more GDP per capita than France[1])
There are of course also family/social pressures in some places, but I really don't think it's the primary factor in the differences between many countries.
1. In the US, zoning laws discourage building things like the "mother in-law suite". These zoning laws were originally created as a way to get around federal laws prohibiting discrimination of race and sex by making it more difficult for people who can't afford housing to live within a certain neighborhood. Even if US residents wanted to add housing for some semblance of independence, zoning laws makes this difficult.
2. In the US, children are educated to become factory workers, and inegunity is deliberately suppressed. (See John Taylor Gotto's The Underground History of American Education).
3. When I look at Carol Sandford's work on regenerative business and regenerative life paradigms, I realized that people here in the US have been conditioned to think that being able to live independently is the mark of an adult. But that is an illusion. They are still largely treated like cogs, whether those are adults who are working full time jobs, or children in the compulsory school system.
4. In contrast, a regenerative business builds up the capability for each employee to figure out what they want to do that will make a meaningful contribution to the business and society in a way that aligns with the general direction the organization is going and the general strategy. Being able to do that gives a far greater sense of fulfillment, purpose, and agency to the people involved. It's as if every employee has the chance to be a mini startup within a larger organization, and the organization as a whole become more adaptive, resilient, without sacrificing being a responsible corporate citizen.
5. When I think about how that is applied to children, I am reminded by the NPR article about how indigenous families have children doing chores without resentment. (https://www.npr.org/sections/goatsandsoda/2018/06/09/6169288...) ... and then I realized that, it isn't really about chores. It is a way that children from indigenous families are encouraged to make meaningful contributions to family and community from a young age.
6. If your sense of self-worth and purpose is derived from making meaningful contributions to the family, community, and society, you're no longer pidgeonholed into the role of being a child. As such, I think a lot of the tensions and inter-generational drama we expect from adult children living with their parents is no longer there.
> 6. If your sense of self-worth and purpose is derived from making meaningful contributions to the family, community, and society, you're no longer pidgeonholed into the role of being a child. As such, I think a lot of the tensions and inter-generational drama we expect from adult children living with their parents is no longer there.
This times ten to a very meaningful exponent.
A large number of factors in society have combined against children being able to gradually assume the mantle of adulthood, gradually assuming responsibility and making greater and greater contributions to society as they grow.
It is obvious that this is in no way culturally sustainable.
I think Carol Sandford's work has a shot at making this happen, but it won't happen at a policy level or through collective action. It's not so much that it is not scalable, but that by nature, it is impossible to implement with policy. If we were to make a policy to implement this, even if everyone agrees to do this, it misses the point. The motivation no longer comes from the inside nor would it be self-selected. But that does not mean it is impossible to implement at all.
This isn't something that you try to change the whole world. It is something that an individual makes the choice for themselves. It's something I'm in the process of implementing with my own children. That is one of the things I came up with when I ask myself, what meaningful thing do I want to contribute to the world? Your answer for yourself might be different.
A granny flat or mother-in-law suite would be cheating. It's a separate apartment. Your parents are your neighbors not your room-mates anymore.
Education in other countries is far more strict and regimented than the US. Especially Asia.
I've always thought the main driver for leaving home is instinctive, basically teenage rebelliousness. If there's cultural "programming" going on, it is just as likely to be in the societies that overcome these drives and keep children subservient to their parents.
> A granny flat or mother-in-law suite would be cheating. It's a separate apartment. Your parents are your neighbors not your room-mates anymore.
That's correct. It gives some semblance of independence. My point with that one is that even if US residents were inclined to "cheat", current zoning laws in most municipalities makes building additions, or expanding to duplexes and triplexes illegal. Other things like, requiring onsite parking, setbacks, not allowing mixed-use zones impacts the ability to have affordable housing.
These laws are changing. Portland recently expanded the zoning laws to allow many of those. The activists who got that through campaigned under the banner of "walkability", but it was a lot more than that. Other cities may follow as they see how well Portland does.
> Education in other countries is far more strict and regimented than the US. Especially Asia.
I was born in Taiwan and was raised mostly in the US, so I have had a taste of what that strictness is. A lot of the structure that the US compulsory school system is based on, took their playbook from the way the Indian caste system educate their children. That educational system was there before the industrialization took that method for its own use.
To be clear, when we're talking about "education", we're talking about "compulsory education" that is part of the predominant paradigm of the modern world. Prior to the compulsory educational laws, the US had a literacy rate of 99%, in a nation of farmers. Kids were taught at home or in one-room schools. It was understood that the main purpose of education was not to create factory workers, but to have critically-thinking and informed citizens in a republic. The contrast between that and our current generation of algorithm-driven conspiracy theories is stark.
What I just talked about and more is in John Taylor Gatto's book.
There are alternative models showing up here. Alaska does not put all the kids all in the same grade. There are too many kids in the bush. Instead, kids learn each subject at the competency level independently. A kid might be at 8th grade reading level for example, and still working through 3rd grade math. Carol Sandford's work on education is much more radical -- no cirriculum, no teachers, no grading. Instead, capabilities like critical thinking are developed, and the kids are taught a framework in which they evaluate their contributions and actions. The kids decide what they want to contribute, and then they figure out how they are going to do it.
> I've always thought the main driver for leaving home is instinctive, basically teenage rebelliousness. If there's cultural "programming" going on, it is just as likely to be in the societies that overcome these drives and keep children subservient to their parents.
Adolescence is a distinct phase that is studied by psychologists during the modern era. It didn't really exist pre-industrialization, pre-compulsory schooling. It used to be, around the pre-teen age, kids were apprenticed and treated as inexperienced young adults. Some cultures had rites of passages that definitively marks when childhood ends, adulthood begins, in a way that the whole community acknowledged. I suppose in the modern era, the ability to be financially independent from the parents a sign of adulthood.
Compounding that is better nutrition, and perhaps, the way our food is grown (hormones), and artificial lighting all contributes towards an earlier age of pubescence. Modern kids' physical maturity are happening at a younger age at the same that the length of time before they are treated as a full adult gets extended.
> US had a literacy rate of 99%, in a nation of farmers. Kids were taught at home or in one-room schools. It was understood that the main purpose of education was not to create factory workers, but to have critically-thinking and informed citizens in a republic. The contrast between that and our current generation of algorithm-driven conspiracy theories is stark.
I suggest you seriously reconsider your views on how the current education system works vs how it used to be back when people were on farms and learning in one room schoolhouses. It smells to me like you’ve been fed a line of bullshit by someone who has a beef with the current system and just wants to paint the ignorance-filled past with rose-colored enlightenment glasses. This society of highly literate, critical thinking farmers did not exist.
According to that article you linked, the method in which they were using puts the 1979 literacy rate at 0.6%.
"The more recent focus on illiteracy has centered on functional literacy, which addresses the issue of whether a person's educational level is sufficient to function in a modern society. The earlier surveys of illiteracy examined a very fundamental level of reading and writing. The percent of illiteracy, according to earlier measurement methods, was less than 1 percent of persons 14 years old and over in 1979."
I don't know where that 99% figure that John Gatto Taylor came from. He did talk about a significantly lower literacy rate in the 1970s. I think if one were to use functional literacy as the metric, there would still be a similar decrease literacy rate.
And no, Taylor was not trying to paint the past with rose-colored glasses. Whether or not the farming society did a good enough job as citizens, the frame in which education was viewed was much different. The things from the past is not necessarily better, but neither are the way we are doing things right now.
> It was understood that the main purpose of education was not to create factory workers, but to have critically-thinking and informed citizens in a republic
Lol. Read Wealth of Nations by Adam Smith... having children was for the purpose of making you rich!
Also, that’s if you even made it to the age of 14. In 1870, survival rate of reaching to the age of 14 was about 30%
> It was understood that the main purpose of education was not to create factory workers, but to have critically-thinking and informed citizens in a republic
Are you saying the seminal book in economics documenting at the time of the Declaration of Independence that having children in the Western world was to help you get rich (opposite was going on in China) was incorrect?
> How does the survival rate of someone who has reached the age of 14 have an effect on literacy and citizenship?
It doesn't, but when your literal survival is against the odds and you're task every day is to maintain sustenance, I'm not sure your comment about a whopping 99% rate literacy hold water.
> Are you saying the seminal book in economics documenting at the time of the Declaration of Independence that having children in the Western world was to help you get rich (opposite was going on in China) was incorrect?
Leaving aside whether I agreed with that point about children being there to make you rich (I don't), or whether everyone in America agreed with that (I doubt it), and we're just looking at the various colonists (excluding the Natives) making up the 13 colonies at the time of the Declaration of Independence, I don't know if that would be considered the seminal book to the point that it influenced how education is viewed. I see (at least according to Wikipedia), it had influenced Alexander Hamilton, but I also think Hamilton in many ways was ahead of his time. It is my understanding though, that those ideas become much more commonplace in the mid- and late 19th century.
> ... when your literal survival is against the odds and you're task every day is to maintain sustenance, I'm not sure your comment about a whopping 99% rate literacy hold water.
So I am to understand that you are saying, because conditions are so harsh, there is very little time to do things like studying or reading?
A curious thing happened in the Midwest in the early 1800s. Land was divided in a way where schools and colleges were deliberately set aside so that children would have access to it. For every N plots of land, there would be a school; for every M plots of land, there would be a college. I don't think any other region of the US was divided like this. The educated farmer, at least in the Midwest, is a thing.
That bit came from an article by someone observing that the Midwest seems prototypically boring, without characteristic. They were trying to explore just what makes the Midwest the "Midwest". The essay was not written as a criticism of the education system.
> These zoning laws were originally created as a way to get around federal laws prohibiting discrimination of race and sex by making it more difficult for people who can't afford housing to live within a certain neighborhood.
I'm not from the US but I'm just not sure I'm reading this right, you say these zoning laws are literally racist? And they're still around??
"Shifting or Infiltration: Negroes and Japanese increasingly numerous"
If a neighborhood had a couple of Black, Asian, or Mexican families banks weren't allowed to issue mortgages or other types of real estate loans. The US built a lot of suburbs post WWII those were restricted to white families only. Blacks, Asians, and Hispanics weren't allowed to buy and also were banned from receiving FHA Loans.
The current battle in the US politically is over whether to return to this state of affairs.
I think your random sampling of people is just unlucky. It's not my experience the people living intergenerationally are unhappy. It's normal here in Asia. I know of no one complaining. It's very common to see 50s mom and 20s daughters spending days together as friends. Browse a dating site and it's not uncommon to see people even in their 40s living with parents. It's also not uncommon for people to move out for collage and move back in 4 to 10 years later with zero stigma
I have feeling you could make an argument that getting your own place is either an indirect or possible direct consequence of marketing. Lots of companies stand to make more money if they promote you moving out on your own. Ikea has at least one famous ad telling you to move out of your parent's house
Had the US not participated the suburban American dream, the excess WWII capacity would be wasted instead of being redirected to home construction, auto manufacturing, and all manner of new industry. And we would’ve plunged into yet another depression.
This matches my experience that children of immigrants from intergenerational living cultures choose to live separate from parents if they can afford it.
No one makes compromises unless they have to, and unless you have a big soundproof house, two or more couples living together are going to bump into each other.
I see older parents moving back in with kids due to declining health, but otherwise the consensus seems to be that having grandparents nearby in a separate home is ideal.
Not saying that fitting people into a small space isn't hard.
However, children of immigrants are especially keen to assimilate into the receiving culture, so much so that they often go beyond what natives do. For immigrants and their children, a clash of cultural values may be a larger driving factor than what's the natural for people in general.
Having your family under one roof isn't a compromise, unless you don't like your family. Sure, there are downsides at times to having everyone together, but the positives far outweigh the negatives.
Even if you like your family, I would be surprised if you didn't make compromises regarding noise levels during different times of day, cooking choices, having people over, etc. Not to mention cultural differences.
The above might not apply if you have a large enough space with sufficient sound proofing and multiple kitchens, but that's not the reality for most people. There are positives, but my observations suggest that the biggest factor in determining if you live in an intergenerational household is whether or not children and the parents can both afford to live in different houses.
I would agree on one point and disagree on the other actually.
On the first point, from what I've seen, there is certainly a lot of conflict if intergenerational couples stay together under the same roof for prolonged periods of time, whether it's the parents living with the kids or the other way around. For short periods of time, it definitely works out positively.
I would argue that it's less because of wealth or even expenses, and moreso because of cultural norms, that children tend to stay with their parents for longer in Europe. I don't know if this comes across as anecdotal, but my SO's parents often requested her to choose a medical university closer to home, and even suggested we stay with them, even though they are extremely affluent and comfortable. Even now, after living separately in another city, her parents and relatives often stop by to check up and stay for a couple of days very often. Of course, the young will always prefer to move apart to retain some privacy, especially once the kids arrive. Obviously there's the shadow of European expenses hanging over everyone's heads.
It's not even necessarily a Europe thing. Or Asian. Though yes there are these tendencies. Italians, even in the US (North America actually) from my experience tend to stick together as a family unit for a long time. There's a lot of pressure on the young folks as well in some cases I know. Every situation is different in its own subtle way but I can definitely see how necessity (money) has made it so that kids stay with their parents until they're married. Catholicism will play a role too. Seeing that in many Spanish friends as well. Both the money and religious aspects. Germans too. I have a good childhood friend (yep I grew up there) who was always very close to his mum and built his house right next to his parents house for money reasons (free land so more money for the house). They are just constantly fighting over this or that. His SO really hates it now. I never understood why they did that. Sure, be in the same city, maybe even same neighborhood but right next to the parents especially after marriage? You're crazy! Same household? Way beyond crazy!
Personally I have healthy 6000km between myself and the parents. To be honest something like the 300km we had a some point is nicer and for taking care if the kids from time to time something like a few kilometers is best but same houseld is just stupid and I have yet to meet someone (even Asians) that will willingly do that for longer than necessary if they can help it. If they do it, it's for one of the reasons stated above like a Vietnamese colleague who did move back in with her mum for like a half year while trying to find a new place. They're close but same household is just way too close.
> While it's true this seems like a strong US thing, I haven't heard many happy long-term stories of folks living intergenerationally.
That's really depressing. I'm sorry your social circle has such poor family dynamics. The majority of inter-generational families I know quite like the arrangement. Grandparents love having grand kids around, parents enjoy the extra help of the grandparents, meals are a lot more fun, etc.
>The idea that having a multi-generational household means that the younger members haven't "grown up" and need to "learn to live on their own" is a completely manufactured attitude. I think many American families would have much stronger, more healthy inter-generational relationships if we lived together (at least for a bit) as adults. As it is now, most US kids leave home just when they're starting to be able to meaningfully contribute to the household as equals.
There's more to it than just learning to live on your own. In the US, we value individuality above all else. People who never move out and forge their own path in life are far less likely to find out who they really are and what they really want out of life. Whether you're aware of it or not, staying so closely attached to your family can massively stunt personal growth. You are constantly reminded of who and what you are "expected" to be, rather than defining that for yourself. You can see this very clearly by going back to your hometown and talking to the people who never left. Sure there's value in the stability and comfort of that life, but you lose out on the opportunity to truly express yourself and be who you want to be.
You're projecting yourself onto all other Americans here. Personally I feel the same about some points:
I moved back to my hometown after finishing college (in Germany!) and went to work at the family business. I was there for 4 years, and miserable for 3 of them. I finally told my dad that I didn't want to work there anymore, and it hurt his feelings for sure, but the last 10 years have been much better for me.
At the same time, I still live in my hometown and I find that the "get out" mentality in high school was massively overhyped. I like it here. My younger brother eventually went to work for my dad, and he seems to like it.
I'm just trying to say that just because you believe living with your parents would stunt your personal growth, doesn't mean that your neighbor can't live a perfectly happy and successful life in that situation.
In america, there is a difference between just living in the same town as you grew up in (not a loser) vs. a room in your parents house because you can't afford it.
I was fortunate enough to be able to attend boarding school starting from age 13, and getting out of my parents' home early was a huge benefit in every possible way. I wish more young people had the same opportunity.
My parents are good people, there was nothing wrong with my home environment. But it's more important that youth learn to act like independent adults and take responsibility for their own lives. Staying at home too long causes learned helplessness. When there's no one around to help it's sink or swim.
I think whether youth learn to be independent adults when living with parents have more to do with parenting style than with the fact that they are living together. Helicopter parenting styles can lead to learned helplessness even when youths are out in the world by themselves, and they end up continuously being a burden to friends and family in order to survive.
I moved out at 18 while working full time, I have always been extremely independently minded and wanted to do my own thing. Was it extremely tough especially when I was going to college as well? absolutely! But it brought to me a sense of independence and tenacity that has given me a huge advantage over peers in my age group. Everything is not that difficult when compared to being on your own at a young age. I counter this to a person I knew who went to a top school who's Dad was a corp. exec and they were not working/jumping between low level jobs into their 30's and were completely dependent upon their parents weekly income. I cringe at the thought of moving into my parents house again, I love them alot, but just value my independence alot more.
I had a similar experience. I moved out at 19 years old, in my own apartment, with no financial help from my parents (beyond 2-3 home cooked meals a year).
It might not be the same for everyone, but for me, there was a definite pride in being independent, making my own decisions and having nobody to answer to but myself.
Boarding school was not sink or swim, you had adults looking after you, likely it was paid for by your parents, and you had a decent home life to return to if shit got really tough. Most parents aren't going to let their child sink and drown, nor is that really practical advice.
There’s a big difference between a parent and the adults in charge at a boarding school, in terms of the emotional support and things that those adults will do for them.
I’m sure most 13 year olds plead with their parents to take them certain places or buy them certain things (e.g. specific food and clothes, etc.), and while I’ve never been to boarding school, I imagine you have to figure out how to get things for yourself.
The point is taken re: not being “sink or swim” (you won’t be left on a ditch on the side of the road), but surely it’s obvious that more independence is needed living without a primary caregiver in the same home.
It likely depends on the country, but I am sure there is no lack of pampered/spoiled children at boarding schools. In the US, where free boarding schools are practically unheard up, it is even more likely.
The adults should be ensuring you don't grievously injure or harm yourself, and that you're returned in same/better condition.
You can always ring up your parents and ask for stuff, it's not like you are adopted by the school and lose all contact with your parents, nor are you earning a wage at 13 going to boarding school.
Lots of kids going to public school and/or with rough home lives learn "sink or swim" just as well or better than someone going to boarding school. I just found it odd to say you're learning to "sink or swim" when you have so many safety nets there to catch you if you did sink/fall.
One of the value propositions of these boarding schools is that they don't put up with your kids crap and your kid hopefully doesn't become a spoiled brat.
It's perfectly possible to do that while living at home.I was more independent at 13 than many 20-somethings I met years later living in a shared flat.
Our mother in law is staying with us due to the unexpected passing of her husband, and we have been experiencing this first hand as we look for a shared home.
Not only is there no multi-gen homes in our area (exurb an hour away from a major city) but it's difficult to find a layout where a part of the house can be a mini apartment or her own personal area. It seems like more basements are finished now and some of the design decisions have been quite odd to say the least.
Worst of all is that we're not allowed to buy some land and throw a small structure or trailer/rv on it for her. Even though it's for family it's not allowed as it could be rented out in the future.
The entire process has been stressful and aggravating, and is made worse by everyone sharing the same space working and going to school.
Some regulators have different rulesets for 'temporary structures' (whose permanence can be fuzzy), for 'extensions' (whose connectedness can be limited), or 'renovations' (whose alteration vs. new-build can be gamed). Work the system. Worst case, put up a glamping tent and go neo-Mongol.
On the glamping line of thinking, I've seen some families around here use an RV as a mother-in-law apartment. They are a bit expensive right now, but still way cheaper than full renovation to add the same amount of space. Plus, then you have an RV.
In the US it was also a consequence of affluence and lots of living space. A lot of social progress comes when a new generation doesn't have to live within the expectations of the previous generation. The parts of the US where there is a lot of wealth creation are the parts of the US where a lot of young people move to.
So, without making any judgements about how people want to live their lives, I think it is a negative for the US that more young people are living at home.
Even though I agree it is more of a western thing, I would argue it is also maybe more of a "recent" / urban trend. I am originally from rural Western Europe and a few years ago grandparents, parents and kids all in the same house was still a common sight. I would agree that people look for more independence these days but I feel like in some places it is still fairly recent.
Correct. Neolocal households coupled (no pun intended) with later marriage ages are unique aspects of historical marriage patterns in northwestern Europe.
Many more regions besides England have also shown this pattern for centuries, but those are mostly within northwestern Europe to the west and north of the Hajnal line.
How do you have a grown up, likely physical, relationship with your partner... when your parents are sharing the same rooms? Do you just hide in your bedroom the whole time?
How do you develop your own relationships and life and way of doing things and way of raising your children, inside someone else's house? I can't understand that but I'm open to hearing about how.
Seems like you are referring to sex. Obviously, when you are living in multi-generational households, you can't be having loud sex on the kitchen table. You can either do it quietly in your bedroom, or use the Asian practice of going to love motels when you want to let the monkeys loose.
Regarding your second point, I'd like to point out your particular phrasing which makes clear your point of view, that you consider a multi-generational house "someone else's house". It would be your home that you are living in, even if it is not your name on the deed or rental agreement. Now, whether you can develop your own relationships and life and way of doing things has to be independent of whether you are living with family. For every person that is an example that living with family is a burden, there surely is another example where it is a benefit. The growth in your relationship with your family can be hindered or accelerated by your time with them, I don't think there is a one-size-fits-all answer to that.
> How do you develop your own relationships and life and way of doing things and way of raising your children, inside someone else's house? I can't understand that but I'm open to hearing about how.
In my experience what happens is that the "family" raises the children.
In intergenerational households - in Asian cultures at least - it is still generally the older generations calling the shots, in patriarchy/matriarchy sense. In practical terms it depends on how much financial power each generation holds that determines how much say they have. But in Asian cultures age do grant at least some implicit authority.
Given the above cultural context, tensions can arise if the way of living/child-raising are not aligned. I would say this resolves how normal conflicts get resolved. Those who have the most time and influence usually win out. Although culturally people understand they have to pick their battles for the benefit of daily harmony.
I think a way to think about how the living arrangement works that may be more relatable is to think about a multi-generational family business. If you watch shows like Chef's Table there are stories were children take over the family's business by more-or-less following in a prescribed footpath, while others conflict and find that they have to strike out on their own.
On a day to day basis though, it's just like living in a very close knit community - you could say a family.
> In intergenerational households - in Asian cultures at least - it is still generally the older generations calling the shots
I think this is the simplest answer to why most people are opposed to it - they fundamentally don’t want anyone else calling the shots on their lives to any extent.
Yes, I suspect that people moving out when they are 18 is an anomaly, due to a special time of increased prosperity, and the recent events are simply just the start of a return to the norm.
It's also completely against human nature, especially when it comes to raising kids. We have always lived in large groups and kids were nurtured by and brought up by many members of family, instead of just father and mother. It results in much healthier humans, who learned from all members of family, because who's to say that father and mother themselves only are best guardians? Not to mention the sheer amount of effort required to take care of a child, which was shared by much larger extended family or just tribe members. Today's nuclear family mostly brings mental issues and overburdens the parents in an unnatural way.
>> In other parts of the world it's abnormal for adults in their 20s to be living anywhere but with their parents, often even with a fiance or new spouse in the mix.
The difference is the prudishness of US culture. Those couples are living life as a couple. In a US household they would be treated as kids, with many parents not allowing them to even share a room.
Though I agree that it's not wrong or abnormal (at least for most of the world), in this context it represents a pretty large economic step backwards. There was a time in most middle aged people's memories where starting a career, affording a house and starting a family were all realistic goals in your twenties. Now that's not possible for many, even as economic indicators like GPD, the stock market, inflation, etc. improve. This statistic simply reflects a growing income inequality and corresponding quality of life decrease.
I doubt think this has been true for most of history. Rather usually one lived and worked the farm with the family. Then it got subdivided as more children survived childhood, at least until the birth rate declined.
There has been golden eras, usually from expansion or industrialization where youths could acquire their own places relatively young. But it doesn't scale forever.
I don't think it is about it being wrong (though it is abnormal in the US context), it is the reason for this shift that is worrying.
Is there any reason to believe this is due to a cultural shift amongst Americans? I don't believe it is controversial that the young have been the most negatively impacted by rising education and housing costs, as well as their demographic being the most heavily impacted by the Covid-19 pandemic. (is it?)
The implication here is that more young adults are staying at home, not because they want to, but rather because they cannot afford to leave (or in some cases, as the article mentions, because it is better than being isolated at home alone). I hope you agree that this is an important distinction.
The American status quo is based on around individual independence and for better or for worse anything that moves away from that is considered a regression.
Well - it's abnormal in that it is not what the US's coming-of-age systems look like. Hit 18, move out, get a job. Whether that is good or bad or right or wrong is irrelevant, it's definitely abnormal from a cultural standpoint.
Yeah, there's definitely a cultural aspect. People WANT to get out of the house ASAP. It's not like all of those American 18 year olds are bummed that their parents expect them to go someplace, it's that many/most of them are chomping at the bit to have their own place and their own life with day-to-day financial and social independence from their family. If they're more likely to be staying home now, it's a sign of financial trouble because presumably most of them would love to go someplace else but can't.
To the degree that there's a stigma associated with adults living with their parents in the US, the stigma comes more from being the sort of person who would want to live with their parents when they could afford to be on their own. That's the stigma. It's not a stigma about poverty, it's a stigma about someone who would want a more sheltered and less independent life, and a stigma about someone who wouldn't get seriously annoyed at having their family around 24/7. Those are both pretty alien concepts to a lot of people in the US. There's also the rule of thumb that the #1 way to keep a family together and loving each other and constructively involved in each other's lives is to not see each other every day. Absence makes the heart grow fonder, and all that.
But like you said, this is independent of it being good or bad or right or wrong, it's really just cultural context, but that's the cultural context.
I would like to add to this that it's definitely not unique to the US. Growing up in Eastern Europe the attitudes of young people around me were very similar - you want to get out of the house ASAP. The age threshold would be somewhat higher (maybe mid-20s instead of 18), but overall trying to become independent and self-reliant was considered a virtue.
Agreed. I wish that the stigma would go away, but not because of mass financial instability. I wish it was just more of a culturally acceptable thing to do - it'd be easier to start a life at ~25 or so after a few years of working and creating somewhat of a nestegg.
in the US, living with your parents after high school implies you need their support financially when you're old enough to have a job of your own.
Usually any mention of living with your parents implies being lazy ( the whole "neckbeard living in their parent's basement" stereotype ) unless you qualify it with "but I pay rent". If you pay rent then it appears more like you can support yourself and still not relying on mom/dad to pay your way even in adulthood.
You mean all the entirely predictable situations, like guaranteed increase in sexual abuse and domestic violence? When this genius plan was announced in late winter, I couldn't help but think of all those poor souls who lost whatever safe space (school, library, job, whatever) they had that kept them away from an abusive person in their lives, who were now together 24/7 under psychological and economic stress. Of course, the spirit of moderation requires that we consider both criminal incompetence as well as sociopaths with grand visions for the "betterment" of humanity and our planet, as an explanation as to how we ended up like this.
[p.s. one fine day, the internets will unequivocaly sing the same song, with not a single person suffering from misunderstandings. That fine day, HN will do away with anonymous downvotes, since we will be in a state of perfect harmony.]
I'm not sure why you were down-voted so much. There are real negative consequences for a State-wide lockdown that aren't immediately as obvious and the consequences of not locking down. I'm curious how in depth that analysis/discussion was, or if everything has been just knee-jerk reactions to the latest news and data points.
I'm a foster parent and have seen a lot of the discussion and tweaks among CPS and social workers in my state because of that. A shitton of analysis and discussion has gone into every step here. People who act like they are the first person to ever think of the downsides to a lockdown are just not relevant.
Coronavirus ironically has been great for family bonding for us. We spend half our time at my parents house (who live 10 minutes away). Between four adults it’s much easier to take care of the kids, and my parents are retired and love the company. And we also enjoy spending time with them: I’ve gotten to talk to them much more than I have in a decade.
I have friend who immigrated to the U.S. when he was in his teens.
After graduating college and finding a good job, he went to get a roommate and move out. His parents were horrified. "Why are you going to move out of your family's house so you can pay money to live with strangers you found on the internet?".
At first we all laughed because it seemed like a case of immigrant parents no getting how things worked here, but the more we all thought about it, the more the parents seemed to make an excellent point, and one none of us had really considered.
Not sure when families living together became a sign of failure rather than a sign of a close family.
I moved back in with my Dad with my husband. I'm 32, hubby is 30. He had two strokes and my little sister didn't want to be the only one nearby. It's been 6 months. Is it the easiest? No. But it's amazing to have this day-in-day-out time with my Dad again after not having lived at home for years.
My older sister moved back in with her husband and two kids for 2 months as she studied for her medical school USMLE exams so she could take advantage of the free baby-sitting.
Neither my sister's family or my own would've made this decision without the pandemic. My husband and I were both pushed remote (same salary) and my sister's child care plans went up in smoke.
While 2020 has been shit, moving home in some cases isn't an indicator of a problem. It's just a smart reaction to the new reality of working from home.
I'm my early 20s and in the UK. I earn more than my Dad who is in his 50s. He managed to get a house, have money left over for an expensive hobby, decent car, the odd holiday etc.
I'm a 90th percentile earner. Will 95+ percentile earner in a few years time. Yet it feels like I am not as well off as I should be. I don't live in an expensive area either. Yet I need to save so much money to even have the opportunity to buy a house. Then I also need to save a tonne of money for a nice retirement as government pensions get absolutely gutted.
I'm not going to pretend I won't have a good amount of disposable income even after maxing my pension contributions and paying a mortgage. But it just annoys me that I'm a relatively high earner and yet the money won't go very far. The most expensive thing I'll ever buy would be a brick box, and one that's not even as good as my parents.
I’ve thought about this a lot. My parents had 2 TVs in a house of five(and one was junk). We had stick on vinyl floors, and a cheap white appliances. Counter tops were linoleum, and we had 1.5 baths. I cut the lawn, and we went shopping in stores. We took two vacations requiring planes for the first 13 years of my life. Most vacations were camping. We rarely went out to eat. We didn’t have computers. We had 1 corded phone in the house.
This is in stark contrast to my house. We have two iPhones and get new ones every 2-3 years. We have two iPads, 3 computers, and gadgets galore in a house of 4. My countertops are stone, my appliances are stainless. We go on vacations yearly that require planes and hotel, and used to eat out often. I have a house cleaner, and pay for an expensive gym.
I realize I may not have the house my parents have, but I have nicer things. I make more money but I spend it very differently then they did. There was basically nothing we bought that compares to an iPhone every 2-3 years. I know so many people who travel regularly, and don’t seem to realize this was rare 15 years ago. I really feel we spend our money differently.
I mean it sounds to me like you're just wealthier than your parents were, but housing has risen in price disproportionately and so the things you buy are different. Would you really be purchasing a house if you didn't buy a phone every 2 years? The things you list sound like, idk, $10k/year with some heavy assumptions mostly weighted on the vacations than the tech. It's likely true there's more premium goods at (higher) affordable prices, but that doesn't actually contradict the narrative that housing has gotten a lot more expensive.
I say this as someone in the same boat, who could/would/will casually afford to buy an expensive home under 30.
The median net worth of millenial families (35 and under) is $10k. Probably trends negative if you filter down to people below age 30 only.
My takeaway from his or her comment was that housing is expensive because it’s nicer.
And it’s true. It is hard, if not impossible, to find a modest, small house. The median size of new construction is more than double what it used to be. And houses are full of glitzy appliances, fixtures, moldings, and counters. It really does just heavily inflate the price.
How much would a 1,000 square foot house with modest fixtures cost in your neighborhood, if it existed? That’s what the typical house used to be.
> It is hard, if not impossible, to find a modest, small house.
True, but small condos have seen similar appreciation
> houses are full of glitzy appliances, fixtures, moldings, and counters. It really does just heavily inflate the price.
This do increase the price of real estate, but not that much relative to the bigger picture. The price of a "glitzy" fridge vs. a non glitzy fridge is going to be what, $500? $1,000? Likewise, appreciation has occurred on older properties without these features unless you're below the inflection point where the risk of the property declining in value faster than the market appreciates is so high that the price remains poor.
A sizable percentage of people don't want to live in condos. And they aren't necessarily small, either.
>This do increase the price of real estate, but not that much relative to the bigger picture. The price of a "glitzy" fridge vs. a non glitzy fridge is going to be what, $500? $1,000?
That's an extreme understatement. A glitzy refrigerator might only had $500 but marble counters might add $20,000 or more. Same with flooring. The price difference on a house full of stick on vinyl and real hard wood might be an additional $20,000. Then you get to other cosmetics such as crown moldings, jacuzzi tubs, walk in showers, vaulted ceilings, heated towel racks, and more. You could take the exact same house structure, and through flooring, counters, and cosmetics alone you could easily jack the cost up by $60,000.
>Likewise, appreciation has occurred on older properties without these features
Not really. Houses get upgraded with better floorings, better counters, additions, and other renovations. Go find a house in your neighborhood built in the 1950s with no major additions, laminate counters, and cheap flooring. Good luck.
> A sizable percentage of people don't want to live in condos. And they aren't necessarily small, either.
Most condos are small. If a sizeable proportion of people don't want to live in condos, that would make them cheaper. The fact that they're appreciating similarly that is further evidence that the premium for size is not the driver of what's happening.
> That's an extreme understatement. A glitzy refrigerator might only had $500 but marble counters might add $20,000 or more. Same with flooring. The price difference on a house full of stick on vinyl and real hard wood might be an additional $20,000. Then you get to other cosmetics such as crown moldings, jacuzzi tubs, walk in showers, vaulted ceilings, heated towel racks, and more.
Most properties don't have jacuzzi tubs or vaulted ceilings. You're not wrong, but they're not relevant to the discussion of what's happening to the median home buyer.
It's nonsensical to think that the price of housing has risen primarily because of quality increases because many, many houses have seen large appreciation with no changes.
> It's nonsensical to think that the price of housing has risen primarily because of quality increases because many, many houses have seen large appreciation with no changes.
So it should be absolutely no problem for you to take me up on my offer. Locate a home, built in the 50s or 60s, without any additions adding square feet. Cheap counters, cheap flooring, and cheap fixtures. If what you say is true this should be relatively simple.
How much is it, and how much more or less expensive is it than newer construction in the area. If homes are just rapidly appreciating while they sit there unimproved, this should be a trivial exercise.
My parents bought a 1400 sqft, 1950s-built home in 1993 for $350k. It still has all old appliances such as a 1950s oven that looks like this [1], old gas heating vents, no central cooling, no pool. No additions. The fixtures and flooring aren't cheap, but they're not luxurious, and are over 60/70 years old at this point - only real maintenance they've done is re-shingling the roof and repaving the driveway every decade or so.
The house is now worth $2.1M (+500% gain). Obviously if they sold a new buyer would tear the whole thing down and build some huge modern home on the land (which is the actual valuable portion of the asset) as has been happening in their neighborhood.
You are placing way too much importance on the relatively small value of fixtures and "nice" amenities vs. the global glut of capital chasing appreciating assets (made much easier through online platforms) such as land in desirable areas.
I think that people ignore the fact that the population of the United States has dramatically increased over time. We now have 331 million people whereas there were only 210 million in 1970. So of course housing is going to be more expensive. The issue gets even more dramatic prior to 1900.
The USA has half of a continent to house all these hundreds of millions. The problem is with overcrowding in larger cities, not the lack of space (even if the location is suboptimal).
NOne of us should feel compelled to crowd into large cities anymore. NOT in the 21st century, and CERTAINLY not after we've clearly demonstrated as a workforce that we can very easily get our jobs done remotely. Sure, that's not for all workers, or even most, but a huge proportion of us could very easily move to small towns all across america to relieve the crowding pressure in cities or the most trendy suburbs.
IF and ONLY IF: employers join us in the 21st century, and embrace remote work where they can.
(and the real danger, as I learned in the 1990's, is not even being remote - it's being "not at the home office" of a distributed organization - it is a career killer, and when that "business cycle" inevitably hits, your remote-office workers are always the first to get cut. This shit has to stop if we're going to get out of this "crowded into cities" nightmare).
We spend it differently because supply and demand (yeah, duh), but what I mean is that we make about the same as our parents, but the cost of housing went up, while the cost of travel and electronics went down. So we buy cheap stuff while try to figure out what to do with housing (and healthcare, and so on).
Everything that requires local labor is very expensive (partly because our expectations and requirements increased, we are willing and able to spend more, so a very high equilibrium point formed), everything that can be mass produced is cheap. (And not just because externalities are hidden, but because technological progress.)
Seems like the ol' "poor people aren't really poor because they almost all have refrigerators and not even kings had refrigerators two hundred years ago!" argument.
I call the counterargument "You can't live on pepper". As in even though pepper is way cheaper than it was 500 years ago, you'll starve if that is all you can afford.
With tens of millions of Americans facing food insecurity and tens of millions of Americans facing eviction now, thanks to years of precarity exacerbated by the COVID-19, I think the situation is worse than you're suggesting.
The counter to your strawman is that you are poor if you feel poor.
Since we have proven that a majority of people feel poor (i.e. they need to earn 20% more), and that this is true even of millionaire’s, we need a different definition of poor, because something isn’t right here...
> The average income is just $18,046 (£13,850) a year, and almost a third of the population live below the official US poverty line. The most elementary waste disposal infrastructure is often non-existent.
> Some 73% of residents included in the Baylor survey reported that they had been exposed to raw sewage washing back into their homes as a result of faulty septic tanks or waste pipes becoming overwhelmed in torrential rains.
I’m not sure how cheap that is overall. For example an extra $400 a month is $100k in mortgage loan right now. It all adds up, and is easier to do if you avoid the wasteful spending.
This is an excellent point - I think we are definitely a generation of consumers, and what happens is, kids who aren't taught how debt works get caught up in it.
And once you're caught up in debt that extra 400 doesn't go to a mortgage it goes to that credit card or that high car payment on a 72 month term..
I’m in my mid fifties and I have never had a company pension, defined benefit or contribution. I saw my first house decline in value by 25%. We had interest rates peaking at 15%. I didn’t have student loans but only because I didn’t go to university, just like 90% of my peer group. Unemployment was much higher than it is now and schools were teaching subjects for obsolete careers.
I think you're missing how pervasive & broad the issues are these days.
You mentioned you had a house. I'm fast approach the top 1-2% by income and think I can maybe swing a 1 bed apartment. It'll be borderline. Not house...apartment.
...no idea what the other 98% of my peers are doing but they sure as hell aren't buying houses. Meanwhile all the landlords I've rented from thus far where a generation older and had entire portfolios of properties.
Pretty sure I'll come out on top of this because I'm doing well, but can certainly understand the disillusionment of the younger generation
There's a reason Pittsburgh's population declined by the hundreds of thousands since the 1970s. Sure you can get a cheaper house. But you aren't making coastal money.
In the 60s those "small towns" had manufacturing plants you could just walk in and get a job at, many of which were union and paid extraordinarily well.
These mid range cities are not as agreeable as you think. I live in one. Housing is very expensive W.R.T income now.
The reason many of these places have cheap housing is largely because of abandoned neighborhoods, vacant lots, condemned housing, ancient housing which requires A TON of work...the neighborhoods people want to live in are pretty expensive still.
Not to mention the old school mentality and opportunity cost. I left one of those old school firms. It was 8-5 everyday, no variation, no flex hours. No vacation in your first year. No comp time for travel. Expectation of working additional hours. Poor yearly raises, etc. Small job market = small network = less salary jumps.
So it sounds like tradeoffs. Go to a big city, get a high salary, can't afford a house. Go to a medium size city, get a lower salary, can afford a house.
I'm not surprised there is a utopian city where salaries are high and housing is cheap.
That's why people left Pittsburgh en masse and other cities have larger populations. Ultimately if it didn't make sense to go to big cities people would stop because of the costs - clearly the market says it's worth it.
Not everyone wants to live in the midwest with terrible food options just so they can afford a house built in 1940 with knob and tube wiring. These costs are never considered because people just want to say things like "lol move" without considering why people just don't move.
Yea if you want to live in a crap, run down neighborhood with a crappy school district and a house built a century ago that isn't code and will cost 50k to fix. I lived there - these statistics are nonsense. They don't tell the whole story.
I don't think I've ever seen someone so confidently attempt to refute data via personal anecdote, so bravo for that.
The median home is not always "crap, run down with a crappy school district". Yes, there exists a quality distribution, and the bottom quintile often has the worst quality, but that's true in every State and every Country.
These are perfectly good homes in perfectly good school districts.
Again, single data points only get you so far in an argument — but most importantly, the aggregate data corroborates it. Nobody claims that outliers don't exist, but we're talking about medians here.
I honestly can't help it but laugh. LATROBE. Latrobe is an hour away from Pittsburgh. Population? 7,885 (2018). There is nothing near Latrobe but St Vincent College. There are very few jobs. Oh and the commute? You take 376 E through the Squirrel Hill Tunnels. Easily a 2 hour commute. Sounds fantastic! Great pick!
Hampton is in Allison park which is a nice suburb. The median home price there is 295k. The house you selected is pretty small, 2 br, 1 bath, which makes a ton of sense - not a lot of young people looking for good jobs are going to want to live in a suburb with older people and families.
> Again, single data points only get you so far in an argument — but most importantly, the aggregate data corroborates it. Nobody claims that outliers don't exist, but we're talking about medians here.
But you cherry picked a value WELL BELOW THE MEDIAN IN HAMPTON. The median is 295k and rising fast. So tell me again, what cheap housing are you talking about?
Oh btw, unless you're lucky and at a FAANG (which have fewer jobs here) you ain't making anywhere near 6.
Go ahead, move to Braddock for that 50k house and breathe in the wonderful air from Clairton Coke Works and Edgar Thompson. I doubt you'd read that on zillow.
Again, I’m just playing by your rules — look up the top 10 school districts in the Pittsburgh metro area, and look up housing on Zillow and Redfin, it’s really not hard to find decent housing under $250,000.
> Not a lot of young people looking for good jobs are going to want to live in a suburb with older people and families
You’re moving the goalposts. You started off talking about school districts — not a lot of young people care about that. If you want affordable housing outside of nice school districts, and not in the suburbs, you’ll find plenty of that in the Pittsburgh city center, also.
The fundamental argument is that if you earn the median income, and you need to live in a good school district, it is more than easy to own a home and build equity in property — you just have to sacrifice being able to live near dim sum and access to “Hamilton”. If you don’t care about school districts, you can find a place with a short commute from work. You might even be able to get some dim-sum action. Trade-offs!
> Pretty small, 2br, 1 bath
Are young people looking for 4BR’s? I seriously think you misunderstand what the “median home” means — it’s not a McMansion. Also 2BR is large enough for a couple with one child.
> Go ahead, move to Braddock for that 50k house
Yeah but...you don’t have to do that. You can move to a far nicer neighborhood in the Pittsburgh area for $150k. It all depends on which trade-offs you’re willing to make given your personal circumstances. $50k is many standard deviations below the median, we’re not talking about that. You don’t have to be a FAANG engineer to earn the median income, especially at the household level.
> But you cherry picked a value WELL BELOW THE MEDIAN IN HAMPTON
No, I showed you the aggregate median home value in the greater Pittsburgh metropolitan area on 3 different sources now, and then made a cursory sweep of the current state of the housing market to corroborate the aggregate metrics. It was pretty easy to do. The data doesn’t lie. That’s far more than you’ve done in this discussion: un-verified personal anecdotes devoid of any citation or sources. It’s honestly pretty remarkable.
That solves my property too expensive problem how?
More seriously...not super keen on living in the US to be honest. Could probably do it practically, but given my life circumstances it would be a net loss.
The income:price ratio would be better if you only consider NYC/SF prices. If you also take in account the vastly lower prices in other regions, suddenly the ratio would become a lot more favorable in those other regions.
Not who you asked but because people have lives built where they are living and they don't necessarily want to move to an entirely different continent away from their favourite people and places even if they could be making more money?
Like if you want to do that power to you, but this seems like such an insane question to just ask a stranger on the internet given that there are very obvious reasons why a person might not want to do that
Everyone will argue with their own statistics, but I think your general sentiment is correct.
Everyone seems to think the oldies had it easy in the good ol' days and the youngens are a bunch of lazy good-for-nothins.
There are probably certain a ways it has gotten easier and others in which it is worse... But I think this is more about generational sentiment than actual facts.
thats not really true though, we have the numbers. In real terms, education, healthcare, and housing costs have grown at a much higher rate than inflation. It is more expensive to go to college, pay rent, and stay healthy now than it was 30/40/50 years ago.
Housing seems to be the primary issue, but you’ll find very little support for actually fixing the issue - more and taller buildings in densely populated areas.
I don’t think people have a problem with spending more on education, they just want a reasonable return on investment for it. Turns out pumping money into monopolistic schools doesn’t get you a better result
The boomer generation was more or less promised that housing was the key to social mobility. And it was for a large number of people. It's hard for that to remain true now, and there's a ton of negative externalities. It's not like these people were experts on real estate policy before, they just don't have perspective on how it differs for the young.
"Not liking change" is disingenuous, even if, broadly speaking, older people don't actually like change
RE: "unemployment was much higher than it is now" - I'm not sure what country you're in, but here is a graph of the US unemployment rate since 1950: https://fred.stlouisfed.org/series/UNRATE (unemployment was higher this year than any other period on the chart)
Regardless, the U. S. had super-high interest rates at that time, too. 12% sticks in my head, but it was also the time of the Variable Interest Rate loan, where I watched co-workers really have to tighten those budgets and almost lose the house because interest rates went from "ungodly high" to "ridiculously high".
I think it’s good that you were able to own a house even though it lost in value. This ownership still sounds better to me than only being able to rent an apartment. Renting always means that the payments lead to 0% ownership in the end, hence a 100% decline in value.
This rarely matters unless you are looking to sell or borrow against.
> We had interest rates peaking at 15%.
But inflation was higher at the time. Also rates are 0% now at the Fed level, but if you are a consumer you are going to pay a bit depending on your credit score.
> I didn’t have student loans but only because I didn’t go to university, just like 90% of my peer group.
The governments (it's really a global phenomena) pushed the general public into universities. It's hard to blame the students when you take that decision at a very early age 17-19 and most of these youth doesn't have any life experience.
> Unemployment was much higher than it is now
I highly suspect the current unemployment rate is meaningful. To be counted as jobless, you need to register with the local employment office. It's possible today's youth no longer rely on that and use modern alternatives instead.
> schools were teaching subjects for obsolete careers
They still are.
> It wasn’t as rosey as it is often portrayed.
It was not. The only difference really is land and housing which was significantly more affordable and did matter less where you lived. Now you need to live next to a "jobs-hub" that have insanely high rent and purchase prices.
If you buy a house worth 4x your salary (in the ballpark of average), a 25% decline in home value means you need to spend an entire year of labor just to break even, ignoring the obvious associated living costs. The decline doesn't matter if it's temporary, but they're not always temporary.
Monetary policy is a huge factor in all this, asset holders are greatly advantaged over productive members of society at the moment.
The combination of artificially low interest rates with significant inflation in particular make housing spectacularly unaffordable. This combination simultaneously pushes up the costs of housing due to asset bubbles forming while reducing the ability of people who earn money to save for a down payment on a house.
I'm no millennial, but gen-X. My brick box is okay. Not as big as the one my parents had, but it's in a bigger city, which really adds to the cost.
But my wife and I are double earners, unlike my parents. And we both have really good jobs. We don't have it hard, but we don't drive new cars either; we've got a second hand Prius. The only sign that we've got it good is that our house in Amsterdam is not as tiny as most.
But I also wonder if maybe our expectations may be too high due to the constant stream of luxury lifestyles that we're being fed on TV, in movies and on other media.
I'm "X" as well and while I grew up it never occurred to me that owning a single tiny home would one day be considered a luxury. I was raised by a single dad who, on one tiny teacher salary ended up with two houses, all sorts of motorized "toys", financial security and a pension by the time he retired.
I probably make 3-4X what he did at the top of his career, and am kind-of hanging on to a house with a tough mortgage and a no-frills lifestyle. My Millennial and younger colleagues' financial lives are even more of a disaster.
I remember when someone reported that GenX was the first generation for a long time whose finances were expected to be on average worse than the previous generation. It looks like this trend has continued at least 2 or 3 more generations. It's not a blip, it's the new actual trajectory.
With middle class incomes stagnated since about 1980, it's no surprise everybody feels a lot poorer now. They have a quarter of the effective income people in a similar position had in 1980.
I think both pay has gone up over time and tracked with inflation. I also think the things people are buying better and more expensive products than they did before.
expectations may be too high due to the constant stream of luxury lifestyles that we're being fed on TV
A vague quote comes to mind, something about the peasant classes of a few hundred years ago would have overthrown the ruling classes a lot sooner if they had any idea the luxuries the ruling classes were enjoying.
I.E., maybe what's happening is thanks to TV maybe we're finally understanding how good some of those on the top have it.
You live in Amsterdam... sorry to say, but that is privileged as hell. Housing prices are becoming insane even outside the Randstad (I’m a 95 percentile earner too) so if you own property in the Randstad and think ‘the only sign you have it good your house is not tiny’ - take off the horse blinders.
Like I said, that is the big difference, but it's also the only difference. And the fact that living in Amsterdam is so privileged is also not a good sign. It's not good if cities become ghettos for the rich.
And with Brexit, there's likely to be an influx of bankers driving house prices even further out of the reach of most people. Good for me I guess (at least if we ever decide to leave the city and sell; otherwise it just increases taxes), but I don't think that's good for the city.
Comparing a salary with a pension to a salary without a pension is insanity. Wages are not stagnant. They've declined precipitously. take-home pay is stagnant and pensions are dead.
And real-estate has been pumped so heavily with low interest rates that you either can't afford it or, if you can, you get to sleep with the knowledge that the music has a good chance of stopping on your watch.
Just for the record, I think "pension" in the UK means something quite different than it does in the US. A UK pension is (usually?) more like a US 401(k).
In the UK, they refer to defined contribution and defined benefit as pension.
In the US, pension is short for “defined benefit” pension, which is an annuity beginning at a specified retirement age. The liability for providing that benefit does not lie with the recipient of the defined benefit, but with the employer (or government).
A defined contribution pension is one where the recipient of the benefit owns and controls the assets that will be used to pay the retirement benefits, hence the recipient is liable for making sure to have sufficient savings and the right investments to be able to pay themselves in retirement.
In the US, social security is the defined benefit pension available to everyone provided by the federal government.
However, it is prudent to expect defined benefit pensions to decrease in value as the retirement ages are increased, and benefit amounts and future value of money are decreased due to slowing economic growth in most developed countries.
Yes, a 401k is one type of DC pension. Specifically, one subject to various stipulations of the tax code section 401(k), where an employer has to setup the plan in such a way that sufficient employees benefit from it in sufficient amounts to pass the non discrimination testing. In exchange, the income contributed is not taxed until it is withdrawn after retirement age.
A Roth 401k is the opposite, where the income contributed is taxed today, but the withdrawals are not taxed after retirement age (unless politicians change their mind in the future...)
An IRA (individual retirement account) is similar to a 401k, except it involves no employer, and the amount of income that can be contributed pre tax is much less, and maybe zero if you earn too much in a year.
The post-WWII generation were able to buy a house plus car/holidays/etc on one person's median working class salary.
It wasn't a particularly palatial house, but the mortgage would have been paid off before retirement.
But this is a direct consequence of a rent-seeking economy which uses property rights as a proxy for political influence. The British economy started being converted from an industrial economy to a patrician rent-seeking speculative economy in the 80s, and the result was massive asset price inflation in property and shares.
This wasn't an accident. It made a certain kind of person extremely rich, and most other people increasingly poor to varying degrees.
Unless there's a change in strategy - unlikely - you can expect the wealth concentration to continue in the UK, with increasing danger to the personal circumstances of any kids you have - if not to yourself if there's a serious downturn.
Even a 95%er is in danger of losing their property if they lose their job for an extended period if they don't live off speculative investments and rent.
>Unless there's a change in strategy - unlikely - you can expect the wealth concentration to continue in the UK, with increasing danger to the personal circumstances of any kids you have - if not to yourself if there's a serious downturn.
It's the same in the US.
>Even a 95%er is in danger of losing their property if they lose their job for an extended period if they don't live off speculative investments and rent.
I fear this the most. My husband and I make more money than the rest of our family combined (both mothers, both fathers, 4 adult siblings, their spouses), but I still feel uneasy about the future. Maybe everyone worries more during uncertain times, but being mid-career with savings/investments I never thought I'd be concerned about losing everything.
I chalk it up to things simply costing more. I make more than my dad did. I dont take any major vacations, go out much, or live in a McMansion, yet we struggle to save.As a kid we took lots of vacations, they saved a good amount of money (stock market was good for them) and are doing well for themselves.
I imagine it's only going to be worse for my kids.
This is the "Avocado Toast" argument that we're poor because we spend $10 on Avocado Toast.
It is totally false. It blames citizens for national structural economic problems like hidden inflation and like bad housing policies discouraging building/planning.
People spend $10 for Nextflix, $90 for Amazon, etc as short term pleasures because they cant spend $GIANT on a mortgage. What are you supposed to do? Might as well treat yourself.
Of course, I'd rather get a home, but if I cant afford it, I wont just sit at home staring at a wall.
It's false for some locations but not for others. I checked on the two homes I lived in growing up and both appreciated slower than inflation from the late 90s to the early 2010s when they were last sold. In real terms they are about 20% cheaper than they were when my parents bought/sold them.
Flyover suburbia is more affordable than it was 20-30 years ago. All major physical items are better and cheaper than they used to be. Netflix is cheaper and better than VCRs + rentals + expensive cable. The big difference is health care and college costs. But most people don't have huge medical bills and college is somewhat of a choice.
The cost of living increase is largely driven by California, NYC, and Seattle. Pretty much every where else things are cheaper than they used to be.
I dont quite agree. I dont think you can compare home to inflation only -- you have to also look at the income in that area as well as total cost. If incomes have also fallen, then the relative cost/income ratio may have remained the same (or as i'm proposing -- has increased.)
As an example, there are depressed areas in flyover states where costs have indeed gone down. But incomes have gone down even more -- they are once thriving places like Binghamton NY which had industries that have since moved overseas.
There is also the cost of healthcare, education, and retirement savings. My father benefited from a pension plan -- I have to save myself in a 401k. My father paid no employee premiums for healthcare, I pay about $900/mo for the family premium (before copays and coinsurance.)
It's not just in declining cities. One of those houses is in the suburbs of Chicago. It's true in basically everyplace outside of the ones I mentioned. You can find a SFH around any major city for 150-300k.
Healthcare is definitely eating up more of the budget. I'm open to the possibility that it's eating up so much more of the budget that it's making buying a house prohibitive, but the numbers I see don't back it up. Most people still have employer provided healthcare and don't pay 900 a month in premiums. Part of that is CoL. Your contribution are higher than my family plan premiums I got through the market place.
this is a variation of the "avocado toast" argument. if you go crazy and subscribe to amazon prime, a music streaming service, and several video streaming services, you're paying somewhere around $100/month. if instead you invested the $100 every month, you could expect to have an extra ~$200k (inflation adjusted) after forty years. that's not nothing, but it doesn't add a whole lot to your safe withdrawal rate in retirement (roughly $8000/year). if you're only able to save a couple hundred bucks every month, that extra $100 makes a big difference. if you're saving $1000+, your subscriptions aren't going to make or break your retirement; you need to dig into those bigger fixed costs to really move the needle.
We might be talking about different budget levels, but to normal people (people who don't have the word 'software' in their job title), 200k in retirement is a lot.
Actually the median 401k balance at retirement is only around 60k, so that alone would quadruple their retirement savings.
>> Actually the median 401k balance at retirement is only around 60k, so that alone would quadruple their retirement savings.
You are comparing apples and oranges. You are comparing today's values at retirement to future values at retirement. It is almost certain that $200k 40yrs from now will not be worth $200k in today's dollars. Inflation accrued over 40yrs -- however low and however faked -- is absolutely going to make that $200k seem not so much.
Presumably, some of the $200k invested will grow, but also, not all the 200k is invested right now, it drips in over 40yrs.
You also forget the wildcard of healthcare lottery. One large medical surgery co-pay and you lose half your nextegg.
I got the $200k figure assuming a 6% rate of return, which is basically the inflation-adjusted rate of return for the S&P 500. both the $200k and $60k are 2020 dollars.
This is the problem. $200k in 2020 dollars wont mean much 40yrs from now. Similarly, $60k sounded like a huge figure in 1980 for retirees planning for 2020. For a proper comparison, you'd need to compare purchasing power of $60k to a retiree today vs $200k to a retiree in 2060 -- i'll bet it is about the same!!!
Inflation is a huge unknown here. My parents' home in 1981 was $35,000. The same exact house today is over $1,000,000. Rent used to be $150 to $200/mo. The same rent today is over $3500.
I did a monthly $100 contribution at 6% assuming tax free comounding for 40yrs and came up with your figure of $200k. That is right -- you'll have $200k at this rate. But in the year 2060 that might be just a year of rent and you're broke!
I hope this doesn't come off as condescending, but I think you are missing the distinction between real and nominal value. if I just say "$200k" without qualification, that is a nominal value. if I associate that nominal value with an instant in time (a whole year can be a narrow enough window when inflation is reasonably low), it becomes a real value. when I say you would have $200k in 2020 dollars in forty years, inflation is already taken into account. if a dollar is worth half as much in 2060, I'm saying you would have $400k in 2060.
you are right that inflation is a huge unknown. if inflation goes up massively without a corresponding increase in nominal returns (unlikely, but possible), it would make that 6% figure incorrect. in this case, you would have less than $200k 2020 dollars in 2060, but the real value of a 2020 dollar would not have changed.
as a concrete example, suppose I own a three shares of microsoft stock and you have a brand new ipad air. both are worth about $600 today. if I offered to trade you my microsoft stock for the air, you might be happy to do so if you don't have any use for the ipad. if the fed prints trillions of dollars overnight causing the value to collapse, it doesn't change the fact that my three MSFT shares have roughly the same real value as the ipad. "2020 dollars" is just a slightly more abstract way of describing this dynamic.
Fair, but i'd say the 6% assumption is suspiciously high in that case. I think you might be doing something like ({mean SPY return} - CPI)
Except that CPI is a deviously misleading number. I wonder if the same approach applied in 1980 would come close to aligning with 2020 numbers (including healthcare, college, rent, energy, etc.)
Please be brutal in your response, I want to understand if my understanding of this is all wrong!
keep in mind, this is really just a back-of-the-napkin calculation. I'm certainly not an expert on the matter, but AFAIK 6-7% is generally accepted as the real rate of return on the S&P 500 (at least historically and over long periods of time). inflation calculations are always kind of messy thing though. in reality, some goods/services increase in price much faster than others, and CPI will be very sensitive to what goods/services you choose for your basket. even when you take into account overall inflation, college tuition is vastly more expensive than it was a few decades ago. it also gets tricky when you consider that the quality of goods can increase over time. a mainstream CPU costs about the same as it did in 2000, but is way more powerful. is that deflation, or is technological advancement a separate thing? I never got far enough in economics to know the answer.
yeah, I'm assuming most of the people on this forum have upper-middle salaries or will likely have them in the future. I mostly wrote the post with this audience in mind, though I think the bit about analyzing spending in relation to your savings rate is relevant to everyone. I am very fortunate to have the opposite "problem": I tend to be very stingy and waste a lot of time and energy trying to save amounts of money that just aren't very meaningful compared with my savings trend. unless you're unable to save anything at all, I think it is very important to strike a balance between saving for retirement and spending on stuff you enjoy in the moment.
also minor addendum: someone with the median 401k savings might receive something close to the median social security payout of ~$15,500/year. since this is a guaranteed payment until end of life, this is like having >$375k in a retirement account at age 67. $200k is a meaningful amount to add to a $60k retirement account + social security payments, but it doesn't do anything close to quadrupling the person's safe spending capability. it's more like a 45% increase, which is still nothing to shake a stick at!
> since this is a guaranteed payment until end of life, this is like having >$375k in a retirement account at age 67.
I would not bet on social security retirement age staying at 67, nor would I bet on the purchasing power of $15.5k remaining anywhere close to it is today.
sure, don't lose track of the thread though. I'm comparing against someone who is currently retiring with $60k in their retirement account. $60k probably won't be the median 401k value in forty years. all this stuff is subject to change.
I'm not sure how one would survive on 60k for even 10 years. This isn't an "investable" amount and it's not enough for food, yet along housing expenses.
Clearly nobody is in that situation. If you have any money at all in 401k, you almost surely have paid significant amount into Social Security, which pays out retirement benefits independently of whatever you might or might not have in 401k account.
This all depends on what you assume for spending. Speaking from experience, it is pretty easy for an "entertainment" budget to hit $1000 per month, or a $2MM inflation adjusted savings.
4x nice restaurant or dates = $200
1x Weekend trip = $250
Hobby projects = $100
Drinks with friends = $100
Media Subscriptions =$50
Most of the people I know who are struggling are stuggling because rent and utilities takes the vast majority of their post-tax income. There's a few people I know who are just terrible with their finances (people who no doubt would have had problems at every previous time in history), but now seems a bit structurally different to some of the boom times due to the number of people I know who have hardship due to expenses they can't easily drop.
But the thing is, nobody said you have to pay for Netflix or Amazon. Each person is responsible for making good choices with his or her money. Lack of financial discipline is not society's fault.
Yes, managing finances takes some level of skill when there are many different expenses in a modern personal budget. But there are ways to live frugally and get ahead. They just aren't flashy or fun.
On two very small incomes my wife and I made big financial strides early in our marriage. We were very frugal but we made it work. We had the lowest tier Internet. We had a very conservative budget for eating out and groceries. We didn't have Netflix or Amazon. Once we paid off a number of debts, our spending was able to increase responsibly.
Correct. It was from being very frugal in _all_ areas of the budget. Eating out, entertainment, internet, not taking vacations that wouldn't be financially responsible. Frugal dates, frugal Christmas/holiday celebrations, living in an extremely inexpensive apartment in a not-wonderful area of town. We were pretty late adopters of smart phones because we had cheap flip phones. We gave to charity too.
It's all about priorities, and having a vision for being financially "free". The victim mentality is an _enemy_ of human creativity.
You can say, "this area is too expensive; we need to find a way to move somewhere else". You can say, "I need to sell this gas guzzler and get a cheap, used commuter car." These things aren't _fun_. But they set you up for success.
The crucial data point is missing: "two very small incomes".
US minimum wage is $7.25 per hour. 2 people working full-time at minimum wage would bring in a household income of $30k per year. But you couldn't possibly pay off $60k in debt and buy a house with that. So your household income had to be much, much higher.
presumably GP and their wife did not go on to both earn minimum wage after getting their degree(s?). even today when a bachelor's degree is worth less than it once was, the median wage for college graduates at their first job is around $48k. only about 2% of people with any amount of college education actually make minimum wage. it's pretty rough living on minimum wage, but paying off student debt is very rarely a contributing factor.
You're right. It was about [REDACTED FOR PRIVACY - but much much less than parent's 48k medium income per person for college grads] before taxes, both with college degrees.
I'm sorry lapcatsoftware if it sounded like I was making light of poverty. Poverty is terrible. But at least in the US, there is _so much_ opportunity to not be stuck on a minimum wage salary. Resigning to the idea that, "Well, I guess I just have to work for minimum wage" is not going to help and it doesn't have to be true. It's sad to think that people give up mentally when there's so much they can do to help themselves.
What opportunities? Tell me how an average cashier can land an average 150k/year job in a metro area? Don't forget that the said cashier has mediocre intelligence, so-so appearance, zero charisma and little talking skills. He might swap grocery store for an oil change shop, but that's about it. Our society is mostly stratified now, with a little upward mobility left for high-tech workers.
That person STILL deserves a modicum of dignity and stability. Most people in this category don't really care if they move up any ladder - they just want to exist and not be facing constant economic crisis and near-homelessness.
How are you ever going to be financially free from eating out less often? A meal at a restaurant costs what, $100? That's $5K a year. No holiday, another $5K maybe? Cheaper phone, ok, you don't buy the newest iPhone, so maybe you save most of a grand in relation to iPhone couples.
Even the car cost is not as big as the sticker price, because it has residual value. Granted it may be a big figure, but it is also spread over several years.
Seems to me you're literally one raise ($10K or so, and there's two of you?) away from making up such deficits, and you want to be near opportunity for that to happen.
Investing $10k a year at 6% (average stock market returns are 6-8%) gives you $368k after 20 years (net increase of $297k over inflation at 2%). Even if you just saved it for ten years that's $100k. Neither are enough to retire on, but it gives you a lot more options. Even if housing increases faster than the stock market, that $10k is $800/month which could be going towards a mortgage (in addition to the rent they are already paying).
Outside of the obvious "don't buy a gas guzzler" tropes, most of the best ways to save money will end up costing you time. Whether it's living with a longer commute or working more hours, there is a point at which people are just happier living their lives than wasting years in their prime scrounging and being miserable to afford a downpayment on a house in worse condition than what they could afford to rent. Big budget decisions like vacations and cars will obviously factor into this in a big way, but nobody's financial situation is changing massively over a Netflix subscription.
Following your own logic, it's almost like saying how dare you say you had _any_ budget for eating out? Why not just save even more money?
I think part of the disconnect is that many people today assume that life will be, or should be, pain free. Life is hard. It's always been hard. It's hard today.
I think the reason we want to believe otherwise is because of the tremendous wealth we have experienced recently, so we expect that trend to continue indefinitely.
To me, it is the lack of gratitude for what we do have and can afford that galls me.
The generation immediately after WWII gave a glimpse of what was possible, before crafty people figured out how to siphon off the majority of that wealth to those already at the top. And over time, that siphon has grown stronger.
Life should not be as hard as it is. It is hard, and it is not painless, but it's harder and more painful than it must be. We have billionaires siphoning money from the masses (either directly, or indirectly via government action) that are already struggling. Redistributing even half of their net worth would be a life-changing amount for the average person, and could put wind in the sails of many charitable/educational/scientific/medical causes.
There is no reason why the current situation should be allowed to continue, and many reasons why it should not. Obviously it's a hard practical problem to crack (given that a naive approach to redistribution of this kind would be met with a great pushback and implode various systems that we depend on), but unless we do something effective, we'll keep ruining the planet while trampling the poor at the same time.
Your house has smoke detectors and a dishwasher. Your car has airbags. When you decide you want to build a garden shed behind that brick box you need to get permission from the town and pay for that permission. Your dad didn't have any of that stuff. You more or less need a smartphone to function in modern society. There's more wealth sloshing around and more (in terms of quantity, probably not proportion) of it comes your way but you're not getting any freedom to do the things you want to do from that wealth because society takes a huge chunk of it and earmarks it for things and you don't get to use it to take a vacation or whatever. Basically standards of living have inflated and there's no choice not to buy in.
Also the interest rates vs asset prices thing other commenters have mentioned isn't helping.
I see this argument, but it has limits. A seasonal farmworker today has access to Google and Wikipedia, but they are still working 12 hour days. They are less likely to get communicable diseases due to vaccination and disease eradication, but hospital stays are more prohibitively expensive than before. It's complex.
I feel the same. I'm not earning quite as much you are, but still doing better than most of my peers. None of the millennial spending tropes apply to me, either, since I don't buy anything outside of the usual bag of groceries once a week.
What's especially worrying is that if I'm "doing well", and I'm so screwed, what's going to happen to the rest of the population below me?
As an engineer in his 50's (USA) - I am also a 90th percentile earner, but I absolutely agree, I'm nowhere near as well off as my parents were at my age.
I never had the money to take my kids on nice vacations every year like my parents did. Also never had the money to justify buying a new car. And while I do have a home, I have no hope of paying it off before retirement. (which, as an engineer, in the USA, could be 1-5 years from now, involuntarily - my father worked for the same company his whole life, while I've had to change jobs 6 times, due to either corporate buyouts or layoffs. NEVER had a bad performance review).
All of my kids, my brother and sister's kids (all in their 20's now), are all very much struggling, barely making it (and in a couple of cases, NOT making it). Only ONE of them (my son) got through college and found a reasonably decent job, and even HE is so bogged down with student loans, he may never own a home.
So as a picture of 3 generations, there's a very clear trend.
For reference, 95% percentile would be somewhere around £100k a year in London. (If you look at working men aged 25-55 the number should be a fair bit higher)
I don't know what you earn but if you are early 20s it might be less than that. There is a lot of money floating in London, the price of homes almost make sense when you realize what the top earners actually earn, the few percents competing for the same homes.
The other critical factor is instability in the sense that we can lose our jobs at any time. It makes it very difficult to plan long term if you expect your industry to get offshored, or automated, or generally collapse somehow. Even if these calamities don't happen to you, you'll still switch jobs way more than the previous generation.
If you are London based, you should also factor in that London real estate’s qualitative transformation in the last 40 years. It used to be real estate, you know, local people buying homes to live in. Now it’s one of the best performing asset classes in the world. You aren’t competing for property with your mates with a big inheritance. You are competing with dodgy oil money that needs to be laundered and more honest international investors told to diversify. The rule of law is a precious and rare component of legal infrastructure, so a lot of money is diversified into jurisdictions with strong guarantees.
I’m generally a pro-market person. In the case of UK real estate, I support a ban on non-residents buying property similar to what Canada have.
You're comparing yourself to the wrong baseline. The opportunities now are different than they were 30 years ago. You also might be comparing yourself to a specific data point (your dad), vs statistically.
> I'm a 90th percentile earner. Will 95+ percentile earner in a few years time. Yet it feels like I am not as well off as I should be.
You should correct your attitude then, don't you think? You are a 90%ile earner. I don't know what "should" implies, but put it in terms of where you "are". You'll be happier.
House prices will never fall significantly. As soon as a house enters the market at anything below the going rate it's bought by a landlord or a rental company. This will keep house prices high forever.
> Why don't landlords own all of Detroit, where housing prices have cratered?
Landlord in the city here - land speculators and landlords own an outsized amount of housing here. Significant churn is caused by blighted house reclaimation by the city, but that's one of the few driving forces allowing residents to have access to housing stock - and by the time it's blighted, there's a good chance it's not livable without significant investment.
Blight is generated because many properties/locations provide such a low rental income low that non-resident purchasers just buy the land as speculation, often doing no maintenance until the house is no longer livable.
While the previous comment isn't as hard of a truth as it implies, large capital owners rather than those who would reside in a home are increasingly the main purchasers of property, at least in Detroit.
The same reason the used car lots don't own all the rust free classics in California, an exceptionally asinine regulatory environment that would put them on the hook for an obscene amount of back taxes.
House prices can fall in real terms even if they don't in nominal terms. I think the is exactly the situation we are likely to see in an environment where the solution to every problem is "stimulus" and "money printer go brrrrrr" in response to the housing market taking a dive.
If the money printer only gives money to asset holders, the inflation will only happen in the asset economy, as opposed to the Main street economy.
This is what we saw with QE in 2008, and what we're seeing now. Asset prices are skyrocketing, while the price of bread is staying more or less stable.
The effects of inflation are somewhat localized at first and the movement of money in the economy matters significantly in terms of the purchasing power of that money for various groups over time.
It's interesting because this looks at inflation from another angle. Some of the central bank money does eventually circulate in the economy but since the money goes to assets first, consumer inflation will always lag behind asset inflation and therefore we have a redistribution effect from the poor to the rich. Unless central banks adopt policies that distribute money evenly among the population they are going to keep distorting the economy.
The central bank cannot distribute money evenly among the population. Congress however can and they basically did albeit selectively based on need with the CARES act which gave citizens direct cash handouts, massive increases to unemployment, and indirectly by funding payroll for small businesses and airlines.
However, they are supposed to maintain a budget and the CARES act alone cost over 2 trillion dollars so they finance deficits by selling US treasury securities. If you look at the outstanding debt, it has grown by about 3.6 trillion dollars worth of outstanding treasury securities from january to august [0]. If you look at the federal reserves asset sheet trends [1], you'll see it grown by up about 3 trillion since january [1] with over 2/3 of that buying those same US treasury securities our government sells to finance the deficit [2].
My point is that if congress had simply decided to pay for all deficits including those direct and indirect payments to citizens this year with printed money and the federal reserve did nothing, we would be basically in the exact same position. Congress is spending to put cash in citizens pockets and the federal reserve is buying up most of the treasury securities that congress is selling to fund that.
The problem is that the fed did not buy those US treasuries.
The fed bought a bunch of crap bonds from the market at above market value (As prior to their involvement, those bonds were tanking), and the people who sold them those bonds then went on to buy treasures and securities.
It socialized the risk, and privatized the profits.
From the current asset sheet in millions of dollars:
Reserve Bank credit: 6,968,229
U.S. Treasury securities: 4,391,505
Mortgage-backed securities: 1,949,547
That puts treasuries and mortgage backed securities as basically their entire balance. Corporate bonds are listed in section 1A as Other securities which Includes non-marketable U.S. Treasury securities, supranationals, corporate bonds, asset-backed securities, and commercial paper at face value and that comes out to a grand total of 86.729 billion or about 1.24% of their asset sheet.
I also don't think this is true... We saw house prices crash 10 years ago, with many owners being convinced that housing, a finite resource, can never go down significantly.
That did certainly happen, but prices were not depressed for any significant amount of time either! Particularly at the timescale of housing transactions. It can take several months to close on a house for example.
Well, I'm only saying that because apparently over 700k people have become unemployed on account of the C.V. That is a significant number of the working population in the UK. This should mean that there would a significant decrease in prices - the bottom would have fallen through the market. I know that the government have pumped huge amounts into the economy which is inflationary. Still, I think house prices will have to drop.
My mental model is that there's too much wealth sloshing around for "large incomes" to make too much difference.
High income is like delta-v, it's great. But you're still near the ground, and you're competing against people already in high orbit.
The beneficiaries of the housing explosion have equity which they can parlay into more ownership, whether for themselves as investments or their children.
Record low interest rates help prices by letting people lever up (letting them spend their lifetime earnings now) to compete but of course also bids up prices, again to the benefit of existing homeowners.
Furthermore, in the UK, Australia and NZ (less familiar with the US or Canada) it seems the government will move heaven and earth to prop up housing.
High immigration rates and supply restriction have not been helping.
I'm not as convinced as GP that the situation can last "forever", but I could see it lasting for another couple of decades. A true housing collapse would probably be a phyrric victory for the young.
You are paying for your Dad's pension, and for the Government services consumed by millions of migrants.
Those same migrants increase labor supply (thus lowering the equilibrium price) and increase demand for land and real estate.
The end result is high taxes and high real estate cost. Of immense benefit to your dad (and other Baby Boomers) who receive risk-free pensions, and supercharged capital gains for their own assets.
High tax rates are what causes this. You are effectively giving away half your wage to sustain a completely unknown person leeching off the government.
What an absolute load of tripe. I'd gladly pay even higher taxes than I do to make sure everyone has access to healthcare and benefits when they need them. "unknown person leeching off the government" is the attitude that just needs to die, it annoys me so much that people still believe this crap, any one of us can be this "unknown person" at some point.
right? and like something i've come to realize over the years is that there is a huge value add of having something just work that i don't think many people actually appreciate. I would absolutely love to pay more in taxes if it meant medicare for all so that if i get hit by a car while riding my bike someone can call 911 and i can go to a hospital and not worry about how much the ambulance costs, whether the doctor i see is "In Network" or not, and not have to figure out how much of whatever needs to be done is covered by the insurance and what the hospital is going to bill me for and whether I can actually afford that or if I need to go into insurmountable debt just to exist.
life already sucks enough as it is, and is entirely too complex in so many aspects that no longer having the "can i afford to not die in an emergency" thought would be such a huge net plus for a huge majority of working americans.
I'd pretty much prefer they'd go against evaders first. two reason: even if it's not as much as what you can tax out of the 99%, it does alleviate middle class pressure.
second reason, middle class can't get savings any more. savings are essential for a wealth of reason, including starting a family, a business, investing in property or other people ideas. these are all essential for growing a solid economy long run.
angel and VC money works as a surrogate but it goes only so far as it aligns with the 1%
incentives; it burns as much as it elevates, maybe even more, and is more of a way to
extract money from growing SMB instead of a way to build a wealthy middle class, as they only play for the exit.
This is blatantly false. Income tax on higher earners in the UK has decreased since the 1970s/1980s when IIRC the highest tax bands were over 70%, if not higher.
Your article doesn't directly talk about the tax rate for the top 1%.
The fact that the percentage of total tax collected attributed to the top 1% has risen from 24% to 30% seems to be more indicative of higher wealth inequality, especially if the figures the other posters have mentioned about lower total tax rates on the rich are true. To me that's a good reason to raise taxes on top earners and lower taxes on the middle class.
When you make most of the money, you pay most of the taxes. You can't squeeze blood from a stone. 10% of a billion dollars is a lot more money than 50% of $100,000.
Have they fallen generally, or has the highest tax band fallen?
Germany had the highest tax rate > 50%, it's now 42/45%. At the same time, the income required to be taxed at that rate hasn't changed with inflation, so while it was e.g. 52.152€ in 2002, it's 57.051€ now - adjusted for inflation, it would have to be closer to 75k€.
Lowering the top marginal tax while not adjusting for inflation so more people get pushed into higher tax brackets from below is great if you're rich, but shit if you're not.
That’s not an argument against taxes, that’s an argument for redistributing where our taxes go. I would suspect that a reduction in the tax rate would mean a less-than-proportional decrease in military spending, anyways, so it’s not clear lowering the tax rate would even help.
Rates and effective rates are too different things.
Some states have zero income tax but the effective tax rate is often similiar because pretty much every interaction with government is self-funded with fees so the effective tax rate is much higher than the on paper tax rate. Conversely you can have a tax rate and then let people deduct everything under the sun getting a lower effective rate. Kind of like how if you income is below the EIC amount (which is definitively not ideal) in the US federal income tax exists on paper (I forget what the rate is) but the effective rate is zero, possibly negative even)
What makes Europe unique such that the proposition that lowered taxes would lead to greater Millenial success holds true, when the same low-tax policies applied in America seem to have yielded similar results to the European approach? If this seems like a leading question, it's not intended to be--I'm American and curious about the potential variables at play here that I'm not aware of.
the European market is a disaster for investment and entrepreneurship, that's what's holding millennial back. your average SMB reach is often regional, and the bureaucracy structure makes almost impossible for garage operations not only to go above national, but to even exist.
like in sports, the size of the talent pool matters, and with an unbearable cost for entry entrepreneurship almost s losing proposition unless if under the heels of some financing partner whims, as it's the only realistic option to sustain the bottom line costs from handling vatmoss, letters of taxations and the other billion historical bureaucratic commitments
No, it isn't. Housing prices as they are are a product of supply and demand. Such that, regulations are preventing the building density required to meet unceasing demand propelled by immigration.
Historically rate of taxes were not much different than they are now, whether for North America or the UK.
Housing prices increasing because of slow zoning and regulations has been debunked already. Typical argument used by property developers.
The reality is that building houses for investment is more profitable for developers so they keep building it. As opposed to affordable housing actually used for living. The result is a glut of luxury investment apartments and lack of affordable nonluxury housing.
No, they just can't build enough. It's not as though building high-rise condos and houses is mutually exclusive.
In Japan, houses don't really appreciate. People just knock them down and build new ones with much more ease. There's certainly no shortage of developers wanting for "investment" apartments, it's not the deciding factor. The demand can actually be met there.
I'm not seeing that luxury investment housing, though. The newly built houses are usually +/- cheap junk at premium prices. At the same prices there's a low supply of 30-40 year old homes, but of a way way better quality. And in any case, new construction + available supply is nowhere near enough to meet the demand. What folks without 500k/year are doing I don't know.
I moved back into my parents house after my lease expired, primarily to have regular social interaction again.
> "While moving back home during the pandemic makes sense and is seen as socially acceptable or even smart, it also means you are living with people who still see you as your 18-year-old self."
One of the biggest things I’ve noticed among millennials is how many parents fail to understand the emotional and mental situation of what their children are currently experiencing. I feel so incredibly lucky that my parents understand that I’m not 18, and they’re happy to help out during these uncertain times. I’m so much more productive working from my parents house because I now have enough space for a decent home office.
I also have coworkers that have openly talked about how their parents refuse to let them move back in during the pandemic, citing the “time to grow up” mentality. I’m all for taking personal responsibility in one’s life, but there are a whole lot of older people out there that are oblivious to just how serious the pandemic has been economically.
> how many parents fail to understand the emotional and mental situation of what their children are currently experiencing.
This is crucial to understanding:
- The immediate distress of young males. They have no chance of seducing externally if they don’t have moral support at home. Explains the billion of 9Gag posts about young people who fall addicted to gaming and joke about virginity and lack of self confidence, who joke about the thing they know they’ll fatally become. They’re stuck in a bad place in life.
- The rise in what all Democrat fans would call “Extreme right”, which they don’t understand is just people who we’ve abandoned, who count on no-one because no-one cares for them. Isolation and individualism goes hand in hand. I keep telling my leftist friends if they want solidarity to triumph, they can’t just focus on women-at-the-workplace, one day they’ll have to face the men-at-the-game-addiction-station question. Especially if they want a cohesive society.
Living with the parents isn’t the best way to get social interactions, unless it is a venue where they can be for _caring for others_. Because young men are especially deprived of places where they can care for someone, women being very independent nowadays, especially in their 20ies. And caring for someone is the blood of the soul.
> Living with the parents isn’t the best way to get social interactions, unless it is a venue where they can be for _caring for others_. Because young men are especially deprived of places where they can care for someone, women being very independent nowadays, especially in their 20ies. And caring for someone is the blood of the soul.
I think you put that very nicely.
I think I understand this problem, and I have empathy for these men (it also took me a long time to get my first relationship, I know how it feels). I just don't know what the solution is. Their frustration might to some extent be caused by the independence of women (where women now may prefer to be single than to be in a relationship they don't really want), but I don't think it's right to hold back on women's emancipation in order to make men feel better about themselves.
What exactly is the right's suggested solution here (I ask this out of genuine curiosity)? Today's mainstream right looks at these frustrated men's hardening hearts, and all it seems to see is an opportunity to accelerate that hardening for political gain, by convincing them that the source of their woes (and the rightful targets of their anger) are immigrants/feminists/protestors/... I'm skeptical that we should expect any workable solutions from there.
Also, as a side note, why do you feel the need to use quotes around "Extreme right"? Do you disagree with labeling rising movements like QAnon and incel/blackpill subculture as "extreme right"?
Not 100% sure, I think we'd benefit from society broadening what acceptable ways of living and gender roles are available for men. There are plenty of women that grow up feeling dejected or romantically undesirable, but we don't necessarily see the same sort of frustration expressed the way we're familiar with in young men. My take is that there are social expectations for how men are supposed to act or live, and there are elements of said expectations that contribute to the frustration and loneliness we see in many of them today. I think the world would be better if a lot of young men felt able to express what was bothering them to their peers, as well had peers (not necessarily always romantic) that cared enough to at least listen.
I was once browsing a Reddit group for Transmen, and a discussion the members were having on socializing with masculinity hit a lot of the notes I expected. [1]
The use of quotes might be because the labels of "right" and "left" are very geographically dependent. The political Overton window in the USA is very different to other English-speaking countries, not to mention the rest of the world. For the record, I don't disagree with the labelling, just explaining the possible reasons.
I’m surprised, I didn’t expect to have resonating words ;) Listen to Karen Straughan for example, she’s a good resource on how to learn to see boys where they are, not for what we project of them. She shakes me every time.
I will never understand this mentality, I mean if the child is an out and out slacker maybe I could understand, but to this day, if I fell on hard times I have a host of family members that would take us in, no questions asked. We as a family where raised that way to the extent that I could show up on a second or third generation cousins door step and they would take us in. That fairly distance relatives I can't imagine a family where the dynamic is that they will not let their direct descendant come home to catch their breath. I mean that is your legacy.
I actually had to come home when I was in my early 20's. I spent my high-school and post-secondary years pursuing culinary arts. It never dawned on me to actually get a job in a commercial kitchen until I had my culinary degree due to the fact that I worked thru school as a finish carpenter and made a pretty good wage for a 18-19 year old kid. Anyways with degree in hand, I set off for New Orleans to make a name for myself as a chef. From the moment I got into a commercial kitchen I realized I had made a big mistake, while I loved cooking, being a chef in a commercial kitchen has little to do with actual cooking. So I came home hat in hand with no direction, went back to carpentry while I regrouped, the entire time my grandfather (I was raised by my grandparents) kept saying you know you really have a knack for programming those computers. I always viewed it as a hobby but folded to his suggestions and took a job at a local shop doing custom business software. This was the dawn of the internet, so there where still small shops doing desktop software for small businesses. Anyways the rest is history but the point being, is I knew I could come home, I could not imagine not having that relief valve as a young person, especially in today's climate.
> "While moving back home during the pandemic makes sense and is seen as socially acceptable or even smart, it also means you are living with people who still see you as your 18-year-old self."
I feel that this is the case for many people and in other contexts. If you develop a lot during say two years of employment, then depending on who your manager is, you may still be seen in the same way as when you started.
There is an inherent poetic dilemma with reconciling yourself with how you age. Parents can buffer this change, whether for positive or negative effect.
Interestingly in most parts of Asia(East, SE, South), living with your parents is the norm, so parents usually prefer if their kids stay with them but it does mean way less personal space and freedom.
Due to the culture, everyone will go out of their way to make you feel as independent as possible. Plus there's single day hotels if you want to have a room alone with someone who should not meet your parents yet. In the end, living with your parents then boils down to going to a restaurant with them on the weekends to honor your ancestors, but most of the time they behave more like roommates.
I think it’s cultural. American society absolutely looks down on those that live with their parents as failures. If I were to guess, some parents might see their children asking to return home as a reflection on their ability as a parent to prepare for the “real world”, but that’s just my guess.
Honestly I hear this much more from those closer to poverty. I think they view it as children should be self sufficient so I no longer have to pay for them. I think a lot of what people consider “cold hearted” in the modern world is really just veiled economic uncertainty. People would rather be considered strict than poor.
I don't think it has much to do with wealth. In fact, in old societies primogeniture practiced by the wealthy meant that the eldest son was expected to stay at home. The second sons with limited inheritance often set out on their own.
In the US context, it has historical connections to the glorification of pioneerism and expansion through the western frontier (along with the genocide that accompanied that).
After that, in the post WW2 period, opportunity in the US was so abundant that a (commonly white male) school dropout could walk into a factory and get a job with benefits. The same person could then afford a modest house (not the gigantic houses of today), support a family on a single income, and had access to affordable health care and good public education for their kids.
In the context of that sort of opportunity, staying at your parents' home in adulthood was far more indicative of personal failings, and that's where the current trope disparaging adult (mostly male) children living at home originated.
But given how diminished all of those opportunities are today (no lands to forcibly take from less technologically advantaged peoples, no new factories, expensive housing where jobs are available, high qualifications required), it's a trope that's pretty irrelevant today.
I'm not sure how irrelevant it is (though Covid may change that).
If I wasn't engaged I would have gone home to WFH immediately during the pandemic, it would have been nice to spend time there and be with family (rare opportunity for easy ability to work remotely and spend time with family on the east coast).
That said, most of the successful people I know moved out to areas with more opportunity and those that stayed behind (particularly those that live at home) are more likely to have 'personal failings' of some sort.
Maybe this isn't true if you were lucky enough to grow up in an economic hub to start, but if you didn't there's still some truth to it.
Obviously during the pandemic this changes and no longer becomes relevant since remote opportunity and being able to save money by living home (since everything is locked down anyway) makes way more sense. Most people don't think independently from the cultural context though so it'd take a while for this to update.
Why live in Palo Alto and waste lots of money on rent because of stupid housing policy when you don't have to? When you can't go out and do stuff?
> Why live in Palo Alto and waste lots of money on rent because of stupid housing policy when you don't have to? When you can't go out and do stuff?
I hear sentiments like this a lot lately, and it feels short-sighted to me. COVID restrictions are not going to be around forever. There are financial, professional, social, and other costs that come with moving somewhere else.
For people who genuinely don't like it in $HCOL_AREA regardless of the pandemic, and see this as a way to get out permanently, then that's great, and they should do that. If it's more like "it's expensive here and I can't go out to my favorite bars/restaurants right now", the latter half of that situation should fix itself by next summer, and hopefully earlier in some fashion. Sure, that's a while to wait, but isn't much time when considering that an alternative is to uproot your entire life.
You are conflating two independent phenomena here. One is the pandemic related pattern of young people moving back in with their parents. The other is the cultural judgment reserved for young people who never leave their parents home well into adulthood. I was addressing the latter.
> That said, most of the successful people I know moved out to areas with more opportunity and those that stayed behind (particularly those that live at home) are more likely to have 'personal failings' of some sort.
Sounds like you are almost defining "personal failings" as "unable to gain the skills to compete and thrive in a high opportunity area".
If that's the case, perhaps we should reconsider whether such a high level of achievement should be required in order for a person to establish a basic non extravagant life on their own independent of their parents.
Nah, rich people boost their kids through life. Poor people are the ones who subscribe to Labour Theology: Hard Work is Righteous, Assisting Kids Ruins Them.
There are people who never grow up if given the opportunity to keep living with their parents. My cousin is one of them.
Get a job? Why? Go to school? Why? Things are fine. I have someone to cook my meals and a warm bed to sleep in.
My uncle ended up booting my cousin out of the house. It was the best thing that happened to him. He matured significantly, went back to school, has a great job. He even admits it himself that he was in a rut that would have never ended had he been able to keep living at home. Living at home sheltered him from the real world.
> There are people who never grow up if given the opportunity to keep living with their parents. My cousin is one of them.
The case of a totally unmotivated individual not engaging themselves in school or work is totally different than the case of working young adults who want to live independently of their parents, but can't afford to do so due to high cost of living, high debt, or other financial factors. I know people who have been in both categories, and they are not much alike.
Not OP, but at my parents' home it's such a classical traditional division of labor that the housewife does all the cleaning, it's her domain, her full-time job. She'd be self-conscious of not doing her part (and annoying) if someone else was doing it.
It wasn't even considered normal for me to cook anything in the kitchen while I still lived at home. It was like being in someone else's workshop and using all their tools and putting things back not quite where they like them or wasting soap/water when washing implements or being too messy or abusive to the equipment. It was impossible to not cause some sort of trouble, I literally started grilling outside daily to not touch the kitchen and still feed myself real food as a young adult.
One could argue it was the parents refusing to grow up, but it's also arguably a predictable outcome when the husband works like a blue-collar dog to pay the bills and the wife doesn't have to work a formal job. Obviously the husband is going to expect the wife to keep the house clean and do all the cooking, if she slacks off on these relatively trivial duties while he's grouchy and overworked, bad times for sure.
It's not peculiarly American, it's a Western European, especially Northwestern European, pattern. See https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2917824/, particularly the multigenerational household columns in the various tables.[1] And I'd bet it's related to the phenomenon of late marriage that has historically distinguished Western Europe from most of the rest of the world for the past 500 years: https://en.wikipedia.org/wiki/Hajnal_line
I'm tempted to admit that the expression of this otherwise shared culture might be intensified by some of the more distinctive aspects of American culture (e.g. pioneer spirit, as mentioned elsethread), but I hesitate because assuming America is exceptional is a bad habit I'm trying to kick =)
[1] That paper is something of a rebuttal to the argument that NW European culture (including North American culture) was always strongly nuclear. But the lack of multigenerational living seems pretty clear; what they seem to show instead is that the trend of the elderly living alone is relatively new. Which doesn't seem surprising. A culture that pressures children to move out of the home doesn't imply a culture that pressures the elderly to live alone.
I will probably be going against the grain here, but I managed to rent a flat by myself while in university years ago with a part time job in a supermarket at weekends and applying for some hardship funds and other money available at the time.
Rents have risen a lot since then, but is it really impossible for someone in work to be able to afford rent? Or are they insisting on living in a fashionable part of town? (For me independence from my parents was quite a high priority in those days).
In a lot of areas normal jobs are literally impossible to do at the moment. It isn't a matter of whether or not people want to do them. In my city in a non-US country you actually are doing something illegal if you go to work in certain industries or undertake extremely common activities that were normal 6 months ago. This is unique and far beyond anything me (or my parents) have ever known. No obvious end to a lot of this is in sight.
You didn't manage to rent a flat by yourself. You were given money to do so, by your own admittance. I don't blame you for taking advantage, but you're using it to argue that young people can or should be able to make it on their own. You've just got anonymous parents supporting you in place of your own parents.
Sorry but that doesn't address the issue at all. I got the majority of money through working, and that was at weekends and holidays, I wasn't in a position to work full time, which i am assuming the people in the article are. The university hardship funds were a bit of extra money, but not a huge amount. No one has explained what has gotten so expensive that a full time low wage job can't support it.
Not in my case, I was easily able to afford rent and I’ve stayed employed throughout the pandemic as a tech worker.
The challenge has been maintaining my sanity. My previous apartment was small and didn’t have space for a good home office setup since I never expected to work from hone when I leased it. Additionally, I was having little social interaction due to the pandemic since Texas wasn’t doing a good job preventing spread early on.
My other reason for moving in with my parents was that my company did a lot of business in the travel industry and I feared layoffs. Not having to worry about my living situation while looking for another job in the midst of a crisis was a huge relief in my mind. Fortunately, I’ve been able to stay at the same company so far.
If being independent is the absolute most important thing to you, that’s great. But I’d argue that America’s individualistic culture is one of the biggest reasons we’re struggling to get past this pandemic. People demand the right to ignore basic public health requests, and it’s a major problem.
While I’m sure they’ve gone down a little in certain urban cores, like SF, they remain absurdly high in the midsize, Midwestern city where I grew up and now live. When I moved back, apartments here were going for only a bit less than what I paid in Los Angeles and seem to have not gone down at all. Home prices also remain artificially high because there are less listings and more interested buyers.
This is something that really depends on where you live more than anything. I will say there is no state currently where you can afford an apartment by yourself making minimum wage.
I've seen this claim and associated study pop up a couple of times. The study is done year on year and it's been amusing watching the increasingly long lengths they go to to hide the fact that their comparing _average_ rent for a _two bedroom_ apartment to the _minimum_ wage.
Anecdotally, this is simply not true. I lived in a fairly nice area next to my university for the better part of the past five years at well below the poverty level. (~$10,000) per year so far less than minimum wage.
I'm mostly voicing a much more general confusion here. I think you have to bolt down our [lets be honest] mostly imaginary system to reality in some spots. Rents can simply be adjusted to whatever people can pay. That way there is no technological or economic progress to be had for those at the bottom. The fix is in?
Or let me put it like this: If I want a banana I want to pay for what it costs to grow the banana, the packaging, the logistics of it and for those who perform the miracle of trade. If all the steps involved also involve maximizing wealth extraction from those employed in those steps by [any and all means!] my banana will naturally grow in price to the point where my minimum wage has doubts if it can afford it. Not just now but forever! Regardless of anything.
Regulation cant be like: We will cap the price of bananas at this point since everyone involved in making them happen for me has to pay rent that grows along with the kiwi's. I very much doubt we cant fix rent. There might be a layer or 2 of maximized wealth extraction above it. Those are not impossible to fix. If we had real collective goals we could just be like: It wont happen - forever! and get a really cheap but highly profitable banana in return.
Note: I can stack bricks and run tubes though them. Its not hard and not a lot of work. IOW: I'm not impressed by a concrete box. End of the day my government owns all the land.
You clearly do not understand the economics behind renting. Wealth extraction as you call it, isn't pure profit for the layers above. Your rent pays for the landlord's mortgage, maintenance, inspection and risk being taken on from a tenant. Your landlord pays the bank, who use the money to pay off their own obligations, including your grandparents pension plan. It would never be possible to adjust that system.
The other reason things are so high is there are too many people and not enough houses, so there's little opportunity for competition.
When, if or where people are either poor or primitive enough it works like this: You build a house then you live in it.
There is nothing in this that suggests one needs to spend 1/4 or 2/3 of the productive labor in their lives to maintain the house.
Progress is to reduce the maintenance cost. The lower it is the lower the salaries can be which increase productivity exponentially.
IOW grandpa's pension plan is for a large part to continue to pay for housing. He spend his entire life busting his ass but some how didn't manage to earn a place to live.
It's still possible possible to build a house today and live in it, and there is plenty of land, even some going for cheap. But most people don't want that because they make that trade off for today's luxuries.
Ok, I will give you that London prices are silly, but it isn't the norm as far as the UK goes. And again I shared a flat, why does no one under 30 expect to do this any more?
Well, people live in flatshare a lot. I don't think you can ask why they don't do it when they do it ^^
One cultural thing I noticed in London and I assume in the UK at large is the lack of studios. There are plenty of 1 bedroom but there aren't studios (200-300 sqft).
If you go to Paris for comparison, you will see an incredible amount of studios.
It makes a world of difference when you get 25+, you make a living and you want to be independent (forget about dating and getting married otherwise). In the absence of studio, you're forced to pay up a lot to get a one bedroom (more than what low end jobs earn so they're stuck with flatmates).
I started as a trainee broadcast engineer in London on £17,800 a year in 2003. This left me with £1,082 a month (back then student loan payments were far higher than now). Rent for a tiny bedsit with a shared bathroom was £520 a month, 2 mile walk from work. I could live further out, but commuting costs outweighed any savings.
That's the equivalent of £828 a month now. Bills were included.
You can actually pick up a studio flat for £737 in the same area, which actually looks better - it's about 60 square feet which I think it a little smaller than the one I had, but it has it's own toilet. Council tax is on top of that at £45 a month, but still fits in the budget, just.
Assuming the same 50% of take home wage in rent, or a net wage of £1500pcm, would be about £21k/year
My £17800 salary in 2003 would be £28,300 today, or net of £1900pcm, so could afford (on the same ratio) £910 a month, which gives you a fair amount of choice at the moment in W14 according to rightmove.
I'm surprised as I felt renting was far harder now than 20 years ago, but seems it might be slightly better. Of course rents on tiny studios are presumably depressed because of covid19, I'm not sure what they were this time last year.
Where I live, most property agents will do a credit and income check, and would turn you away for not meeting the "minimum income level" for renting those places.
Even if you feel you can afford spending 50% of your income, it doesn't follow that you can easily find a landlord who allows it.
If you have a bad credit rating, as many people do these days, it will be even more difficult as more landlords check that than income.
In my case, where I am currently living, I had insufficient income at the time I moved in to qualify, and was only allowed to rent on the condition that I paid 12 months rent up front. And then I had to do it again the following year. Obviously that's only available to people with decent savings.
But that's no different to 2003 (you could have a guarantor - typically a parent - who would be on the hook for your rent if you didn't pay it)
Before I started looking I was under the impression things were harder now then they were in 2003, but it seems not, at least in this one case (tiny studio/bedsits in a dodgy part of west london) -- unless asking prices on rent are massively depressed due to covid.
In 2006/7 I lived in Tunbridge wells, paying £800pcm for a 2 bed flat that looked almost identical to this one, although it was in the next door house and had a garage instead of a parking spot.
Things seem to have become more difficult to obtain in some cases. Back in 2003, nobody asked me for proof of income for renting. Just basic credit checks (which don't directly know about income or bank balances). Proof of income is more recent.
(And difficult if you're self-employed with highly irregular income, I found.)
If using a guarantor, a guarantor has to pass similar checks.
Guarantor works a lot better for a young person starting out in a cheap-ass room in a shared place, whose parents expect this. For a flat and an older adult with retired parents on a low pension, or their own housing costs, not so much.
Good like finding a guarantor if your parents or friends:
- don't have enough spare income to cover your rent in addition to their own expenses
- don't pass the credit check themselves
- can't pass the proof-of-income check themselves
- don't have enough assets to use as security
- are not happy using their assets as security for you (e.g. their limited life savings or their one and only home)
Some people don't have parents, and these days, quite a lot of parents rent precariously too. They would be turned down as guarantors.
More parents renting is a factor which has changed in recent years.
I imagine most people don't have friends who would be willing to be long term rent guarantors, even if they could be.
>Things seem to have become more difficult to obtain in some cases. Back in 2003, nobody asked me for proof of income for renting. Just basic credit checks (which don't directly know about income or bank balances). Proof of income is more recent.
Because they can ask those things more quickly and easily now. There's a bunch of jerks in California who are hellbent on connecting every DB in the world to every other DB that we can thank for this.
> Guarantor works a lot better for a young person starting out in a cheap-ass room in a shared place, whose parents expect this. For a flat and an older adult with retired parents on a low pension, or their own housing costs, not so much.
Absolutely. When my mother-in-law divorced and moved into a rented house, I was her guarantor.
I did have parents in 2003, but they lived 3000 miles away in a greek village where there was an ISDN line a 20 minute ride down the mountain, so not too practical. But this artcile is about 18-29 year olds moving in with their parents, not 50 year olds.
> 18-29 year olds moving in with their parents, not 50 year olds.
It applies in that age range as well.
A 29 year old moving in with their 64 year old parent(s) who are themselves poor and renting while on the edge of official retirement age, is going to find their parents probably rejected as guarantors.
> Where I live, most property agents will do a credit and income check, and would turn you away for not meeting the "minimum income level" for renting those places.
This is where room in a shared house comes into play. They're available for $4-500 a month in my city.
Where I live, there's a minimum income level for shared house rooms as well, and the cost of a room can be 50% of someone's income if they are working but poorly paid, so they won't be allowed it.
Luckily rooms are more likely to be rented somewhat informally, or by less stringent agents & landlords, compared with flats, so there's a decent market of these without a hard income requirement, alongside those with the requirement.
TL;DR: London will chew you up and spit you out unless you live so far out that your commute is measured in 1.5-hour increments, or unless you're already rich. A young person is sentenced to renting.
My personal story:
I lived there up until about a year ago, not far from the center. Being a young person, I earned the usual entry-level software developer salary. I tried to live a relatively frugal lifestyle, which included not going out and spending not a whole lot on personal entertainment costs.
The rent was £1500, so I had to rent a flat with my friend. Travel was expensive, and a fixed cost in my circumstances. Bills were not included, so we had to pay those as well. I tried to cut costs as much as I could, and in retrospect maybe I could have cut £80-100 a month from my grocery spending by shopping in cheaper stores, or perhaps even another £50 on top of that if I was willing to trade off some of my sanity/time for the savings. I had some savings, but not a whole lot.
The whole time, I was cutting into my savings each month and literally losing my money by staying in London. Even if I tried to save harder, that would get me nowhere nearer to saving up for a deposit for the next few years.
I eventually decided to leave the city behind and move to Scotland. Instant quality of life improvement, and I actually got the chance to start building up my savings rather than chipping away at them.
There aren't studio or one bedroom below about £1200 a month in London, closer to £1500 toward the center.
You're talking about Kensington in London? That's the center and one of the most expensive location in the city.
Where the fuck do you see a place for £737 in there?
Either it's a flatshare (that's a bit low, must be 6+ people) or you confused 737 per month with 737 per week (that'd be £3000 a month, possible for a luxury 1 bedroom in that area the size of what people consider a 2 bedroom, typical ads that come at the top of rightmove).
reports "Rents in the capital are down 4.2 per cent as tourists stay away and short-let landlords switch to long-term contracts, flooding the market."
I suspect rents on tiny bedsit studios are down even more, especially as weekly commuters no longer need them, and young people move to live with parents.
Wow, they are less than 3x3 meters (10x10 feet) including the corner for shower. The bed is literally touching the cooker/oven in the first one.
That explains the £737. Can't even put a desk to do your homework. Nobody would want to live there, especially with COVID.
Regular studios in student accommodations go for double that in this area. I've actually seen friends paying as much as £2000 a month, when they come from far or from abroad, don't have the luxury to visit 10 properties and landlord won't rent to students with no income.
Yup, but that's what I got for £520 in 2003, and managed to live there just fine. Hell for 2 months I lived there with my girlfriend (now wife) before we moved out towards Reading for an actual 1 bed flat. I was working shifts then though so could drive to work mostly off peak, get free parking, and it was only 7 days a fortnight.
The room in my hall of residence was smaller than that, although being in Exeter it cost far less (£90 a week, so £390 a month).
Of course I had an office to go to for that time, clearly it's different in the last 6 months.
Similar story, also 2003. Think the pay was £24K, but I had to be in for work quite early in the morning so that limited the location. Rent was £800 a month for new building, but in a not-so-nice neighborhood. It was a 1BR, the sort of size that's big for a student but small for anyone else. Had its own kitchen and bathroom.
Moved in with a friend after that, saved about £100 a month, but also in a nicer part of town.
Have to say the budget felt stretched at £24K, luckily that went up a lot pretty fast.
> Housing is more expensive for them than prior generations
I harp on this constantly. But housing is not more expensive in the majority of American metros. Adjusted for inflation the median cost per square foot of new housing is almost exactly the same as it was in 1990. (This doesn't even take into account that mortgage rates are drastically lower since then.)
We get skewed on this for two reasons. One is because homes today are substantially larger and have more amenities than they did in previous generations. We take for granted better fire safety, higher ceilings, central A/C, higher load electrical circuits, attached garages, better lighting, and swimming pools that are much more common in new construction.
Two is that we're highly skewed to a handful of elite metros, whose housing markets are not representative of the country as a whole. Housing is expensive in San Francisco, New York, LA, and DC. But in places like Tampa, Omaha, Cincinnati, and Phoenix the cost of housing (per square foot) has barely gone up at all.
The demand for ultra-expensive housing in places like the Bay Area is driven by the huge earning potential of the high-skilled labor market. (Of course the supply side of the equation is driven by NIMBY zealotry.) If you're talented enough to make it as an L8 at Google, then it probably does make sense to buy a house in Palo Alto. You'll earn far more money than you would in the St Louis tech scene. more than enough to make up for the living costs.
But unless you have the potential to become an L8 at Google (or equivalent), it makes no financial sense to choose to live in the Bay Area instead of Raleigh. It's like somebody who works as a back office bookkeeper insisting on buying custom tailored Seville Row suits for his work attire, then complaining that the costs of clothes has gotten out of hand.
> Two is that we're highly skewed to a handful of elite metros, whose housing markets are not representative of the country as a whole
Right, but what matters is the housing price where people are. It doesn't matter what the housing market looks like in South Dakota if I don't want to live there. While houses in South Dakota may be 1/10 the price of houses in NYC (likely cheaper, honestly), they also have 1/10 the population. The notion that the quantity of land somewhere (in this case, quantity for sale) should somehow equate to importance more than the quantity of people is ridiculous.
> It's like somebody who works as a back office bookkeeper insisting on buying custom tailored Seville Row suits for his work attire, then complaining that the costs of clothes has gotten out of hand.
No, it's like someone who works as a back office bookkeeper in New York City being forced to pay insane amounts in rent while seeing thousands of empty AirBNBs, hotel rooms, etc. and complaining that the cost of living has gotten out of hand. Housing is a necessity, "custom tailored Seville Row suits" are not. And it's simply not feasible for the vast majority of people living paycheck to paycheck to just up and leave to Raleigh like you imply.
> Right, but what matters is the housing price where people are.
We're not talking about houses in the middle of nowhere. These are major urban population centers.
The Houston metro area has 7 million people. The Phoenix metro area has 4.9 million people. Tampa metro has 3.1 million people. Houston and Phoenix are both larger than the Bay Area metro is currently. Tampa's just shy of the size of Seattle.
Nor is it the case that these are depressed areas with hollowed out job markets and no opportunity. They all have substantially lower unemployment rates than the national average. Well below the Bay Area in fact. All three of these metros have large-scale employers with plenty of high-skilled jobs. All three have economic growth rates and business formation rates far above the national average.
Sure, when you look at the whole metro area, you can get good prices. Most people don't consider the whole metro area. There is usually a specific area they want to live in, to be closer to family, to get better schools, to be closer to work, etc.
I'm in Indianapolis and just look at the difference across this one affordable metro area.
https://www.neighborhoodscout.com/in/indianapolis/real-estat...
Your other point about houses being "better" is also false. When you compare to economic items, you don't compare against something you can buy and something you can't buy anymore. The houses for sale are the "better" houses. That's the simple fact for Americans. It's because our culture only builds for the wealthy. The poorer get their hand me down houses.
Pretty much everyone I know is being priced out of market in the tampa bay area. Rent under $1k/mo means looking on the extreme periphery and suffering a long commute.
> Pretty much everyone I know is being priced out of market in the Tampa bay area.
Rents in the neighboring counties have been climbing steeply for years. If you were looking at an $850/mo property in 2012, expect to pay about $1500/mo for the same place now.
>And it's simply not feasible for the vast majority of people living paycheck to paycheck to just up and leave to Raleigh like you imply.
There was a time where people would move countries with nothing but what they can carry at a chance of improving their life. At a time where the only way to travel was by boat for weeks and the only way to communicate to relatives was by mail.
Now we balk at the idea of moving cities when it's easier than ever before, and we can communicate instantly across the world.
To be clear, it's not just "Raleigh" or "South Dakota", it's really any city outside of California + New York. I live in Richmond, an hour and a half from DC, and you can buy 2000 sqft homes for 200k.
>There was a time where people would move countries with nothing but what they can carry at a chance of improving their life. At a time where the only way to travel was by boat for weeks and the only way to communicate to relatives was by mail.
They went to a place that is better than their hometown. What you are suggesting is that people should leave their hometown for a place that is worse at everything except housing.
And they could set up in single room boarding houses or camp outside town when they reached their destination. Those boarding houses have been mostly regulated out of existence, and people camping within reach of most cities risk arrest.
But clearly not if you can’t even afford a place to live. Richmond and plenty other cities have TONS of economic opportunities, but not as many as NYC or SF - they’re also much cheaper. Clearly there’s a balance here so the answer isn’t so obviously “there’s a housing crisis because I can’t afford to live in SF”
Hmm - I think you're misunderstanding (or maybe I am too). There aren't really that many opportunities (AKA - jobs) in Raleigh as in DC. Certain professions are not as common in Raleigh as they are in DC. If you're looking to be a lawyer, DC probably gonna be better.
So, it doesn't matter if X region is cheaper if there aren't any jobs there...
I mean - I moved to the bay area because that's where so many software engineering jobs are. I didn't move here because I loved the high cost of living. I moved here because there were a lot of jobs and I had an easier time getting a job here than almost anywhere else (ironic - I know). The places that were hiring in "anywhere else" were paying $50k/yr and still not easy to get into.
Ok so the change from a decade or two ago is that young people want to live in places they can't afford. In the past they were evidently more content to live in places they could afford.
Doesn't really feel like cost of housing is what's changed.
I grew up in a small rust belt city. 40 years ago there were reasons to live there: factories with union jobs and an entire local economy built upon them (financial services, a hospital, bustling main street, etc). All that's gone now. It's not that I wouldn't be content like my parents were, it's that it's fundamentally not the same city it was back then.
It’s not like the dichotomy is so stark. Like the parent comment said: Raleigh is cheap but still bustling with plenty to do, Richmond, Baltimore, Atlanta, and so on are bustling but not stupid expensive. It’s not just “ghosts town” vs “expensive modern city”
I don't know whether it accounts for the entire "housing's more expensive everywhere" perception, but it sure seems like the only houses that exist near good schools and are cheap on a per-square-foot basis are giant, so still not cheap, thanks to a combination of zoning and developer incentives. It's not like we could live in a significantly smaller house if we wanted to.
Another change is that smaller houses have giant rooms. If you want a 4-bedroom in a decent school district (so, around here it'll be 80s construction at the very earliest, probably late-90s or later, or else in one of a couple very rich and expensive areas that have older houses) you're in for a giant house. A 1960s middle-class 4-bedroom probably has about the square footage of a modern 2-bedroom. Sqft./room is way up across the board. Further, floorplans that look nice in a walk-through or in photos but are incredibly wasteful of all that "cheap" square footage are the norm.
> what matters is the housing price where people are
What matters is where HN commenters are, because they are controlling this discussion. Let's not pretend that upvotes here are representative of the wider population, or that the average populations' opinions are well represented here. No, you did not imply that, I'm not attacking you or anything, but I figured it should be said lest we delude ourselves.
> I don't want to live there
Isn't it great that the increasing wealth in society gives us the idea that we can pick and choose anywhere in the country to live and then expect to buy a house there? This was not exactly the case for my (grand)parents. My family came from Buffalo, moved to Phoenix, and settled in the Seattle area(long before there were Amazon jobs, when the PNW was a refuge for weirdos). Imagine how silly it would be if the majority of the US population thought they were entitled to a house in a "tier 1" city.
That's ridiculous. The expectation of affordable housing, and being unable to move to some random town in South Dakota, comes down to the personal responsibility of "choosing to be poorer"?
> But in places like Tampa, Omaha, Cincinnati, and Phoenix the cost of housing (per square foot) has barely gone up at all.
Maybe if you stop looking at like 2018. But my on-the-ground analysis living on one of these cities is cost of housing has fucking exploooded. I built a house just two years ago, which I thought was incredibly expensive at 2 times the median home price in the area. I had it in the back of my head that I was insane to pay so much for a house, but since I could easily afford it, I went ahead with it.
Now, the median price has shot up by 25% and there are literally no new houses available for what I paid. My neighbors are relocating after only a year in their house and sold their house for 20% over what they paid new. The new construction 3 miles down the street from me starts at 30% more than what I paid, and a few are double or more. Meaning, 3-5x the median for the area.
All of this is trickling down to the rest of the area. Houses that went for $130k in 2015 have sale prices in the $200k range. We're talking 60s era ranch houses that haven't been updated since the 90s.
Olympia WA, 60 miles from Seattle, 100 miles from Portland:
A recognition (debate, but at least some recognition) of what is called "The Missing Middle" (medium density housing, alternative options, not just SFHs and "high rise").
A proposal is put forth, and there are screams from homeowners, because the study shows that the Average Property Value in the urban growth area will _slow_. Not decrease. But instead go from 12% YoY growth (which is insane) over the past 10 years to, if all measures are put into effect, an estimated 7% YoY growth.
Somehow these homeowners have got it into their head that they "have a right to" property value growth which, at its worst, will outpace inflation _by a factor of TEN_.
I agree with you in principle. Since the 2008 crisis, previously developer-friendly mid-sized Sunbelt metros have adopted some NIMBY building restriction policies that would make even coastal California blush.
But so far, that hasn't really created a housing affordability crisis... yet. A lot of the impact has been mitigated by falling mortgage rates and rising wages. Let's just take Tampa, as one of the hotter housing markets. Since 2014, median listing prices have gone up 57%.[1] Adjusted for inflation[2], that's 49% real price growth.
But over the same period, average mortgage rates have fallen from 4.49% to 2.95%[3]. Meaning for the same house cost, the monthly payment on a 30-year fixed mortgage has fallen by 18%. In addition national median incomes have gone up over the period by 10.5%[4]. (And almost certainly more in Tampa specifically.)
Therefore housing affordability has only declined by about 14% for the median household in Tampa. All during an extremely hot housing market. Again, that's still indicative of some recent bad NIMBY policies. If housing supply was perfectly elastic, things like lower mortgage rates and higher wages would benefit consumers instead of inflating property prices.
But there's no indication that housing has become drastically more expensive in "flyover country". This conclusion can be spot checked by comparing national consumer expenditure surveys over time. The percent of after-tax income spent on shelter has actually slightly declined from 17.8% to 17.0% during the 2013-2019 period.[5]
Economic opportunity is a big part of deciding where to live. Just like people migrate to America because there is a higher probability of securing security and economic advancement for their descendants, people do the same within the US.
In decades past, this might not have been so evident because the entire US was growing and opportunities were available everywhere, but as the disparity of economic growth between regions of the US diverges, it makes sense for people to value real estate in those regions more. And if you think the disparity is going to grow in the future, then you might be willing to risk even more to buy in.
Really cost of housing alone doesn't tell the full story without considering the jobs/income sources in the area.
I have noticed an irony that if housing in an area is really cheap you probably won't be able to afford to live there unless you are already a retiree who doesn't care about long emergency response time - because the highest paying job in the area is say a resturant manager at the local diner.
Before the pandemic economic growth was very urban concentrated - remote working normalizing might reverse the trend but there are still some service and infastructure demand constraints - chances are they need reliable high speed internet.
Can you name some? I would gladly leave my HoL city for a cheaper one with great job opportunities in technology (not necessarily at a tech company) and cheap housing. The only city that seems to have all those things is Minneapolis. Even Atlanta is fairly expensive at this point.
I work at Aberdeen, MD making 141k. I got an offer once for 155k from a nearby military base not long ago. I've seen houses nearby for 180k. Pretty easy to save here if you're ok with Gov beurocrac. Easy to get a new job, too.
The mortgage isn't the only cost. Interest is tax deductible. If you make decent money, you're better off with higher interest, lower house prices, lower insurance prices, and lower property tax. Let's not forget that debt does need to be repaid. Interest rates will likely never normalize, but anyone taking out 4-5x their income in debt, should at least be a little worried if they do...
Take Dallas Texas as an example. It wasn't affected very much by the 2008 bubble (probably because of high property taxes). The median price in 2000 was ~$100k and is now ~$240k [1]
Interest rates in 2000 were 8% [2]. They're currently 2.94%.
WOW! House prices are cheaper today! Not really. Let's take taxes into account.
Property taxes:
=240000 * 0.0208/12 # TODAY
$416
=100000 * 1.025^20 * 0.0208/12 # 2000
$284
Insurance is about $30 a month more today. And since the mortgage interest today is less than the $12k standard deduction, it probably won't get any tax benefit today. In 2000, it'd be about $100 a month.
But then there's the opportunity cost, too. Today your down payment is ~50% larger. The opportunity cost is about $100 more per month.
$1,004 + $416 + $30 + $100 = $1550 # TODAY
$1,202 + $284 - $100 = $1386 # 2000
It's only a ~12% difference. If you're in a more pricier market, the tax deduction was much juicier. Real monthly payments are ~50%+ more expensive. If you're an investor, cap rates are trash. Plus you're taking out debt to income that at any other point in history would seem insane.
The monthly payments aren't the big issue. The real trick is that by lowering interest rates from ~8% to ~3%, the Fed created $14T in real estate wealth out of thin air. That's where most of the inequality really stems from. For most people, their house represents the majority of their life's savings. If you're older and own a home, the Fed doubled your wealth. If you're younger and don't own a home, the Fed make increased your housing price by 5-20%, devalued whatever savings you had, and forced you to take on extreme levels of debt for a similar monthly payment on a house (which you probably don't have, because in real terms you need a ~50% bigger down payment).
YoY median home prices were up 13% nationally in August. That's largely driven by the diaspora we're seeing with WFH/COVID, with people pushing into more affordable communities and driving up prices. Until now we were all competing in major metros pushing up only the top end of the curve but now there's a push towards the median priced areas.
The media talk of diaspora, which is based on narrative and anecdote, needs to be measured and quantified before we can treat it as something that drives housing prices.
>YoY median home prices were up 13% nationally in August.
That's a misleading statistic. It simply means that the houses getting sold has shifted towards the higher end of the market. If you look at the price for the same house it's gone up somewhere around 3% YoY.
And sorry, but in markets like mine, over the last year the average house has spent about 72 hours on the market and "the same house" has been sold multiple times in the last decade each time for approximately a 20% increase.
I think the low end of the market isn't selling due to economic insecurity. Also being pushed up by well off city folk moving to the burbs due to Covid.
It doesn't help as much as you've implied since 1) you need 20% of the sticker price for the down payment, and 20% of $200k is more than 20% of $130k, and 2) in many jurisdictions you pay tax on the market value, so your taxes go up whenever mortgage rates fall and prices rise.
FHA mortgage down payment is 3-5%. There’s frontloaded mortgage insurance as well as ongoing monthly mortgage insurance, but the credit score and down payment requirements are very low. Most people with a pulse qualify.
If you come with enough money down, you can get a hard money loan with 70% loan to value (30% down) 1 day after bankruptcy or foreclosure.
I'm not sure what you're arguing here. The simple fact is the amount people pay for housing is up since the 1990s. You can find this data on the BLS web site:
https://www.bls.gov/cex/csxmulti.htm
Here is the data adjusted for constant 2020 dollars:
But given the choice between smaller and cheaper houses and larger and more expensive ones, they almost always choose the larger, more expensive ones.
The university in town is over a hundred years old, and many of the dorms are that old too. Most have no air conditioning, and have insufficient power for a resident to add a window air conditioner without special approval.
And the parents and students describe them as, "practically unlivable", "bad for the students' education, and all of that. There are numerous schemes around to get that special permission. And many scheme to move out ASAP. These are folks borrowing tens-of-thousands of dollars to go to school, and yet still go even deeper into debt for better housing, when the cheap option is right in front of them.
100 years ago no one would have thought twice about the exact same conditions. I doubt anyone would have thought twice about it even 50 years ago.
People just expect a certain level of amenities, and are willing to pay to get them.
I worked in office without AC under roof in summer and it was not just less comfortable, but productivity really went down measurably. I dont know how hot it gets there, but it can be so hot they are at disadvantage against students who dont live there.
I also stayed in house with bad insulation and it affected my health. 100 years ago, my health would be affected the same way whether better house would be available or not.
Maybe they are all irrational. Or maybe those dorms are really in bad shape.
50 years ago it was cooler and everyone grew up without AC, they were used to it. That's not the case today. It's hotter and people grow up with AC and are not accustomed to living without it. The bar has moved.
It looks like this is counting the average rather than median, so it's going to be skewed by the top earners. Here is per capita income during the same time period using 2019 dollars:
It has increased even faster than average housing costs. To be fair, that's is expected because rich people don't spend the same percentage their income on housing as most other people.
Good point. The data I reported is for "shelter" only, excluding utilities, furniture, etc., so I'm not sure how that looks on the income curve. You're also reporting average income, not median. Median income is much stabler, having climbed about $6000 since 1990.
My main point is, people are spending more on housing. It's not a mirage. It is highly concentrated where there are jobs, but of course people move to where the jobs are. It's facile to say they should move somewhere else, or that they are getting "more" for their housing.
>My main point is, people are spending more on housing. It's not a mirage.
House sizes have grown a lot too. When you factor that in, you get to what the OP stated: per square foot, housing prices have been remarkably constant (and for much longer than his 1990 to 2020 window).
When you factor in that houses are now vastly more energy efficient, safe, with niceties like central air, then modern home buyers are likely getting the best deals in history.
Interesting, I've never seen that stat before. one problem is that inflation is a lot lower than before. If you borrowed a house in the 70s/80s you'd pay less each month but after 10 years that payment would be negligible, where now it still takes a big chunk out of your pay.
I have actually wondered if this is where a big chunk of our parents perceived security came from- if I buy a house, but in 4 years I am making 20-30% more, and in 20 years I am making twice what I paid for the house, life feels pretty comfortable.
We have low interest rates today, but we aren't inflating out of our debt like generations past did.
Inflation adjusted housing cost per square foot has remained remarkably constant for decades. Thus, given higher interest rates over the same fixed timeframe, relative payments were higher.
> Inflation adjusted housing cost per square foot has remained remarkably constant for decades
I think you mean for the first year. With higher inflation everyone got big wage rises each year which quickly made mortgages more affordable. Now wages are stagnating so even 10 years later most people dont earn much more than when they first took out the mortgage.
I spend much more on food now than I had when I had been a student, but it's not because the food is much more expensive, but rather I am much wealthier now.
Grows in expenditures does not immediately imply growth in costs.
Historically a house in the US cost around 3 times the median annual income. During the housing bubble of 2006 the ratio reached 4.5 - in other words, the median price for a single family home in the United States cost 4.5 times the US median annual household income
> Two is that we're highly skewed to a handful of elite metros, whose housing markets are not representative of the country as a whole. Housing is expensive in San Francisco, New York, LA, and DC. But in places like Tampa, Omaha, Cincinnati, and Phoenix the cost of housing (per square foot) has barely gone up at all.
I think cities are fundamentally the wrong unit to look at when thinking about housing prices.
What we really want to know is "how much does it cost to live some place where I can get a job". Knowing that Tampa is just as cheap today as it was 40 years ago means little if Tampa today has, say, only 70% of the jobs that it did back then.
What we really need is some sort of normalized "job availability unit" like "per capita" but "per employment opportunity" and then try to calculate current and historical housing costs relative to that.
> "how much does it cost to live some place where I can get a job"
And we'd do well to price that in hours of work per week after taxes, including commute.
That is, making $30 an hour where a house is $300k can be better than making $60 an hour where a house is $600k . Think about progressive tax rates, CoL, commute time et al.
No, you have the option of buying a condominium apartment in most cases.
Here in the Philadelphia urban real estate market —- which has no shortage of reclaimable housing —- the break-even point for builders is about triple the value of the existing homes. No current resident can afford to buy one, so single family homes get converted into tiny “luxury” condos.
[Edit: there are city subsidized ‘tiny-housing’ developments but these are more for welfare recipients than regular buyers.]
The same thing is happening here in Austin. Developers are buying up older properties, demolishing them, and then splitting the lot into 2 or 3 sections and building smaller "modern" homes/condos.
This is one of the perverse effects of limits on new construction. Since builders can only build so much, they naturally focus on the high-end where profits are fattest. In a well-functioning market there is only so much demand for luxury housing so they would also build smaller, less expensive stuff as well, but they can't
>One is because homes today are substantially larger and have more amenities than they did in previous generations.
I have noticed that most of my fellow millennials seem to have completely forgotten the concept of "starter home" and assume that as soon as you turn 25 you should be entitled to a 4 bedroom house with a pool, huge yard, wonderful neighborhood, three-car garage, etc.
Among my friends that have bought houses, many of them have gone into significant debt just to buy a 3-4 bedroom house, even though they have no kids and only use one of the bedrooms, because they think that at some point in their life they will put them to use. The extra rooms go completely unused (other than the extra furniture which they also went into debt for). It's like they see the house that their parents own and assume that their house also needs to be that, and ignore the fact that their parents probably started out in a much smaller home and then moved into a big one once necessary.
>Two is that we're highly skewed to a handful of elite metros
I contend that it's not even just this, but also that within metros millenials are highly skewed to a handful of elite neighborhoods.
I live in a medium COL metro, and all of my friends constantly lament the "high" cost of houses and how they will never be able to afford a house. But when I ask what houses they are looking at, it's always the nicest, premiere neighborhoods that have McMansions with huge yards, white picket fences, hip restaurants within walking distance, etc. Not a single one of them even considers living in the many much cheaper neighborhoods.
There certainly are issues with prices in some areas (cough SF cough) but at least in my metro and in my friend group, the "houses cost too much" meme seems to be a scapegoat for what is really just an inflated sense of what housing they are entitled to.
> I have noticed that most millenials seem to have completely forgotten the concept of "starter home" and assume that as soon as you turn 25 you should be entitled to a 4 bedroom house with a pool, huge yard, wonderful neighborhood, three-car garage, etc
I don't know where you live but I almost find this insulting.
I'm from Amsterdam my self and friends of my are being forced out the city because of the high rent prices.
I'm 32 year now and because of some shitty new rent laws that says every tenant needs to have an individual rent contract which our landlord refuses to give I'm also being pushed out of my home. I tried to find something for my self just anything would do, but I'm kinda skewed because I just earn above social housing and here in Amsterdam there is not really a market anymore for middle incomes. So yeah I'm being pushed to either live in a room or move out of the city. But I also couldn't find a room in time so now I'm going back to my parent. So yeah your comment kinda hits a nerve for me.
As I mentioned in my comment, there clearly are actual real estate issues in some metros, and Amsterdam may be one of them. But your situation is often conflated with the issue I am describing in my comment.
I live in DFW, and there is an abundance of middle income places to rent and even buy. The problem, as described in my previous comment, is that those middle income places are in older buildings, or have older appliances, or aren't within walking distance to the hip nightclub area, or have a 10 minute longer commute, and thus my fellow millennials seem to deem them unacceptable places to live. These are the same people who have complained to me that their high-rise condo downtown across the street from the nicest steakhouse in the city is driving them into debt, or have complained that they're depressed that they will never be able to afford a home while linking me a Zillow page of a $1.5m newly renovated house in the premiere neighborhood in Dallas.
Housing in the Netherlands is really awful, in the '90 the boomers have build smaller apartments for their parents to move in and actually profit in an illicit way 2x of their real estate gains of sometimes 6x. No boomer is living smaller to make room for the next generation. I think the best way to combat current shortage in housing is putting up a limit on m2 that an individual could claim. 300m2 for a single person in a metro area while being on a pension is not sustainable in current conditions.
Not sustainable for whom? If their pension covers the taxes and they can support themselves so they are not a burden on social services or something else what do you care?
No country for old men indeed.
BTW, I'm mentioning social services because here we do have some complain how hard life is with their meagre pension... all the while living in a 3 room flat in the middle of the city. I find those people unreasonable and I believe if they would sell / rent that property and downsize they would have a much better quality of living.
So, someone who worked their entire life and paid off their house should be forced out of that house and made to move in retirement because...you'd rather be able to live there with a roommate?
They did that to their parents, and on top of that advantage they systematically didn't build enough houses for the projected population growth.
I think it is reasonable to ask if you set up a whole generation for failure yourself. Millennial choices are severely handicapt considering how we inherit the world versus how the boomer in the 90ties got it.
> I have noticed that most millenials seem to have completely forgotten the concept of "starter home" and assume that as soon as you turn 25 you should be entitled to a 4 bedroom house with a pool, huge yard, wonderful neighborhood, three-car garage, etc.
"Starter homes" for young people is the stuff that was built 30-40 years ago that hasn't been updated. So they are buying those mcmansions because that's what was built in the 80s-90s-00s. The really nice, older urban areas with housing built before that is way more expensive in absolute dollars.
Smaller is not cheaper in most cases. Smaller is "established" and everyone with money wants to live in those established neighborhoods, not the suburban sprawl 50m from the city center.
This is a solid point; my house seems like a classic starter home physically: a 1930's brick duplex with less than 1,000 square feet. But it's in 1930s neighborhood close to the city... so my "starter home" has a market price well over half a million dollars!
Price correlates more with location than size, at least around here. "Starter home" prices don't start to show up until you get to the wrong end of a 1-hour commute. And most of those less-expensive houses are physically larger than mine, because no one has built houses under 1,000 square feet for decades.
>"Starter homes" for young people is the stuff that was built 30-40 years ago that hasn't been updated. So they are buying those mcmansions because that's what was built in the 80s-90s-00s. The really nice, older urban areas with housing built before that is way more expensive in absolute dollars.
In my metro (DFW), the neighborhoods of houses built in the 60s/70s/80s are dwindling because nobody will buy them. There are neighborhoods of perfectly fine ~200k houses just sitting on the market for months because "ewww, I don't want to live in Grand Prairie/Garland/Irving". Then those same people pine over the newly built $500k mcmansions in Frisco or the $2m mansions in Highland Park and lament about how they'll never be able to afford being a homeowner. Do you see the disconnect?
>Smaller is "established" and everyone with money wants to live in those established neighborhoods, not the suburban sprawl 50m from the city center.
It's not some secret that desirable location is a huge driver of property prices, and being closer to a city center is more desirable. My parents knew this 50 years ago, which is why even though they loved living downtown in an apartment, when it came time to buy a house they moved out to the suburbs because that's where the affordable starter homes are. Then, when they became more established in their career and built up some wealth, we moved a little bit closer to the urban center. That's just how it works. But these days, millennials seem to think that they are automatically entitled to live downtown in a 4 bedroom, newly renovated/constructed house with full amenities next to the main park and hip shopping center and zero crime while on an entry level salary. I understand that, and I wish I could have that too, but that's just not how the world works (nor how it has ever worked).
Sounds like the 200k houses need to come down in price.
This is another reason people are burned on "starter homes". You can't get your money out if you need to move. Cheap houses are in undesirable areas and you can't sell them, better to rent.
> In my metro (DFW), the neighborhoods of houses built in the 60s/70s/80s are dwindling because nobody will buy them. There are neighborhoods of perfectly fine ~200k houses just sitting on the market for months because "ewww, I don't want to live in Grand Prairie/Garland/Irving". Then those same people pine over the newly built $500k mcmansions in Frisco or the $2m mansions in Highland Park and lament about how they'll never be able to afford being a homeowner. Do you see the disconnect?
An alternative hypothesis would be that suburban development patterns don't work generally. I don't know anything about the DFW area specifically, but it's possible people don't want to live in those cheaper areas because they are poorly laid out and the infrastructure maintenance is higher than the revenue the area can generate. This may manifest itself in different ways (poorer schools, sidewalks, amenities), but one way or another, these neighborhoods are signaling decline.
Many first and second generation suburbs are in death spirals because of this problem. Buyers who can afford it chase newer development because the areas have an optimistic future and no obvious maintenance problem. Unfortunately, many of those areas will be in the same spot 30 years down the line.
> But these days, millennials seem to think that they are automatically entitled to live downtown in a 4 bedroom, newly renovated/constructed house with full amenities next to the main park and hip shopping center and zero crime while on an entry level salary.
I'm not saying there aren't some entitled people, but I haven't encountered this attitude very often - it seems like there are plenty of other reasonable explanations for what is driving consumer choices without stereotyping.
I live in DFW as well (Oak Cliff), one thing to keep in mind about home prices are schools. In East Dallas, on the border of Lakewood schools, there's literally a $100k difference between one side of the street and the other. A good public school in DISD is rare and so home prices around it are very high.
I think the quality of the local school drive home prices considerably.
I notice and acknowledge this as well, but it's the same conversation about starter homes: if you are currently childless and you were to become pregnant today, you would not start using or benefiting from a school district at all for another 5-6 years. Why pay the premium for a nicer school district that you aren't even using? You're essentially just throwing away that money for half a decade, and who's to say if that school district will still even be a good one 5 years from now.
Why not move into a cheaper starter home now, and then once your child is about to start school (and you presumably have gotten some raises and built up some wealth), move into a more expensive house in the better school district? That's what the entire concept of "starter home" is about.
So now the conversation becomes: it's not that this person can't afford housing, it's that they can't afford housing that has an amenity they won't even use... which makes the entire situation seem even more silly.
It's not a single point. Builders are cutting corners any way they can. Interior trim is expensive to install so they just declare that the modern trend is bare walls, floor to ceiling that you can bang up easily. Tract home inspectors will skip over most units so you can leave out flashing around windows and doors. This is their mentality.
On top of this, if you buy a house that is 40 years old, it's more likely to have problems and deteriorate in the future. Housing is, frankly, terrifying as a financial asset. If it goes up, great! If it goes down, you can easily lose YEARS worth of wages when sold at a loss, if you're able to sell it at all.
I would have not much of a problem living in an old place. I'd have a lot of skepticism to conquer about purchasing one.
Have you ever actually look for small living spaces in the US? I would be perfectly fine with a 450sf apartment in northern VA, but their almost impossible to find in desirable locations. A large reason for this is the actual cost to construct a building doesn’t increase linearly with apartment square footage. Simply having a smaller apartment doesn’t reduce the amount of space needed for hallways, elevators, or parking spaces. Kitchen’s and bathrooms similarly cost a lot more than large carpeted areas.
This ends up being reflected in renal prices. My building has a 578 sf studio @ 1515$/month where a 751 sf 1br is running $1,625/month. Add in parking and your talking 30% more space for 7% more rent.
It’s not that the actual cost per SF is equivalent, it’s that housing got upsized without much input from consumers.
Maybe people in middle America already have enough space to not feel pinched so that extra space is viewed as an amenity not a huge factor that they demand? In my experience in denser high COL areas space is priced basically linearly on the margin. In NYC going from 1 br to 2 br can significantly affect your quality of life so people are willing to pay an extra $1000.
> Among my friends that have bought houses, many of them have gone into significant debt just to buy a 3-4 bedroom house, even though they have no kids and only use one of the bedrooms, because they think that at some point in their life they will put them to use.
Are you sure your friends aren't just being rational? I thought about the rent vs buy thing pretty constantly in my 20s and always came down on the rent side. Not because renting Dwelling A would be cheaper than buying Dwelling A, but because I was happy living in Dwelling A (a nice-ish 1-bedroom apartment) but if I were to commit to ownership I'd want Dwelling B (at least 3 bedrooms). Life can change fast - you're not sure which fling will turn into a spouse or when a little one will come along or when you'll really need a home office. Selling a one-bedroom condo is obviously doable, but transaction costs are fairly insane on real estate, and it seems like low-end places (like 1-bed condos) haven't historically experienced the same appreciation as standard houses.
It sounds like your friends could get by with a Smart car but bought a Toyota RAV4 instead. And when they decide to trade up to a Tesla in a few years, they might find that the RAV4 retained value better than the Smart car, because that's what "everyone" wants!
Sure. If you're being rational, it would possibly make sense to buy a 2 bedroom house or even a 3 bedroom if you think you might need an extra room for a kid plus a home office.
But it's not as rational to insist that you need 4 bedroom house with a three car garage inside a top school district when you aren't even married/pregnant yet. Yes, life can change fast, but paying a premium mortgage for a top school district that you won't even use for 6 years minimum (if you suddenly got pregnant today) and an extra bedroom that is going to go unused for at least several years (second pregnancy, perhaps)? I can't see how that's rational.
With real estate prices in some of those areas going up %10+ per year, and the 6-8% transaction cost of selling a property, buying something that you may not need for 10 years starts seeming more rational.
It's a risk, because things change, but if you know you're going to be somewhere long-term, it's a rational decision in a irrational game.
It might end up cheaper overall then buying twice or renting and moving. Especially with prices rising every year. If you know you want kids one day and want to live in that area and paying that mortage still leaves you enough money to live, it easily ends up better deal.
> Among my friends that have bought houses, many of them have gone into significant debt just to buy a 3-4 bedroom house, even though they have no kids and only use one of the bedrooms, because they think that at some point in their life they will put them to use.
I was one of these people who was conservative and bought a small cheap apt starter home instead of a 3-4 bedroom house. 10 years later I can't afford a 3-4 bedroom house because they've gone up in value so much so I'm still in my apt and its crowded.
Looking back and what would have been optimal I should have bought a huge house as soon as possible, probably a couple of them. That way I could retire by now.
I did the "starter home" thing in 2006 and then the market crashed and I was under water until 2019...
I would never recommend the idea of a "starter home" to anyone, ever. It only works when housing prices are on the rise and continue that way the entire time you live there.
is there such a thing as non-survivor bias? You perfectly timed the most dramatic fall in home prices in maybe a 100 years. The subprime collapse aside, a home purchase is usually a safe investment.
It should be noted, they don't build 2 bedroom homes anymore. I was talking to a real estate developer in Sacramento about this. New 3 bedrooms do exist, however, they would rather cram out the lot with a 5 bedroom since the cost to add on another few hundred square feet is nothing if you have the equipment and material right there. PLUS! People will go ahead and take on huge loans with that low interest rate. It is win win (unless you don't want huge crushing loans).
>It should be noted, they don't build 2 bedroom homes anymore
I don't know if this is what you meant by this, but I do see this same argument come up a lot, and it's a great example of the "entitlement" I'm referring to.
The only reason it would be relevant that they don't build 2 bedroom houses anymore is if you for some reason think you must have a newly built houses. The old 2 bedroom houses didn't suddenly disappear. They are there in abundance for great prices (at least in my metro), but my extended circle (close friends plus people I know from childhood/high school/etc) won't buy them because they insist on new builds or new renovations.
"The only reason it would be relevant that they don't build 2 bedroom houses anymore is if you for some reason think you must have a newly built houses."
Yep. Hence "they don't build 2 bedroom homes anymore"
"The old 2 bedroom houses didn't suddenly disappear."
The population of Americans in their 20s/30s (typically the age of first time home buyers) has remained mostly static since 2000.
But hell, let's go ahead and assume that the population has grown in some unknown way. Why is my metro awash with perfectly fine $200k 2bedroom homes? The supply is there. It's the demand that has dwindled.
"Starter homes" were bought up by wealthier older people or businesses to turn into AirBnBs or rentals.
https://www.bobvila.com/slideshow/7-signs-starter-homes-may-...
I don't know if you talk to any "millenials" but most of them are _extremely pragmatic_ by necessity.
Fact is though, it doesn’t matter much where in the world you’re looking to buy. If it’s a capital you’re expected to pay close to $1m or more for a house, even in places like Beirut where the houses don’t have central water, electricity/internet infrastructure is extremely poor. Prices are the same. This in a moment in time when the majority of people barely can afford food due to the pandemic and financial meltdown that has occurred.
The main reason behind it all is the low costs of taking on debt, which in some scenarios is totally insane. Italy for example that has been bailed out several times can get rates around 1%. What kind of entity would accept the risk of default when the profit is close to none after inflation?
The world is obviously in a debt bubble - the question is only when it will pop & how dramatically it will happen.
It's essentially a distillation of underwriting standards, low/zero central bank interest rates, and consumer behavior.
Underwriting standards for mortgages are typically based on loan to value (LTV) and debt to income. In that calculating, value is traditionally defined as "what the market currently values comparable assets at" (aka comps). For debt, providers of credit (banks and the central mortgage agencies) are more concerned with ability to repay, rather than absolute debt. Consequently, monthly payment >> total price.
Therefore, in business as usual (moderate to high interest rates), there are caps on how much individuals can leverage with mortgages (i.e. eventually their LTV or debt to income will exceed standard limits and they'll be denied a mortgage).
Unfortunately, both of those key components are heavily influenced by central bank interest rates. If the Fed decides to plunk the rate at 0%, mortgage rates decrease as well.
Because mortgage rates have decreased, my resulting monthly payment for the same total loan value decreases. Or, conversely, the total loan value I can assume for a given monthly payment increases.
Because it increases, I can pay more for a house. And either I, or someone else does!
Now, a few months later, someone else wants to buy the 2nd house on the block. They call out an appraiser, who turns the crank on their standard process, looks at comps in the neighborhood, and values the 2nd house in light of the 1st home sale. Because that 1st sale was inflated (inasmuch as we can judge), the valuation on the 2nd house is likewise inflated.
Ultimately, both of these have the end result of raising the cap on how much borrowers can "afford" to pay (assuming static income) for the same asset. Whereby the financial system previously capped their effective leverage at one level, now it's allowing greater leverage (albeit greater leverage that "looks" like the same value, because the underlying inputs have changed).
Tl;dr - The financial system used to impose a cap on how much I could pay and qualify for a standard mortgage. Because of actions taken by central banks and consumer behavior, that financial system-imposed cap has effectively been lifted. Now, the consumer themselves is the primary brake on overpaying. And average consumers? They don't math too good.
It's been a few years since we left, but those prices are generally for Vancouver specials because the land is more valuable than the old frame. I know PoCo has risen in price, but not near $1.5M-$2M CAD for a starter. Many friends bit the bullet and struck outward in the quest for affordability (Langley, Abbortsford) while still being within the Vancouver area.
> I contend that it's not even just this, but also that within metros millenials are highly skewed to a handful of elite neighborhoods.
In St. Louis there's a small but frothy back-to-the-city movement that's driving prices up to new highs in a handful of trendy neighborhoods. And it's all anybody can talk about. It's a kind of synecdoche for "the housing market" to reference these tiny neighborhoods while using cargo-cult language about "gentrification" that people learned on twitter.
Make no mistake: prices are way up in those neighborhoods. But they're walking distance to far more affordable housing. It's really bizarre.
There was gorgeous old architecture to be had on the cheap, if you were okay with a couple crumbling vacants on the block, trash everywhere, poorly rated public schools, overflowing weeds, and frustratingly difficult access to the ostensibly adjoining trendy neighborhood (the ones I was looking at were separated by a half mile with a single cross street, where blocks in each of the neighborhoods are probably 4-500 feet long).
When you're shopping for ten years (and not just yourself) you get gun shy about stuff like that
> There was gorgeous old architecture to be had on the cheap, if...
St. Louis really punches above its weight in gorgeous old architecture, so there are well-maintained, affordable neighborhoods with pretty old red-brick houses, too, but the real value is to be found in plain working-class neighborhoods where the houses never show up on Instagram. That housing for actual working-class people is unsurprisingly where most working-class St. Louisans live.
Of course, nobody who has ever used the word "gentrification" on twitter has any interest in living in any of those neighborhoods, so their existence is rounded down to zero in the discourse.
It wasn't that long ago that even the coolest neighborhoods with the best housing stock were wildly undervalued against their fundamentals. And hipster St. Louis isn't thrilled that the secret is out.
I have noticed that most of my fellow millennials seem to have completely forgotten the concept of "starter home"
I've noticed this too, but obviously it's not universal (lest someone accuse me of bashing millennials).
And with regards to houses getting bigger, I keep hearing about the "golden years" when you could buy a home on a single income. Sure, but those homes were similar to what my parents starter home was - 1000 sq ft, 2 bed, 1 bath with a family of 5 living in them (siblings sharing rooms).
> I have noticed that most of my fellow millennials seem to have completely forgotten the concept of "starter home"
"Starter homes" tend to be fewer these days, especially in desirable areas. Much of the old "starter home" inventory has been upgraded and made much larger over the years, making them not really starter homes anymore, and very few builders build small houses these days, since profits for building larger homes are higher. The closest thing to starter homes being built today are condos, but those are usually in high cost areas, so again not terribly accessible.
This is why it would be good to change zoning to allow existing single family zoned lots to be subdivided or turned into multi-dwelling lots, which can accommodate a main home and a separate "starter home". This is starting to be done in places like Toronto with "Laneway houses"
> McMansions with huge yards, white picket fences, hip restaurants within walking distance, etc.
Huge yards, white picket fences, absolutely, but where are you finding "McMansions" with hip restaurants within walking distance? Usually "McMansions" are synonymous with totally un-walkable and car-bound developments.
People I know buy smaller flats if childless, rent with roommates and have three kids in one room.
And cant afford large houses, not even with debt. Cause no bank will borrow them. If your friends could get that much money, they are likely well off and see the house as investnent.
Which is how we bought put flat - rent was only slightly cheaper then mortgage.
> Among my friends that have bought houses, many of them have gone into significant debt just to buy a 3-4 bedroom house, even though they have no kids and only use one of the bedrooms, because they think that at some point in their life they will put them to use.
The problem is they think they might not be able to afford it once they have enough kids to need it. Ironically lots of people thinking that way reinforces the problem.
> I have noticed that most of my fellow millennials seem to have completely forgotten the concept of "starter home" and assume that as soon as you turn 25 you should be entitled to a 4 bedroom house with a pool, huge yard, wonderful neighborhood, three-car garage, etc.
Then you've got a non representative sample. This claim is outrageous, and it's not true. Honestly it pisses me off how casually you just assert that most millenials think this way. A very simple search for millenial home buyers surveys will show this is not the case.
> Honestly it pisses me off how casually you just assert that most millenials think this way.
He never asserted anything about "most millenials" and specifically talked about his friends. If someone talking about their personal experience with their owns friends pisses you off, then you're reacting to something else.
I've got 500k in liquid assets, a respectable salary and no debts. I'm looking at the housing market and see two options: a junk house in a sketchy area for 600k or a decent house for 1.2M, but I'd have to give up financial security and live pay check to pay check.
If there was a smallish decent condo for 200k, I'd write a check today.
it isn't just homes. there is no starter car, no starter tv, no started anything. I regularly work with tech support persons who are spending more than I am on a wide range of goods and services. It is mind boggling to me.
Yes some have trade offs but that seems to be either they are house poor or car poor but mostly the latter. What catches them as with those who do have the money is all those monthly bills can add up really quickly. Adding twenty to thirty to your monthly phone bill for a new phone doesn't sound bad until they add in other similar arrangements.
Sadly far too many seem to think they are just free this or free that away from having it all. (as in if healthcare were only free or college was only free they would not have such problems - welcome to the poison of politicians and mass merchandise marketing combined)
I don't think anyone that says it intends it this way, but this is how I read 'generation rent'.
Not 'forced into renting instead of buying property' but 'subscription over ownership for everything'. No money left, lots of stuff, as little of it as possible actually bought and owned. Lease car, rented flat, rented furniture, takeaways and meal box kits, craft beer / organic veg boxes, etc.
In many cases it's a reversion rather than a new idea, and fine, it's not wrong, just different. Very different though, and largely not for me (though I fall in the generation described).
"Starter TVs" are certainly still a thing. And it's not just inflation-adjusted; you can get a 24" LED for about the same dollar price that a 15" B&W CRT TV would have been when I left high school. And there are used units out there as well.
Local control over zoning is a massive problem. Most people agree that building more homes would bring housing prices down. However, most cities have more than half of the land exclusively reserved for single family homes and have rules that prevent any creativity or density. They want other places to add the housing. I can't see the problems going away unless entire states reform zoning.
Akron, Ohio is up 7%. So is Cleveland, Madison, and Toledo. Cincinnati, Milwaukee, and Scranton are up even higher. [1] These are figures from before the pandemic.
The idea that the rust belt has lots of cheap housing is outdated. That was true in five to ten years ago. It is not true today. You can expect to pay around $200k for a house in any given rust belt city with decent jobs -- and quite a bit more if you want to live in a nicer neighborhood or a nicer home.
And can you get the same services, community (people of similar circumstances/values as you moving there), opportunities, schools, safety that these in demand areas provide? Travelling around only reinforces my desire to buy in an in demand area. I cant just shop at panera, five guys, and walmart for the rest of my life.
I dont think this is a regional problem -- it is a problem of income/price and income/rent ratios off the historical chart almost regardless of where you live. It is a worse problem in SF, NY, LA, and DC but still a universal problem.
I’ll ding you on the financial sense of not living in Bay Area vs living there even if you’re just a new grad (or just below L8). I live in a very low cost of living area with salary nearly twice the median software engineer and I’d still be able to save 40% more on a google paycheck even adjusting for the rent 5 times my current for the same amenities.
We don't even need to be that frugal! 100% of the net increase to VHCOL compensation can go into VHCOL housing expense increases with plenty of room to spare.
If we would pay 33% of your income in LCOL housing, and move to someplace that pays us (net) 100% more, we can afford 4x(!) the rent we did previously.
We're bidding against everyone else who wants what we want, so it's no wonder housing is insane in the Bay Area, since household incomes are so much higher.
Uh my Zillowing suggests that you’re wrong. At least in WI - and what’s more middle American than WI. I’m talking even bumfuck, wi, where a hunting lodge with no plumbing and a woodfire oven for heating will set you back 100k. In Madison WI you are wrong nearly on an order of 10 (Comparing w 1990 prices).
> But unless you have the potential to become an L8 at Google (or equivalent), it makes no financial sense to choose to live in the Bay Area instead of Raleigh. It's like somebody who works as a back office bookkeeper insisting on buying custom tailored Seville Row suits for his work attire, then complaining that the costs of clothes has gotten out of hand.
Buying a custom tailored suit requires extra/better labour and materials, so it makes sense that the costs associated with it would be higher.
For this analogy to apply to housing, the cost of constructing and maintaining housing should be higher in the Bay Area too. However, almost all the increases to rent in urban areas has come from increased land values. This isn't a result of the landowner putting in "extra work" to make it better; they get to extract the added land value that the community created while putting in no extra labour or capital.
The fact that private landowners capture all this extra value the community created is not inevitable! It's entirely a result of the economic system we've chosen to stick with. There are solutions that are both more fair, and economically efficient [0].
Not sure that's true. L8 at Google is a total compensation of >$500k. You can afford to live on that in the Bay Area.
If you leave Google for a job in Raleigh, you're probably going to take a massive pay cut. Remember, the average SWE makes like ~$100k. It's not nothing but it's not that great either after you factor in a mortgage, car insurance, gas, utilities, food, retirement, and increased healthcare costs due to being on an inferior health insurance plan. At a certain point, you're better off at Google.
It seems to me that the places where cost of living is still low is places that people don't want to actually live. Whereas in previous generations regular people could afford to live in interesting parts of the country.
I tried to confirm this for Cincinnati. Zillow reports that the median list price/square foot in Cincinnati was $131 in March 2019. In March 2011, it was $82 (roughly $93.20, adjusted for inflation). That is a huge increase proportionally, and that's only going back 8 years. I would be shocked if the increase isn't more severe going back to 1990.
Cost per sq. Ft. may not have gone up significantly (adjusting for inflation) but if all you can get are larger houses (i.e., builders are not making 1300 sq. Ft. houses like they used to) then it really doesn't matter. See https://www.manhattan-institute.org/reevaluating-prosperity-...
You are so, so close to understanding the problem, and then stopped at the last minute. Are you arguing that SF should be only populated by L8s at Google? Surely not. It should make financial sense for teachers and cooks and Uber drivers to live in SF, because that's how cities work. L8s are great at writing design docs for obscure CI systems but what if I want a burrito?
> The demand for ultra-expensive housing in places like the Bay Area is driven by the huge earning potential of the high-skilled labor market.
Maybe the Bay area, but that's (sadly) not the case in places like Vancouver and Victoria. Sky high property prices, but no corresponding earning potential.
I've never quite been able to figure out what happened in Vancouver. It's a great city with a tech scene but salaries there seem very low (by American tech worker standards). Who is actually buying all these multi-million dollar bungalow? None of the senior-level engineers I've worked with from the area would ever be able to even sniff being able to afford that.
Chinese bureaucrats looking to park some money outside china's financial system. Some west coast cities even instituted special taxes to try to prevent this.
> But housing is not more expensive in the majority American metros
My parents bought their NYC home in 1976 for $76,000. Adjusted for inflation brings that to around $350,000 in 2020 dollars. The house is currently valued at $800,000.
Sure, but post-WWII the federal government injected billions (in 2020 dollars) into the pockets of mostly white veterans to build millions of homes. The federal government also provided generous home loans and unemployment insurance. Today, these policies would be viewed as socialist by the very people who benefited from it the most.
USA in 1945 was 91% white so it kinda makes sense that government did it. Homogeneous countries have no political issues with welfare because everyone is alike.
People find differences. Back then the places that didn't have a ready supply of colored folks (might as well use the adjective of the day) were treating the Irish and Italians and eastern Europeans like crap in their place.
1945 is kind of different because by then it was pretty clear we were all in it together but in 1940 or so there was still plenty of "white on white" bigotry targeted floating around. 20+yr later it was considered novel that JFK was Catholic.
Unfortunately this is also where all the tech jobs are located.
And the reason most people live here is that it's extremely easy to move jobs. Yeah, Austin and Seattle have become the next locations, but we need more. Hopefully the remote work options because of Covid become more permanent.
I believe that, while still low relative to SF or NYC, home prices in Tampa and Phoenix have risen rapidly in recent years. As for Cincinnati, not exactly a thriving job market.
> I harp on this constantly. But housing is not more expensive in the majority of American metros. Adjusted for inflation the median cost per square foot of new housing is almost exactly the same as it was in 1990. (This doesn't even take into account that mortgage rates are drastically lower since then.)
It doesn't matter that real estate on the Moon is free. There aren't any jobs on the Moon, or in third-tier cities.
I remember our family of five children, two cars, pool (but above ground), most vacations were camping but we did make it to Disney World. We had lots of nice stuff as kids, but it was solidly middle class.
My mother stayed home while my father worked an eight hour day as an engineer at the local factory. He never worked overtime or weekends. All this with a bachelor's degree. My mother eventually went back to work so my parents retired quite early.
American workers have been conned into creating the very wealthiest people in the world by continuing to give up more and more earning power, every year, and for being more productive. Europe is slightly better thanks to good public benefits, but it has also gone in the same direction: making the wealthy far wealthier than they were in the past.
I can understand why this latest generation has little enthusiasm for doing anything extra at work. Good for them. Maybe things will eventually head back in the right direction for the middle class in developed countries.
I wouldn't say it's a con. In the end capital has bargaining power over labor because labor works for capital. Labor needs to organize very hard to take back control and that's difficult when everyone is scared they'll lose their job. Capital is able to make unilateral decisions because it's usually controlled by single/very focused and competent entity.
> Labor needs to organize very hard to take back control and that's difficult when everyone is scared they'll lose their job
It's fair to note that one party in the USA has worked very hard to break up unions. And it has worked. So it's not just labor vs. capital. It's labor vs. capital allied with the government.
Well politicians from one party bow to capital's demands. Democrats get campaign funding from unions. I'm not claiming Dems are free from corruption or deals with big business - they are not. But they for sure have not worked hard like the GOP to destroy unions and worker rights in favor of big business and the rich.
it isn't just bargaining power or losing your job, it goes to the extent of lobbying gov'ts to be prolificly pro-business and anti-union, indoctrinating workers to view organizing as against their interests, and in some cases literally waging war against their employees
> American workers have been conned into creating the very wealthiest people in the world by continuing to give up more and more earning power
This pendulum seems to swing back and forth. The phrase "conned into" implies that American workers had some kind of choice and were lied to or otherwise induced to making the wrong choice.
That may be true, or there may have been systemic changes, not under the control of American workers, or there may have been choices made by other groups in American society (older workers, politicians, etc.), that led to the current state.
I wholeheartedly sympathise. My interpretation is slightly different. The working class aren’t giving up earning power as much as the western central banks are inflating it away with endless money printing and support of Wall Street that is supposed to trickle down to Main Street. It seldom does. Instead it’s used for stock buybacks and further entrenchment of inefficient firms that would have long collapsed in genuinely free market conditions.
I interpret the “capitalists are screwing the working class” as a) erroneous b) long-term dangerous c) convenient way for those bureaucrats to divide and conquer. Meanwhile they take risks with our economy without accountability.
> support of Wall Street that is supposed to trickle down to Main Street
> I interpret the “capitalists are screwing the working class” as a) erroneous
Isn't support of Wall Street fairly interpreted as support of the uber wealthy capitalists who benefit the most from this monetary policy and artificially boosted stock prices?
And what's stopping the capitalists from using some of that vast wealth to actually pay workers more?
> Instead it’s used for stock buybacks
Who benefits from this? Shareholders, right? Aren't the uber wealthy in the US and Europe getting the vast majority of their wealth thanks to capital gains via shares?
> genuinely free market conditions.
There good reason genuinely free markets exist nowhere in the world and nowhere in history. Negative externalities don't magically disappear all on their own. Privatizing profits and socializing costs is the natural strategy every company must adopt to remain competitive lacking regulations to prevent socializing those costs. It's simply far cheaper to pollute when you are allowed to.
I think people need to start realising just how incredibly much the government is now stepping in at each of these crises to make them as smooth as possible. But there is a downside to this. You are not allowing the normal economic effects to happen because you are wanting to keep everything as it is, but then guess what, the status quo stays, and anyone joining the ladder is finding it increasingly difficult.
What's amazing is how the narrative around this however is that we need MORE government to set things right. Yet in the tech bubble the government blew up the real este bubble, in 2008 all the banks got saved along with loads of other insurance and other businesses, and now we have the largest stimulus packages ever. (on top of government subsidised student loans, which have made loads of money available for college, pushing up prices).
It's counter intuitive but in the long run this is BAD for anyone that doesn't already have something. It inflates asset prices, it locks in people who already have something. It's bad for millennials. And millennials shouldn't be arguing for more government intervention, but less. Let things fail, so that the waste can get burned off.
Unfortunately it seems a lot of people think things literally need to be burned down for there to be change. But let's be clear, 30-40 years of interventions by governments did this, which is exactly what left leaning people want of government.
"millennials shouldn't be arguing for more government intervention, but less"
Your argument that government intervention is bad for millennials is flawed. Without government intervention such as eviction moratoriums, unemployment benefits and federal government stimulus checks there would have been massive homelessness. Prior to the pandemic 40% of americans could not cover a $400 emergency, all of these people would have been on the street without the government stepping in. At one point the unemployment rate as 15%. I cant really see how this would have been good for them.
I would argue that specific and targeted government intervention such as complete student loan forgiveness would have a massive beneficial effect on millenials.
Burn it down is always a mistake in hindsight. There is alot of low hanging fruit to fix these issues; higher taxes; amendment to fix Citizen's United; revamp the Supreme Court..
All of these are easier then digging a shaft, jumping in, and trying to climb out.
Speaking as someone who has no assets, no 401k, no home.
Not to mention that if "shall not be infringed" and "secure in their persons, houses, papers, and effects" are and indication they'd find a way to ignore it when they do abridge the freedom of the press.
I'm saying this couldn't work without explicitly including restrictions on the freedom of the press, since "the press" is the very vehicle by which money gets turned into political influence. Unless this amendment includes something akin to the fairness doctrine I can't see how it could possibly have the effect you are looking for.
Perhaps corporations are not people, however "the press" is made of corporations. If there is to be no restriction on the press then what is to stop any corporate entity from advancing the cause of their politics as a member of the so-called press?
> Don't be afraid of change. If something isn't working; we should fix it.
Furthermore, this is a binary line of thinking that isn't even fit for a children's book. The world is not split between those that want change, and those that are afraid of change. It is very much possible for intelligent adults to consider the details of what is being prescribed and conclude that "that sounds at least as bad or possibly worse than the status quo."
You're listing one possibly problem when this addresses dozens of issues. Removing corporate money from law making will make it was easier to address these issues in the future, with sensible legislation.
By all means, extrapolate your position. The press is corporate, but every story I've ever seen has a byline. That means the actual speech is from a person.
>Your argument that government intervention is bad for millennials is flawed. Without government intervention such as eviction moratoriums, unemployment benefits and federal government stimulus checks there would have been massive homelessness. Prior to the pandemic 40% of americans could not cover a $400 emergency, all of these people would have been on the street without the government stepping in. At one point the unemployment rate as 15%. I cant really see how this would have been good for them.
It wouldn't have been "good for them" but it will hurt a hell of a lot less than when (at some undetermined point in the future) things come crashing down so hard that the government can't prop them up.
We're preventing fire crackers from going off and eventually we're gonna get hit with a bomb.
Right now the Fed's back is pretty close to the wall in terms of policy levers it can pull. Imagine a financial crisis comes along in 2021 or something, we could really be screwed.
I don't really agree with that assessment. If there is mass layoffs for example, and renters can't pay rent, why would a landlord evict the tenant? Who is going to take their place? I think many landlords would prefer a potential to pay (owing rent) than full eviction and being forced to lower rent and uncertainty wouldn't they? I'm not saying there would be no evictions, but everyone homeless doesn't seem like a fully realistic outcome considering renting is a marketplace.
> I think many landlords would prefer a potential to pay (owing rent) than full eviction and being forced to lower rent and uncertainty wouldn't they
Every land lord thinks they'll be able to rent their apartment, hence the need for the eviction moratorium. Their view is: if I leave in a tenant who won't pay, definitely won't make money, but if I evict them I can find someone else.
Eviction moratoriums, unemployment benefits, and stimulus spending is the least the government can do when they're the arbiters of who is considered 'essential' and allowed to work. The real question is what happens when the restrictions on evictions are lifted and people are inevitably evicted into a second outbreak.
Some programs benefit them but the things you listed were secondary interventions, interventions. If there was no stimulus and business stayed open that would have benefited them.
No, it's zombie companies kept alive by stimulus cheques, and management who get to stick around and failing companies that should have gone under 20 years ago.
a better solution is raising minimum worker benefits & protections, pigovian taxes as well where necessary, etc. If a company cannot earn enough money while meeting some basic minimum requirements to society then it should fail quickly.
In the scenario you're asking for - the zombie companies just layoff employees, cut wages/benefits, landlords evict, etc. The zombie lives on just fine until the market corrects while everyone else fails.
You're correct that failing companies need to fail but your "just let the free market handle it" approach is a fairy tale.
Hm, maybe that's how the statement should be interpreted, but I was interpreting it in light of the "too big to fail" mantra after the 2008 recession. Lots of banks and auto companies were bailed out to keep them afloat. So I interpret it as "let companies go bankrupt".
Yes. It's the sort of take by people who have made zero effort to study history or economics.
"Keep the budgets tight" was the mantra in the early 30s in response to the depression. It took a World War that killed millions of people (and was -- surprise! -- a major artificial government stimulus) to get out of it.
Yes, providing monetary liquidity and fiscal stimulus during times of extreme stress is not purely good. It can have an effect of keeping some companies alive that perhaps should not be. That is bad and we should try to minimize it in the context of a recovery effort. But the fact that it's not perfect is not a reason to claim that burning everything down and creating a decades-long horrible depression in which many die of starvation, and that cripples the country, is a preferable alternative.
They think that if you let everything burn down then green shoots will pop up and everything will be happy and folks will rebuild and it'll be better and the government oughta get its snout out of our business and just let pure capitalism run its course and...
> It took a World War that killed millions of people (and was -- surprise! -- a major artificial government stimulus) to get out of it.
You are describing the broken window fallacy here. War and destruction doesn't help the economy. What happens in war is that useful resources in the economy are diverted from productive use and mutual beneficial trade to death and destruction.
You're right that the broken window fallacy is a fallacy when the economy is not in a depression, but it can be a bit more situational and complex than that.
When aggregate demand is "stuck" at a depressed level (high unemployment causes low demand, resulting in more low unemployment), the stimulus of war can actually help pull the economy out of its stuck position, even if the war is destructive. Of course, once it's no longer stuck, the continued destructive stimulus is just destructive.
There are better fiscal ways to pull the economy out of a depression than war, because most wars don't pay much in the way of dividends, unlike large scale public works. But even if the stimulus isn't a great ROI in "normal" times, it can have a high ROI in "depressed" times due to its ability to get demand unstuck.
The issue is not really that the government is bad, the problem is it has become a proxy for ultra rich to push their agenda. You can probably make it more efficient by limiting corporate sponsorship and making it more transparent. Millennials don't have many options or tools at their disposal to influence the direction we are heading.
This might be unpopular, but they're not going to let major things fail because of political reasons. Popular opinion thinks the US is declining, and failures only add to that perceived momentum. That's why there's endless stimulus.
For letting major businesses fail, we really do have the resources to let those former employees do nothing but sit at home and use the internet all day and have no bills. But the US can't handle someone not working and still being able to pay their bills.
If we let large numbers of businesses fail, the people who have a lot of money now will buy up their assets and we'll come out with more concentrated wealth in society.
I will grant you that the federal government in the US could have done better in some ways by just sending out checks to every citizen instead of loans to businesses, but I don't think that's what you had in mind when you talk about less government.
> But let's be clear, 30-40 years of interventions by governments did this, which is exactly what left leaning people want of government.
You Unironically say this yet Trump (a very right candidate) is the one pumping money into the economy to save his election chances.
The reality is each party wants to spend money where it feels it is important. Republicans/right wingers have given up fiscal responsibility a LOOOOOONG time ago.
So why call out the side that's at least honest about its intentions? If you think government intervention is a bad thing, isn't the side that's upfront and honest about its desired amount of intervention still better?
You can either take the view that the honesty is better or you can take the view that at least one party is sufficiently embarrassed by it that they don't proclaim it's a good thing and when they do it they hide it.
Capitalism did this, governments intervened when it became necessary to prevent things from effectively burning to the ground because the market can’t/won’t fix it.
Letting banks burn down in 2008 would no doubt have been a cathartic moment, but it would be pragmatically a poor decision. Immediately post-crisis those responsible should be held responsible and actual action should be taken, but we don’t elect governments to lead us and then have them do nothing in a crisis.
I live downtown in a coastal city. What I’m seeing is a lot of young men living in the streets. This is the other side of this story some young adults don’t have a home to go back to after job loss and eviction.
We’re seeing just the tip of the iceberg. I expect a lot more social upheaval in the coming years. Social services are going to get severely strained.
I've seen a documentary about San Francisco it's crazy how middle income people are being pushed farther from the city. One teacher had several bus transfers and then a long walk to get to her job. Even bus stops where "poor" people (less than $100,000/year) are being crowded by private buses like Google forcing city buses to wait which adds to the wait down the line. Nuts!
Same here. The rust belt cities across the northeast and stretching into the Midwest don't seem to be doing that bad either.
I see the "jobs in places not SF or NYC" situation as kind of like how the people who spend MSRP minus $2k for a 5yo 4Runner feel the need to loudly proclaim how everything else is crap because they have this massive sunk cost they need to justify to themselves. All I know is my car starts every morning and I'm not making payments on it.
California: Tax the hell out of people who need to drive because they can't afford to live near prime transit locations. Then be subjected to such transit which is unsafe, unreliable, and unpleasant to say the least.
The main part of the documentary is a teacher who can't afford to live anywhere near the school that employs her. I think the cheapest rent was $3,500/month and she made 60K per year (?). I believe she worked in San Francisco but had to move to Oakland. She had to take multiple buses and then walk a few miles from the final stop. But in the end she found a place in San Francisco near her school which she could afford.
It also showed Google and other large companies with their private buses. There was a lot of conflict between average citizens and the "Google buses", at least in the video there was.
I’m a renter. Do I need to prove I’ve lost my job to not pay? Do I get to skip out on paying for a luxury apartment if I have money in the bank? Does my landlord get to skip her mortgage? Or only the portion paid by my rent? What about the bank who holds the mortgage? Or the retired bond holder who ultimately gets the mortgage payments?
Every step along the way requires somebody to not get paid.
If the government intervenes, at which step should they do it?
I’m not saying no actions should be taken, just that it’s more complicated than pure rent forgiveness. Perhaps the answer is some kind of short term UBI, but that gets expensive quick. Zero interest government loans puts the burden back on the individual. I’m not fully clear on how to beat balance individual ownership versus protecting the system from collapse. (The latter involves propping up the banks)
As of now there is an eviction moratorium in most of America, but when the moratorium ends do you have to catch up on 12 months of rent ?
How is any family, which was already living paycheck to paycheck ever going to sort that out. What's going to happen is tons of Americans are simply not going to be able to pay, their credits will be ruined and the rent won't be paid anyway.
It would be nice to present a goal, no one pays rent until we have a functioning economy again, and then sort out the details a bit later. The government could forgive property taxes as well, Banks could delay mortgage payments until the end of the pandemic.
I spoke to one friend who was three months behind on rent at a point. Telling him to Buck up and figure it out, isn't going to do any good. Money ultimately is an abstraction, as a society we very much can shape the rules around it. I can't imagine millions of homeless families being worse than landlords having to seek out different arrangements with their Banks.
Overalla lot of people aren't going to be able to pay rent through no fault of their own, they shouldn't be evicted as punishment. Or you can tell me ,how would anyone catch up on a year of rent once the eviction moratorium is over ?
This didn't answer the question at all. People understand renters who lost their jobs can't pay their rent.
The problem is, you can't just say "so don't pay rent" and magically make that OK. That rent money in turn pays for maintenance/upkeep, mortgage payments, property taxes, wages for property managers and repairmen etc. You can't pretend like all land is owned by some king who can just afford to not get rental payments.
If the government doesn't collect property taxes, how do they pay for schools, roads and firefighting next year? If the bank doesn't collect their mortgage payments, they go insolvent and don't have the cash to give you when you try to withdraw from your checking account.
Flipping your final line around, how would the elderly widow relying on renting out her former family home handle receiving no income for a year?
The current defacto situation involves millions of renters just being unable to pay. They can't be evicted in most of America.
Landlords are going to lose money.
>Flipping your final line around, how would the elderly widow relying on renting out her former family home handle receiving no income for a year?
She still will not get any income until the eviction moratorium is lifted. The only thing she can do is sue her tenants for money they don't have. Even in good times evictions can take months to a year.
It can be argued this is the risk of doing business. If tenants can't pay they can't.
The backlog of evictions ( which are one of the most stressful things you can experience) will clog courts. At least if we establish renters will not be able to pay, we can develop an alternative plan. Better to have a plan than saying everyone has to survive the best they can.
Someone with an economic degree would work out the details. Obviously I can't write a full relief bill in a comment
It is very complex, but what's the alternative? Widespread evictions (in the midst of "stay inside," no less)? A bad answer is so much better than none at all, in the same way that a badly-implemented draft and a poorly-trained army is a vastly superior response to an invasion than nothing.
I think the starting principle I'd take is that this is going to go very poorly for some people, and our only decision is for whom it goes poorly. (After all, if we do nothing, it will clearly go poorly for many people, and as you point out there's no obvious solution where it works well for everyone.) There is a productivity loss that needs to be borne by someone, and it seems to me the obvious approach is to ask who can bear it with the least impact on the long-term good of society / the nation / humanity.
The answer is probably that certain people in the chain you mention, possibly the landlord, probably the bank, and perhaps (but probably not) the retiree, can afford to just not get paid. It's unfair for them, but they will do fine: they won't lose out on revenue that they need to put food on the table or a roof over their heads (the whole point here is to keep roofs over heads). Everyone upstream of them gets to not pay them.
And yes, it's unjust to take money from people (or really, require that people keep providing services without being paid for them) without their consent, but it's also unjust to draft people for a war without their consent. We do it anyway because the alternative - choosing to not fight the war - is unjust too.
It’s not an easy solution. Even if the Govt pays, we pay as taxpayers. My inclination is if the broader “we” decide someone doesn’t have to pay, then “we” have to be willing to pay for it.
> Unless we just forgive rent until a vaccine is out, many people will never catch up.
If 'we' forgive rent owed landlords, will 'we' also forgive the mortgages those landlords owe the banks? Will 'we' also forgive the obligations the banks which owe to other banks and their investors? Will 'we' also forgive the obligations those investors owe, for example to pensioners? Will 'we' then step up and pay for those pensioners' food and … rent?
An economy is a gigantic web of interlocking relationships. It takes years (one might even say centuries!) to build and develop all of those, but it takes far less effort to destroy them. It is computationally impossible for anyone to understand all of an economy, and thus impossible for anyone to make good decisions on behalf of an entire economy.
If we are worried about folks without resources, we should give them some. Yes, that runs the risk of encouraging those who want to get those resources (e.g. student financial aid encourages the growth of the academic industry, mortgage assistance encourages the growth of the real estate industry &c.): we should probably just give the poor some amount of money and let them make their own decisions about it. Call it unemployment or UBI or whatever.
The fact that it's impossible to make good decisions doesn't change the fact that a decision has to be made, nonetheless. This isn't a computer game where there's an answer to the puzzle from the designer, where the COVID-19 monster shows up but it has a weak spot on the back of its tail where you can land a critical hit. There is no good solution. Our job is to find the least-bad one.
I think there's a good argument that yes, forgiving all of those rents and paying for the pensioners' pensions is less bad than not doing anything. (We might also want to consider why pensioners are living off of complex financial relationships instead of, like, cash, and whether that risk/reward tradeoff was good for society, but we won't be able to see the results of any changes we make for another generation or two.)
I do think that, yes, "we will just give you money" (and "we will increase taxes on people who won't get evicted if we do") is a fine answer too.
But also, the amount of benefit that any intervention can have drops rapidly by the month. Every time rent payments (or mortgages, or pension-funded bills) are due, there's a new batch of people who can't pay it. A bad answer today, and maybe a workaround for second-order effects later, is a lot better than a better answer in three months.
The reason retired people can’t live off of cash is simple - inflation. In many countries, governments provide and guarantee retirement. US has largely shifted to saved retirements in the form of IRA/401Ks. These are investment accounts, which means your principle is not protected, but you earn interest to, hopefully, protect you from inflation and build returns. In practice, those retired end up bearing the same market risk as normal investors, whereas a government insured pension is only as risky as the government itself (which differs by country).
Oh hm, I guess there's a natural experiment there - are countries that have government-backed pensions more willing to do rent cancellations than the US is? (There are a lot of confounding factors, to be fair.)
> The fact that it's impossible to make good decisions doesn't change the fact that a decision has to be made, nonetheless.
Does it? Maybe the right answer is not to make all decisions in one place: maybe the right answer is to let every citizen make his or her own decisions. The one who is willing to trade the emotional cost of moving back in with his loving family in order to have more money for lunches with friends does so, while the one with abusive parents chooses to cancel cable rather than moving back in — and so forth.
> We might also want to consider why pensioners are living off of complex financial relationships instead of, like, cash
Because storing all of one's life savings under the mattress is susceptible to theft. Even taking a broader definition of 'cash' to include a bank account, would you at age 60, with another 20 years to live, rather be earning 0.06% (the current savings account rate) or 1% (or more) per annum? At 0.06%, one would need about $100,000,000 to earn the $64,000 median U.S. income in interest. Alternatively, if you figure that you will live a maximum of 50 more year, you will need over $3 million in order to retire and just spend the money. You gotta invest to have something to live off of.
> Does it? Maybe the right answer is not to make all decisions in one place: maybe the right answer is to let every citizen make his or her own decisions.
That is one of the possible decisions, yes. It does seem to be the decision the US is going with, for the most part.
(I'm a little confused what you mean by "cancel cable" - do you live somewhere where the cost of a monthly cable TV bill is comparable to the cost of a monthly rent bill?)
> would you at age 60, with another 20 years to live, rather be earning 0.06% (the current savings account rate) or 1% (or more) per annum?
It depends on the risk profile. If you can guarantee me 1% or more per annum without risk, then obviously I'll take it, but if you could make that guarantee, then savings accounts would just make the same investment and offer 1% interest too.
Also, if you tell me that my options are earning 1% on my savings and setting up a system of complex dependencies that leads to a thousand people becoming homeless over the rest of my life, or 0.06% and not doing so, that may influence my answer.
I've never seen a government tasked with taking care of the populace actively work against them as much as this one has. Assistance is endless paperworks, checks, administrators, double check. All to make sure the people that need that help can't get that help. It would be so much easier for everyone for government assistance to be cash. But we'd rather have endless "programs" marked up 100% where in the end assistance is 50% cash and 50% administration.
If 'we' forgive the rent owed to landlords, what about the property taxes that can be just as large as the mortgage. NYS has an eviction moratorium, but they still want their taxes.
I grew up on the farm, but have spent most of my adult life living in big cities. But I take a month or so home most years for a bit of farm work / harvest celebration.
Corono got me good traveling SEA in February, and have been now living and working at home since March. I could have never thought about living here beforehand. At least I always think that twenties and thirties are for the movement of the city, and then the farm work / home life can begin.
But having been somewhat forced to force myself to settle for an indefinite period, it is giving me much appreciation for a different kind of life. Building stuff, farming and a lot of cooking / baking / fermenting has brought out a real positivity, which now seems impossible to find in the city.
It's even got to the point where we've started inviting friends to come and live and work with us, and there seems to be that community feeling bubbling up all around.
Commuting and travel seem so weird to me by this point, and I know that the logistics are hell to try and rearrange the entire economy to be kind of segmented, but I'm starting to believe that this is the only realistic hope we have left.
Don't let the awesomeness turn to pessimism! The gap between "this is great" and "this is the only realistic hope" is huge. Others - even outside of farm life - have found community too.
I guess it wasn't worded clearly, but I meant that it's the only hope for a less wasteful economy.
EDIT to add: In the short term! Right now the infrastructure is totally oil based, and consumerism relies on ecological destruction. But I am definitely not saying that we can't have a global zero carbon everything you want economy. But that is a question that I do not have the patience or information to ponder seriously!
Chiming in with the rest here. Moved in with my parents, and honestly I think this is great. I've traded in a bit of freedom for much healthier meals and people to talk with. I'm also saving a ton on rent, to the point where I'm throwing in nearly 70% of my paycheck into savings. I'm not thinking of keeping this up in the long term, but I'm glad I did this for now.
I think we’re going to have to accept we’re the uncommon ones around here.
I don’t know what the stats are but I’ve got a feeling that most people on HN (particularly those in expensive cities) get along with their parents quite well. I’ve noticed in my time in SV that I’ve never really heard anyone say their parents are/were abusive. Or that they even really hated their parents. On the contrary, I hear most people liking their parents quite a bit.
Abusive or terrible people for parents just don’t seem too common around these parts. Makes sense, abused children don’t tend to be rising stars - they kill theirselves instead.
The higher you get, the more supportive the parents are. It’s hard to get far alone and without a kickstart.
> I’ve never really heard anyone say their parents are/were abusive.
There are probably many people in your social circle with abusive parents. Just because they don't talk about it doesn't mean it didn't happen. People tend to keep their skeletons in their closets.
Related: Many men would not believe how common sexual assault of women is. A lot of men are like, "I don't know any women who have been assaulted." Really, it's that you don't know any women who have told you that they have been. For many reasons, most women only bring that kind of stuff up around a select trusted set of people, if any.
I always try to be mindful when interacting with people that almost everyone has some trauma in their past or some cross to bear. Just because they aren't showing it doesn't mean it isn't there.
> There are probably many people in your social circle with abusive parents. Just because they don't talk about it doesn't mean it didn't happen. People tend to keep their skeletons in their closets.
I've asked directly to a lot of people about their relationship with their parents. My point is more like: They all seem to love their parents. They call them daily or, minimum, weekly. They enjoy their family gatherings and being around their parents overall.
If you did the ACE test with the younger crowd in SV's tech sphere, I would really doubt many people with troubled parents would show up. I get a score of 7 on that test and I don't see many 7+'s here. https://acestoohigh.com/got-your-ace-score/ If you had shitty parents, you probably wouldn't get into tech here. The people I know with shit parents are not in tech.
On the contrary, my mom and I get along swimmingly. We also know that we don't want to be in each other's hair endlessly and our limit for each other's presence is around 2 weeks.
I earn more than my family or my peers earn, but living in London often feels like my money comes in and goes out again immediately. As a result, I currently live with my family in an extraordinarily nice house that I would never be able to afford myself. I pay them a nominal sum for rent; they refuse to take the market rate even though I am happy to pay it...
I look at the rental cost of a standard 1 bedroom flat in my part of London, and they want £1,200/month just in rent. It would be cheaper to get a mortgage, but I fail the "affordability" tests. Perhaps I am selfish, but I am not so desperate to move out to a relatively inferior property in which I possess no interest (since I will merely be renting) for that sum.
I don't believe I'll ever be able to afford a house, especially as wage growth allegedly stagnates and then seemingly declines past the age of 40. If these are my "peak earning" years, then I'm quite sad because at this rate I'll be trapped at home forever. It would be fine if rents were about the same as a mortgage: one could rent while saving.
At the moment though, renting while saving seems eminently unaffordable.
> It would be cheaper to get a mortgage, but I fail the "affordability" tests
I naively thought that these affordability tests would involve looking at whether my take home income minus my monthly costs was higher than the monthly cost of the mortgage. That sounds like a reasonable definition of "affordable", right? We can account for increases in interest rates too.
In reality, the amount of ridiculous hoops that need to be jumped through to quality as being able to "afford" a mortgage is silly, and it never used to be like this. Current employment contract less than a year old? Denied, even if you've been at the same company longer than that. Contractor without 2 years of Ltd company history? Welp. Want to use help to buy? That'll limit your pool of potential lenders even further.
There's also the point that banks want you to put down a sizeable deposit so that if the market crashes and you lose your job they can sell the house, recover their outstanding debt and you lose your deposit.
So you might be able to afford £1,200 a month in mortgage payments (which on a 30 year mortgage could mean you could borrow £400,000) but you'd need a 20% deposit, meaning you'd need to have saved up £100,000 to take advantage of it.
And even then, for £500k in London that's, what an okay 2 bed flat.
Yes, £500k doesn't get you much here. This is why I champion remote working and possibly relocating to more affordable areas of the United Kingdom, thus spreading the wealth around a bit more.
Yes, I had similarly naive thoughts about that too. They want ludicrous sums for the deposit in my case, and also I haven't worked at my company for more than a year at the moment so I failed that too.
At this rate, I'm considering moving out of London to somewhere else (perhaps with fibre internet), renting be damned.
As an aside: how strange that we have a number of mutual professional connections (couldn't help but check out your GitHub).
Those parents often shout about "greedy developers" (or, if pressed, "parking and neighbourhood character") when, heaven forfend, someone tries to build new homes near them.
Treating homes an investment was one of the worst mistakes of the 20th century.
You say mistake as if it were an intentional choice that turned out to be a bad one. I don't know my history of this subject very well, did policymakers really sit down and encourage homes to be treated as investment, leading them to become less affordable? Or were homes becoming less affordable just the natural consequence of having an expanding population and fixed supply of land? I'd always sort of assumed the latter.
As soon as we let people vote to deny their neighbours the right to build a home (or convert a house to apartments, etc.) we gave homeowners the rights of a cartel to increase the value of their asset.
Since the pandemic hit, my parents have been trying to convince me to move back in with them. I'm working remotely now, they say, so I don't have to live in the city, so I might as well live with them, right?
I have to keep making different excuses. They don't seem to quite get the message that as much as I love them, I just don't want to live with them...
At the start of the lockdown in France, my parents asked me to move back (temporarily) with them, mostly so that I don't spent all the lockdown alone. I nearly refused, because then I didn't though the lockdown would be so long, a few weeks at most. In the end I still went back for the duration of the lockdown and I'm thankful I did.
It really just depends on your relationships with your parents. I moved in with my parents when I started working remotely a few years ago, and lived with them for two years until I moved in with my fiance. Moving in with them was a fantastic decision.
That said, we immigrated to the US from a country where it is normal/expected to live with your parents until marriage or later. I don't think my fiance would have had a good time moving back in her with parents for 2 years like I did.
I was in a similar boat. I eventually said sure why not, might actually be great!, sold my house, and moved back in with them. A month later and now I live with my sibling because I hit my breaking point.
If you're doing ok on your own and your parents aren't worried about your financial capacity, they're probably just worried in general, about your physical or mental health, or their own. Sounds more like they just have the same general anxiety as most of us. They might want it for themselves more than you.
I don't think they're worried, they just like to see me. Which, all things considered, I really appreciate—it's certainly better than the other way around.
I guess the original reason I posted the anecdote is, I wonder how many of the people who've moved back home just did it because they could, since they're working remotely anyway.
Millennials face a very real risk of being a lost generation financially. They have endured 2 major, years long recessions, and now the Covid pandemic coupled with social isolation and massive unemployment that does not appear to have an end date in sight. Housing is more expensive for them than prior generations, wages are stagnant, school is expensive and social conflict is also currently on deck.
WW2 was of course a much more trying time but it was followed by massive economic growth for most sectors of the population, I don't see that happening after the pandemic, wealth is just being silo'd and prosperity limited.
> They have endured 2 major, years long recessions,
What are these recessions? I'm an "elder millennial" and the .com bust came while I was in high school. Even entering the job force with a two year degree, I graduated well after it was over. Leaving, the GFC and our current one, but our current one isn't years long...yet.
The GFC was definitely a fucking mess for all of us. I have literally never had a real promotion and it wasn't until like five jobs in that I learned about annual cost of living adjustments. I still don't have a "senior" title despite having worked in industry for 15 years...
I feel like GenX got the biggest shaft. They graduated in the 80s-90s into an economy where unions were in decline and Asia had come into manufacturing dominance. Saw a brief boom in the 90s, only to have numerous accounting scandals destroy any investments they managed to save during that era. Went through the housing boom/bust, then were in their mid careers by the time the GFC hit. Now they are in their 50s/60s with a pandemic and another recession landing, and this recession looks to be inflationary, which means any savings they had is going to get eaten away.
Sorry to nitpick but the social isolation and massive unemployment are being caused by our response to the pandemic, not by the pandemic itself. Lockdowns are a choice, with tradeoffs.
Exactly and by not locking down properly we have managed to extend the pandemic in the US and its associated quasi lock down leading to our current situation. I agree with your response.
Have we? It doesn't seem possible to permanently stop outbreaks without having either reached 20-25% of the population infected, or locking down until a cure or vaccine is discovered. Plenty of places that locked down much more stringently than the US are having new outbreaks now - Europe, New Zealand, Australia and even parts of China.
Anyway, I seem to remember that extending the pandemic was the whole point of the lockdowns. The messaging at the beginning was that we would spread out cases over time, in order to keep under emergency healthcare capacity. Not prevent cases entirely. By that metric, hasn't the US been wildly successful? Or has the goal changed - and if so, why?
Other places have managed to become entirely COVID-free due to properly following lockdown policies. The US is still gaining thousands of cases a day–the only reason this isn’t more is that most people are staying inside. The places you mentioned with “new outbreaks” have a handful of new cases, and yet are taking it significantly more seriously than the United States.
I did not specifically mention Spain, I was thinking of the other things on your list that are actually countries–as far as I am aware, cases in Australia are still going down, in China they are a negligible number, in New Zealand they had a couple dozen that they immediately locked down over and will likely stop the spread of. But since you brought it up, let's look at Spain–why does it have so many new cases every day? Because they aren't following the policies!
> It doesn't seem possible to permanently stop outbreaks without having either reached 20-25% of the population infected, or locking down until a cure or vaccine is discovered.
You can't magically make yourself immune to future outbreaks by locking down - the only way to avoid outbreaks in the absence of widespread immunity is to maintain the lockdown indefinitely, until a cure or vaccine is discovered and widely distributed.
So, it's not true that we could have eliminated the virus and been happily back to normal in the US if we had just locked down harder/better/longer. We would either still be locked down with no end in sight, or have opened back up and now be experiencing another outbreak.
Not sure about China, but FWIW Australia and NZ are still quite locked down.
This is not true. Sweden experienced a spike in unemployment, despite not having a lockdown. "People are too afraid about getting sick and dying to go outside" is pretty much directly attributable to the pandemic.
Sweden experienced a spike from ~7% to ~9%. US has experienced a spike from ~3% to ~14%. Sure, some of it might be attributable to social attitudes, but I don't think that such a big discrepancy can be explained by this. I think it's mostly lockdown policies causing this.
> People are too afraid about getting sick and dying to go outside
This is still a response to the pandemic, just a non-governmental one. I'm not saying such a response isn't justified, but it is not directly attributable to the disease.
If a hurricane came and destroyed a bunch of people's homes and businesses and people stopped working, it would be more reasonable to say that "the hurricane caused mass unemployment" than it would be to say "the hurricane didn't cause unemployment, it was just people's individual decisions to not work out of a pile of flooded rubble that's causing the unemployment."
This doesn't seem like a fair analogy for a number of reasons. But mostly just that COVID itself is not destroying businesses, whereas a hurricane literally is.
A hurricane isn't directly destroying anything except the building the business operates from; the business still exists. In principle employees could still walk to the rubble to work and customers could walk to the rubble to exchange money for services, but the material conditions make both of those untenable, in the same way the material conditions of COVID make working and buying things untenable.
That's true. Without the lockdowns, everyone would have had some very small increased chance of death or lifelong respiratory issues.
It's the role of science to tell us what that increased chance is, and the role of politics to decide whether that warrants the long-term decreased quality of life for a much higher fraction of people that the lockdowns/shutdowns will cause. At any rate, none of this was forced, certainly not by science (which can't make normative prescriptions).
There would also be the increase of all kind of death and disablement due to the breakdown of the medical system. So prob 1 month of all emergency cases wouldnt been treated. (Pulling this number out of thin air, maybe somebody has a good source)
I only remember that northern italy might have had a similiar problem, and I guess Wuhan and wouldnt be surprised about Brasil.
According to media here France choose the 'culling' strategy (or more nobly called age triage) and offered palliative services to people who had covid and were considered too low survival chance.
> WW2 was of course a much more trying time but it was followed by massive economic growth for most sectors of the population, I don't see that happening after the pandemic, wealth is just being silo'd and prosperity limited.
I could see it happening, but not in a good way. One (not all that unlikely) scenario is that the economic winners manage to place themselves out of harms way in the pandemic & social unrest that follows, and then everybody else just...dies off. That'd leave all the survivors extremely well off, and everybody else drops out of the population and ends up forgotten.
Globally, WW2 worked this way as well. There was a huge loss of life in Europe, in Russia, in China, in Japan, basically everywhere that the war was actively fought. 2/3 of Europe's Jewish population just died off, up to 20% of Poland and Russia, 8-10% in Southeast Asia, 4% in China. "Most sectors of the population" in the U.S. did well because the war wasn't fought here and we were the last developed nation left standing.
That analysis completely fails after WWI. The actual cause of the post war boom was a massive increase in agricultural efficiency. This freed up a large chunk of household budgets to be spent of consumer goods which kicked off a long cycle of economic growth.
Timeline and geography doesn't work out for your hypothesis. The Green Revolution began in earnest in the late 50s; at that point, the post-war expansion in the U.S. was alread 10-15 years old and slowing down. It also started in developing nations like Mexico, India, Bangladesh, and the Philippines - there's perhaps some influence through international trade, but if that's the cause you'd expect Mexico and India to be the geopolitical superstars rather than the U.S.
The timeline does match up with the Marshall Plan and redevelopment of Japan. A much simpler explanation is that the U.S. was the only nation whose capital stock remained intact after WW2. This allowed us to produce high-value goods more efficiently than everywhere else, which allowed us to export more, which led to a strong currency and ample buying power on world markets. Post-war unionization also spread the fruits of this productivity to society as a whole, rather than concentrating it among capital owners.
The US also saw a short term boom after WWI just look at the 20’s. That doesn’t explain why the boom continued for so long after WWII. Also, the green revolution was more a global phenomenon, the US saw significant agricultural productivity growth in the 1940’s from increased mechanization and fertilizer usage.
The 1920s boom was partially global - the U.S, France, and Great Britain boomed, along with non-belligerents like Venezuela. Weimar Germany had one of the worst economic collapses in history. Additionally, the Ottoman, Austro-Hungarian, and Russian empires disintegrated, with widespread hardship (revolutions, civil war, economic problems) occurring during the early 20s and then subsequent trajectories defined by how stable and how market-friendly the successor states were.
See a pattern there? It's really awesome to win a war, particularly if it was never fought on your territory or you got reparations. It really sucks to lose a war. Over the short term (~10-20 years), this effect dwarfs the normal peacetime business cycle. Over the long term (~50-100 years), it's dwarfed by things like the political-economic system, technological development, alliances, population growth & demographics, etc, which tend to set up the winners of next war.
(The U.S. experienced a similar boom after the end of the Cold War in 1991.)
I agree that the US experienced a war related boom after WWI and WWII. I am simply saying the boom lasted as long as it did in large part from the green revolution. This didn’t just mean increased prosperity at home, but a continued stream of new markets opening up. China’s boom for example was delayed due to internal politics, but that just extended the same long term trend for even longer.
The boomer generation wasn’t shaped by a few good years, it was shaped by a lifetime of prosperity which is extremely unusual in historic terms. IT technology played a major role, but looking at the industrial revolution for comparison you find plenty of crashes even during a period of rapid growth.
"Major, years-long recessions"? In the lives of anyone 25 and under, there have been three recessions, the current 7-month recession, the 2008 recession which lasted 18-months, and the 2001 recession which lasted 8-months. Recessions in the US almost never last more than a year. https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...
I think you're mixing up your generational labels. Millennial are pushing 40. Under-25s are typically referred to as "GenZ" or, more colloquially, "zoomers".
Those are some... VERY specific timings. For many, the 2008 recession lasted >10 years. Putting a very narrow specific figure on it needs a little bit of perspective. 10 years is obviously ridiculous as it represents the extreme, but the impact of any academically-defined "18-month" recession is always going to be multi-year.
That may be true academically, but it’s important to point out that everything doesn’t just go back to normal when the textbook definition has ended. The wealth transfer from working class to the rich in 2008 was staggering, and so many people feel that we never really recovered from that crisis.
My grandfathers were an accountant and an engineer. The latter was really sought after too, he oversaw the construction of roads and spent months away and refused jobs to spend time home too.
My parents were both musicians/painters/other artistic stuff on the side. We were always tight money-wise but somehow had a two kids middle class upbringing on the absolute best part of town. Every time I think of this my admiration for my father grows.
Me and my sister became STEMpunks. My sister dropped it to be a full-time mom after a year of not liking the idea of daycare; but by then she had married well.
Once every other day I wish I had become a musician like my dad. But I don't think I could pull it off. Besides, they didn't save much so I (very gladly) chip in with about half of what they need to survive -- it's not as easy anymore.
I mean.....at least here in UK, your parents would just simply.....remortgage? How are they "stuck" exactly? Even if there is a penalty to pay for remortgaging, surely it must be worth paying if you can bring down your mortgage from 10% interest to literally 1-2% like many available right now?
We have low mortgage rates right now because the European Bank has set low interest rates for loans; consequentially, we now have very low (nearly non-existent) interest on savings, and because of 'cheap' mortgages, more people want to buy houses which drives up the price.
So while mortgages have low interest, houses are expensive. To the point where you need a double income for a reasonable house.
My parents started off with a (iirc) 12.5% interest rate, but over the years were able to remortgage the house and eventually to a payment-free one (so they will never pay off the remaining balance on their mortgage, meaning they don't own the house (fiscally) and pay taxes on the monetary value it represents).
To the point where you need a double income for a reasonable house.
Even for a double income, it's insane. In NL, the average price of a home is 315k, while the median full-time income is 36k per year (pre-tax). Even with a double income, that's 4.5 years of household income, comparable to the peak ratio in the US before the housing bubble burst in 2008.
7 billion people in the world. We can't all live in the few best cities. Why should it be so cheap to live there, if everywhere else is unacceptable to you?
If that’s all it takes to lay claim to a city, then people will just move and have kids in desirable places. The problem of the math not working out still doesn’t go away.
Just being curious - if your parents are stuck with 10% interest rates while current interest rates are closer to 3%, why are they not borrowing a 3% to reimburse their 10% loan?
It's going to depend a lot on personal situation, but they might not be able to obtain a new loan due to credit assessment, and therefore be stuck with the old one.
Perversely, at least in the UK, a lot of people are paying higher rent than they would be for a mortgage for a similar place, but they can't get a mortgage due to "affordability", despite a demonstrated history of paying the rent.
Similarly, people can be on a 10% mortgage, paying it consistently, but unable to open a new, cheaper mortgage to replace it because their current circumstances don't pass the criteria. Criteria may include age (time to retirement) and current income.
It’s also important to compare the purchasing power of those two groups.
Sure, interest rates may be lower, but the purchasing power (a.k.a how much does a dollar/euro get me?) has also declined dramatically over the last several years. If your parents are retired and on a fixed income, tax increases and insurance premium hikes are a major factor to consider as well.
At least in Germany, it's common to have a fixed interest rate for up to 30 years (more common are 10 and 20, 30 is rare). You can refinance, but you have to basically pay a fee that covers the expected loss for the bank, so that may not be worth it. Other countries differ, for example AFAIR it was common in Poland to have housing credits pegged to the swiss franc.
However, I'm fairly certain that the GP is exaggerating. Even 15 years ago, no bank asked for 10%. 5% would have been a lot, something around 3.5 - 4% common. My parents paid between 7 and 10% when they built their house, but that's like at least 40 years now. Today, something around 2% is the going rate.
At least in the booming markets, however, the rise in prices has completely eaten the gain in interest. I could for the same monthly installmend pretty much finance the same size as I could 10 years ago, the interest rate would be lower, but the principal substantially higher.
That's interesting. In the US, it's called a "pre-payment penalty," where you have to pay a fee if you want to pay off a loan early. It's not imposed by regulation, but is up to each lender, so you can choose a loan that does not have such a penalty.
Often consumers with weak credit or low incomes end up with loans that have worse terms, such as these penalties.
My family refinanced our home loan, and it was just a matter of going to the bank and signing the paperwork that they filled out for us. It took less than an hour, and the ROI was not hard to compute.
It’s the same in Germany, it’s laid out in the mortgage terms. As a rule of thumb, you can pay up to 5% of the principal in a single lump sum every year on top of your usual payments directly reduces the principal at no extra fee. You can negotiate higher yearly extra payments, but that usually comes at the cost of higher interest.
Sometimes you’re able to refinance at no prepayment fee, but that comes down to how hard the bank wants to keep you as a customer etc.
Perhaps I don’t understand why there should be a penalty to pay off a loan too early? I’ve given the bank back their money; isn’t that exactly why I was paying interest in the first place?
Think of it like returning an item to a store and paying a restocking fee. Stores would prefer all sales be final, but where they allow returns, they prefer to charge for the service when they can. You bought a mortgage from the bank, now you want to return it. They want to charge you for that.
See, the bank is not like your friend that lends you money. When your friend lends you money they are happy to receive payment early because they didn't actually want to lend it at all, it was a favor to you. They probably didn't charge interest, but if they did they did so because they "had to" (meaning they can't afford to lend you money as a flat out favor so they'll take the market rate, like when my friend the mechanic fixes my car but asks me to pay him because he's gotta live).
When the bank lends money they _want_ to lend it, it's the whole point of their business. That's why they exist, to charge interest. When you pay back early you're reneging on the deal, so to speak, and defeating the purpose of the business. They don't want the money back until the agreed upon time, it throws a wrench in their plans, budgets, forecasts, etc. The fee covers the cost of this inconvenience and discourages you from doing so.
Because paying off a loan early means that loan has had less time to generate interest, which means the bank gets less money.
On an extreme example, imagine taking out a loan, then you pay it all back the next day. The loan has earned no interest, but the bank had to spend a bunch of time and money to get the loan set up.
Of course, early payment penalties are still pretty scummy. However, it does make sense why a bank would have one.
I don't know if they're scummy. When I buy a typical corporate bond I expect that the company will pay until maturity. If I buy a callable bond wouldn't I expect to be compensated for the one sided exposure to interest rate risk I'm exposing myself to (rates go up I lose, rates go down I lose)?
With consumer debt we have different expectations of what's fair, but consider the bank's risk profile here - if interest rates go up those outstanding mortgages are taking them for a ride, and if they go down the customers refi... seems natural they'd want to minimize prepayments.
In my view, the chance that a loan will be paid off early can be worked into the risk calculation that the bank uses for coming up with the interest rates and fees that they are willing to offer, and also for computing the cash value of the mortgage on the secondary market. At the end of the day, the bank just wants to know that they can sell the loan for more than it cost to originate it.
An issue with consumer debt is that a proliferation of fees and "fine print" make it confusing for folks to understand what they're signing up for, and to do comparison shopping on loans.
Traditionally, folks were advised to be wary of prepayment penalties because of a widespread strategy to prepay a loan if possible. When interest rates were high, this was like an investment with a guaranteed percentage return.
For instance, my family took out a loan with a particular payment, but we paid more than the minimum each month because we could afford it. On the other hand, being able to drop back to a lower payment was a kind of safety net in case something happened to one of our jobs, or something like that.
They write the terms to benefit themselves; in this case, to guarantee a minimum payout from the effort/risk. Not justifying it but a bank does as a bank does.
Not sure about the rest of the EU, but in the UK it's unusual to have very long-term mortgages that seems to be described here. The norm is 2->3 year variable rate (tracking an underlying rate + a %) or a 2->5 year fixed, maybe a 10 year fixed. After that they tend to 'default' to a worse rate for the remainder, but with no penalties generally for switching.
Remortgaging is a normal part of life, but you can imagine that there might be penalty clauses if you've signed up for a 10 year fixed and in year 2/3 you want to remortgage at different terms.
The relevant metric is monthly mortgage payment, not interest rate. When interest rates go down principle payments can be expected to go up as people can afford to bid more for the house.
Really? Lives were lost, but WWII came and went rather quickly, a handful of years. Millenials are dealing with multi-decade problems, potential solutions to which are discussed in terms of generations, decades rather than years.
For perspective: US WWII deaths: 407k over ~6 years. US COVID Deaths: 196k and counting over ONE year. So, even adjusted for population growth, the US is losing people to covid faster than it did during WWII. (The math is radically different for other countries, but in the US it is an interesting comparison.)
For perspective, the Soviet Union lost something in the region of TWENTY MILLION people. Exact numbers are disputed in the range of millions; the Soviet state lacked the capacity to track accurately, having convulsively emerged from feudalism only twenty years previously. It also, frankly, displayed a spectacular disregard for human life even of its own troops and civilians.
> The US is losing people to covid faster than it did during WWII.
This is a huge tragedy; the US responded to the war by trying to win it, deploying huge scientific and technical resources to that purpose. The US (and the UK) has responded to COVID largely by wishing it would go away, leaving the public to their own devices, locking down too late and too incoherently, and waiting for the private sector to develop a cure.
? 80+ million people died...
That is not something that is just shrugged off. Entire ethnic groups were culled. To suggest that WW2 had no long term affects and indeed affects that did not last generations is to demonstrate a fragile grasp of history.
The optomisit in me hopes that when the truth about climate change really dawns then the effort to battle it could cause a similar transfer of wealth to a post war rebuilding. Lets hope we can actually solve the problem though or it wont matter much.
In an era of rampant misinformation feeding reality-denial, I think our collective willingness to respond to global catastrophe is worse off today than a hundred years ago. The US response to the coronavirus epidemic is a great example of this.
You hear it time and time again: people who have personally felt the loss of loved ones to pandemic or wildfire or flood still deny the cause. I fully expect 50% of the (surviving) public to point out that "some scientists disagree" on the cause of global climate change while we slowly perish in a Water World dystopia.
A lot of post-WW2 wealth transfer was from old failing empires to US of A. While climate change wealth transfer would accelerate transfer from US of A to ex-2nd and, especially, 3rd world. Either way, US and rich West people are looking to grim future compared to their parents. The rest of the world... We'll be fine one way or another.
There's always this kind of narrative floating around that's simply not true. Sure things are getting bad right now but times have been good for a decade. Also people always say this kind of thing and extrapolate current trends into the future. After the 2008 crisis which many thought would take a long time to recover from we've had unbelievable growth for a decade.
The recovery from 2008 was very uneven, because I'm in tech I did quite well but many of the people I knew from my community that were not in tech did badly. I think this unevenness in recovery is why that narrative persists so strongly.
I think this is only really true if Millennials continue to attempt to live like their parents.
First thing people need to do is stop fetishizing home ownership. It's not a magical object, instead of buying a home put your money in an index fund, you'll be better off financially anyway in 20 years. Owning a home is just a status symbol people are obsessed with for your quality of life it doesn't matter if you own or rent. Even better would be to share a space with peers. Not only does it make housing cheaper, it makes everything cheaper. Nobody in their 20s or 30s needs to be isolated in some giant house.
Education is predominantly getting much more expensive at elite institutions, but good public universities in-state are still affordable, or go and move abroad and get a degree in Europe if you're American. If you don't like to go to university, pick up a vocation, a lot of them pay well. In general be ready to move to improve your circumstances. Physical mobility in the US has fallen to extreme lows, it's one of the easiest way to improve your situation.
Being a millenial myself I'm actually not pessimistic about the generation at all, or at least not fatalistic. This isn't an economy any more where you get a job at 23 and then you're set for life and then live in a suburb with your labradoodle. To me that's a positive.
18-29 year olds are sort of between generations but largely fall into Gen Z; certainly they're the youngest end of Millenial, and can not really be said to have endured the 2008-2011 recession as they were not working at that time.
> certainly they're the youngest end of Millenial, and can not really be said to have endured the 2008-2011 recession as they were not working at that time.
My 2 & 4 year old aren't working right now, and they've certainly endured the coronavirus pandemic. I don't know why not yet being in the labor force would prevent one from being accurately described as having endured an economic downturn any more than any other adverse conditions. It's hardly as if not being the breadwinner of the household insulates you from the effects if their income is reduced or eliminated.
As a 29 year old, I reject this sentiment. I may not have been working but my decisions regarding college and overall early adult life were heavily affected by the 2008-2011 recession because of how it affected my family.
We endured it, just in a different way than those who were working.
> Millennials face a very real risk of being a lost generation financially
I think it's already a done deal. Millennials aren't as young as they seem (over 30) and as the own a minuscule percentage of US household wealth. The numbers are incredible.
"Indeed, at a median age of 35, Gen Xers owned just 9% of the nation’s wealth in 2008 — less than half what boomers had at that age. And millennials will have to triple their net worth in the next four years to catch up to Generation X at 35, and increase their wealth sevenfold to catch up to boomers at that age."
https://www.marketwatch.com/story/this-depressing-chart-show...
The funny thing is that across that millennials seem to love politicians that HATE them.
Obama's big thing was Obamacare which was basically a tax on the young (force them to buy insurance to subsidize capped insurance rates on older people). Bernie's big thing is expanding Medicare and Social Security.
Obamacare banned declining coverage for pre-existing conditions and allowed < 26-ers to stay on their parents' health plans. It also created exchanges with subsidies for those who don't have employer health plans - of whom a large proportion are under-employed youngsters.
Since they don't see things getting better for them as they get older, maybe it's not so irrational to support expansion of Medicare and Social Security.
It's not as illogical or against their self-interest as you think.
Except that you skip over the most important provisions.
Do you think that insurance for a 60 year old is 3x as expensive as a 30 year old for health care? The government MANDATES that to be the case. Who do you think pays for that?
Obamacare mandates that a 64 year old get charged no more that 3x a 27 year old.
Employers. Or the government - via subsidies. And the insureds themselves.
Have you considered that many millennials are OK with paying more if it means everyone is taken care of? People don't always vote for policies that benefit solely themselves.
> Have you considered that many millennials are OK with paying more if it means everyone is taken care of? People don't always vote for policies that benefit solely themselves.
So that's why they vote for policies that exclusively benefit Boomers. Gotcha!
Have you considered that maybe Millenials just don't understand how money and taxes work?
I was talking to my friend the other day that lives in California and didn't know what Prop 13 was. He was a state champion debater in California but didn't know how property taxes worked in the state. I was shocked. If that's the slightest indication - most millennials have absolutely no idea how money and taxes work.
I've talked to friends about zoning, depreciation laws, capital gains taxes, backdoor Roth laws ect. They don't even have a clue.
> So that's why they vote for policies that exclusively benefit Boomers
And I would disagree with the "exclusively" part of that sentence. I've already shown you how millennials benefit from Obamacare. Your note about young people subsidizing over-60s is a red herring. Over-65s are already on Medicare and it's pretty good. Why wouldn't millennials want that for themselves?
Most people don't understand taxes and money - this isn't specific to any particular age group. And frankly, as I've opined elsewhere on this site, retirement savings laws particularly are overly complicated for nearly everyone.
> I've already shown you how millennials benefit from Obamacare.
Actually you didn't. Pointing out a single feature that benefits them while ignoring all the others is not a cost benefit analysis.
> Your note about young people subsidizing over-60s is a red herring.
And this a straw man. Actually, no - its wrong.
I worked on Obamacare for 2 years. I think it's a decent law a vacuum. I can't possible pretend its good for young people. It's good for my 60 year old aunt who has diabetes who thinks she pays too much for insurance but actually is getting the deal of a century considering how much health care costs.
Obamacare did little to slow health care spending (another long story) but it did work to spread the costs around - mostly to young people.
My point wasn't to pooh-pooh on the Democrats (Republicans are worse obviously with their awful tax policies). My point was that they should care about millennial issues. Whether you like or not WE are the ones paying for increased social security, medicare, NOT the boomers. They are getting way more out of the system than they ever put in.
The Boomers basically took all the wealth in this country and regulated everyone out of it. There are so many issues that are good for the country and good for millenials that never seem to gain traction. Student loans reform for instance or Housing (especially zoning and property tax laws e.g. Prop 13).
Can we please stop with the term "Millennials"? The article talks about 18-29 year olds. The most widely accepted definition of Millennials is people born 1981 to 1996, which would be 24-39 year olds. Not the same.
Regardless, the financial differences between people the exact same age are always vastly larger than the financial difference between so-called "generations".
Hmm the article is not about Millennials but perhaps the comment was. I don't think GenZ has "experienced" two years long recessions like Millennials have.
Hell, depends on what you mean by "experienced" as well. I'm a mid-range Millennial, and was in college during the Great Recession - not even aware of it until after it was over. This year is the first recession I'm actually experiencing.
It's funny, when we talk abstractly, we can look at the statistics and see that wealth in concentrated in the hands of a small % of people.
But then when we break it down by age, or by gender, then suddenly, magically, this wealth becomes distributed to the entire age group, or the entire gender, so that "Boomers" are all well-off, or men are all well-off, when the reality is that it's not even remotely true, and a lot of people of all different groups are struggling.
I hope we see a cultural shift toward recognizing that so-called "flyover country" is actually ripe for re-development and cultural renewal. There are tens of thousands of small towns and cities in the Midwest in which buying a house is still possible for the average middle-class person.
The main issue, of course, is the lack of jobs in the area, but with remote work growing, that might become less of an issue.
Also, many rural areas have cooperatives for their internet and have gigabit fiber, now. I live 40-50 minutes from the closest 'town' and 3-4 hours from the closest urban center, and I will have fiber by the end of this month. Remote work is absolutely an option.
That being said, no one should consider flyover country to move to. Please stay away from my flyover country, it's bad enough with east and west coast investment firms buying all the property and driving regular folks out of the market entirely. When my partner and I bought the property our home is on, in 2009, we paid ~$3,000/acre. This was a high price.
The place next to ours sold last week for ~$13,000/acre to an investment firm from New Jersey.
I feel a shift coming, and I feel like the smart money is way out in front of it - buying up land that would be ripe for development once people figure out how much cheaper it is in the country.
And it's killing the people who live out here, right now. I can't imagine what it will look like if people start moving out here.
> And it's killing the people who live out here, right now. I can't imagine what it will look like if people start moving out here.
To be blunt, this is what already happened to all of the "desirable" cities on the West Coast and, as those of us who've lived here since basically the beginning said: buck you, you can't stop it. Start preparing now for what a wave of migration looks like and take steps to make room for the new arrivals before they[0] show up and outbid everyone who's already there.
Yes, this is going to look like "density" or "growth" or "change." Genuinely sorry, but the world is not a static place and since freedom of movement inside the United States is still a thing, all pretending that it won't happen or trying to make policies to limit it will do is turn whatever other area into one of haves and have-nots.
0 - I wrote "they" because I'm not leaving. I must be one of the tiny minority of people who likes where I live and have no plans to depart. If everyone else wants to pack up from the West Coast city where I live and move to Omaha, good on 'em.
One downside is that all of those areas, which have been unattractive for new employers for whatever reason, will no longer need to become attractive to new employers in a heavily WFH economy.
Multi generation homes used to be norm but societies became wealthy enough to move away from that ( and various frictions it creates) looks like we’re literally moving back. Good for the environment, bad for the economy and mental well being.
Is it really bad for mental well being? I know a lot of people nowadays (including me) have the desire to live separately from parents. But mental health has been going down, with increasing rates of reported loneliness and isolation.
Society has made us individualistic / "independent". But has it really made our mental health better?
Edit: and as others have pointed out, more people living separately is not ecologically efficient / sustainable.
Need to redefine courtship culturally in the western world and we can make it work, that's the biggest friction with having young adults back home. It used to be, and in many cultures it is still true, that the parents were heavily involved in that process, but the western world moved away from that dynamic.
But in America, at least, a lot of people’s parents are fully gone down the road of selfishness and cruelty.
It would be nice if we had a culture that encouraged multigenerational support, but you can’t pull that out of thin air. It’s something that would’ve needed to be in place prior to the pandemic. I think millennials may come out changed from this, as, at least in my experience, we’re already more supportive of each other and collectively-oriented then our parents generation, but that would be a change felt far off in the future.
The suburbs are similar. Dealing with bad relationships by spreading farther apart is economically and ecologically terrible. We need to fix the people.
"Societies became wealthy enough..." I'd argue that value systems shifted. Consumerism and careerism took over family and home.
"bad for the economy and mental well being"... quite the leap. It's good the family economy of those involved, and for many parents and children it can be a great thing for mental health as well.
My family spends about three months a year working remotely from my inlaws' place in Malaysia. Frankly it's the best time of the year for my mental well being. Things run so much more smoothly with more adults in the house.
And maybe it makes sense to start framing the US in those terms too. We had the whole manifest destiny thing, and now it's time to move back to traditional life.
I am one of those people, though in my case it was not so much for cost saving reasons as it was the easiest means of leaving a coastal city that would clearly be hard hit by Coronavirus.
oddly enough I'm morbidly curious about the decline in birth and marriage rates due to this whole episode. hard to hook up in your parent's home.
Economic crises almost always cause huge drops in fertility rates, look at the US rate post GFC.
Fertility being correlated with income levels, the people spending time at home together are already not going to have kids, the others are unemployed/under massive financial stress/still going to work.
> People are spending more time at home together, could there be a birth boom in Q1/Q2 of next year?
Birth control is cheap and well understood these days, I doubt many people are actively trying to have kids during a pandemic (financial + health risks). If anything I'd expect more breakups than births
Anecdotally where I live several OB/GYNs (my wife is a resident) have told me they will be delivering a ton of babies over this upcoming winter, and that they are busier than ever - with obstetric cases.
Also anecdotally, we're expecting our first - we were waiting for the right time, had it all planned out.. then COVID pulled the rug out from under everything so we said screw it and just went for it. I suspect we're not alone in this...
Birth rates generally decline in times of uncertainty; most people are aware of and practice family planning. For many, having a child right now would be fiscally irresponsible.
not just fiscally - if you have a choice, why would you choose to go to the hospital for a traumatic process, tying up valuable doctors but also potentially exposing yourself to covid...
There are 5 18-29-year-olds in this house (plus myself). Here's what we learned.
Very, very few companies will consider an applicant without a job history. Felons tend to have easier time finding employment than HS Graduates.
Which companies hire w/o job history? Applicants don't know. It's not like companies advertise their hiring bias. Sometimes word of mouth may lead you to a reasonable employer - in which case the applicant can expect to compete against countless other applicants, for the one available position.
This is reality. Part of it anyway. The rest isn't any better.
This is an excellent point.
I know someone who is having a really hard time finding jobs because they just got out of school, but there are hardly any entry-level positions and the ones present are highly contested. They must have applied to >200 places at this point. This is in a non-software, but STEM field.
I have one son who took 4 years to score a job. In between applying to every local job listing, he also walked door-to-door trying to find an unadvertised position (which didn't work out).
He had state food prep certifications. The ALF who eventually hired him got a worker who's on time every day, easy to get on with & does his job with consistency and competence.
My wife and I are living with her parents... because my mother-in-law has moved in with us so that she can moderate our kids remote learning sessions while my wife and I both work.
It's not _great_, but it's not bad. Either way, I think we should get used to it.
The Economist [0] had a great special report recently that highlighted something I think we all know but don't think about; old people need care and we don't know how we're going to pay for it.
The idea of elders going off to homes is relatively recent. Multi-generational homes are not just, as the OP points out, geographical unique, they are also historically unique. I suspect the next few decades will have more multi-generational homes.
What this means for gender roles (the burden of all sorts of care tends to be disproportionately carried by women), work-life balance, rural vs urban preferences, remains to be seen. Either way, having family nearby will become increasingly relevant, which is a big deal for the U.S., where people tend to move around more freely.
Cannot agree more. There's nothing wrong to live with your kids. I have a child now and would love to live with my parents (a little bit so they can take care of it) provided we all had big enough house.
In many countries it's not only acceptable, but customary to live with your parents if you are single - even well into your 30s. In parts of Latin America (most/all of it?), people will find it odd if you leave home "for no good reason".
I don’t think living together is going to really make the impact eventful... it’s like saying, not buying that coffee in the morning is going to help you save money (with the pretense that not buying that coffee means you’ll be able to eventually afford a $2mil home on a $40k/year income).
Living with parents until late 20's is just harmful if you don't have a job, don't do anything and just live supported by parents, because you're lazy or some similar reason.
There's those cases. But if you have the means to go living alone you tend to develop faster since you have to handle everything, manage your responsibilities etc.
In my case, I left my parents home when I was 30. Bit late by some people's standards, ok by others.
I did just right because I was already very mature by that point. It can be hard for your parents at first, but it's for the best in the long run. I guess leaving by 30 could be a sweet spot depending on your family situation.
These sorts of threads seem to spiral down the drain rather quickly. There is a rather large disconnect between the opinions of most 20-40, 40-60, and 60+ year olds. I hope we find a way to bridge those gaps, understand where the real problems are, and find solutions.
For what it's worth, I'm 45 and I feel like the last 25+ years were filled with a lot more wealth and choices than when I grew up. I feel like expectations are higher than ever, and the number of things one needs to buy in order to have a complete life is higher than ever. There are many expectations, like owning a detached, single-family home, which do not seem practical in many highly populated regions. I feel bad for the younger folk, because they have inherited dreams which may never become true. That said, as the child of two parents who both worked hard at full-time, well-paying jobs just to provide a modest lifestyle for my family(home, but no cars, no college, etc), I feel like some in the younger generation are judging by an inaccurate yardstick.
The HN community, which is far, far removed from average America, is likely to feel even more bitter. They've often been sold on the idea that they are highly paid professionals, and they are, but their location(Bay Area, NYC, DC, Seattle, etc) prevents them from having the life they think that should buy them. Unfortunately with the way wealth is distributed geographically in the US, it is unlikely they will ever really feel that wealth until they relocate.
My wife has a staff of 20 and most of them are young-ish. Like a few years out of college, first real professional job. About half of them have packed up their apartments and gone home to their parents. They're still paying their rent but they're living with their parents so they can have a little social interaction and have more room than their apartments. Its caused a little concern with the higher ups because they didn't realize people were leaving the local area. Lots of internal arguments over it.
Time zone differences. Remote people are less likely to want to come back to the office after or might be slow to do such (“cant yet. Have to find a place to live. Will take months.”) Taxation purposes. Plenty of reasons afaict.
> Remote people are less likely to want to come back to the office after or might be slow to do such
I'm in the same area code as my employer and I am far less likely to want to come back to the office after. My "office" is a 15-person open space pod with no barriers, no door, and a handful of breakout rooms per floor for one-on-one meetings that are always occupied by someone camped out in there for the entire day (the lunch wrappers and multiple soda cans are a dead giveaway).
Meanwhile, at home, my family might be in a smallish apartment but I have a bedroom I can use as a home office, my own food with all of the zero-sugar soda I can buy, a restroom where no one is ever sitting in a stall gabbing away on the phone, and I'm not sitting four feet from my boss' shoulder while we're both doing technical calls.
I did it. Spend the last decade trying to get into graduate school/graduate school. Finished up my phd this year as covid hit while I'm job hunting in industry. I couldn't justify spending my savings on rent.
So far, it's been mutually beneficial, I keep my savings to a minimum while I job hunt and I help around wherever I can.
It's also been great reconnecting with my parents as more mature person.
It's worth noting that a huge number of universities and colleges have shut their doors and doing online learning, which accounts for probably a large number of the 18-22 year olds and many of the 23-25 years olds.
Unemployment is a thing, but there are also many people who have gone home because they can't be social with friends during lockdown and for some, being social with parents is better than being alone.
And then there are people with kids who can't cope with the kids being around at home (instead of school) while trying to do work at the same time, so they use their parents' free babysitting services.
In short, there are many people who are choosing to be home for very valid reasons rather than NEET and economically forced to be home.
There really isn't enough data in this article to make much sense of how to interpret this. Numbers split out by reasons would be nice.
It has been a mostly steady trend since 1960 at 29% to now where it is at 52%. All of your examples of young adults choosing to live with their parents are because of COVID-19, which can only account for the 5% increase since February 2020, not the other 18% increase since the 1960s.
My 21 and 23 year old daughters have moved back in with us. They stay up until the wee hours of the morning watching streaming media, then wake up mid afternoon to get on social media, eat dinner with us and then repeat. I can't wait till they leave. At least when they are living on their own I don't have to know about their bad habits.
As someone who's faced end of life fears, this kind of perspective is very different from the one you might get when you're realizing your time on this Earth is suddenly limited. I'm not saying you're not frustrated, but there's more to consider. I love having my kid around, even though we are sometimes annoyed with each other.
>>They stay up until the wee hours of the morning watching streaming media
That is how young people keep contact with their collective culture. Do you expect them to sit in the corner reading newspapers?
>> then wake up mid afternoon
Efficient time-sharing of common areas. I have to haul myself into work before 6am, but when I get a day off I sleep as long as possible. That is healthy.
>> to get on social media,
Social media is can be a career. Parents once laughed at kids who wanted to be on TV. That isn't a joke anymore. Now the want to be hot on social media. That is as valid a career choice as wanting to be an actor or pro athlete.
>>> eat dinner with us and then repeat.
They eat dinner with their parents? That is a problem? I know plenty of parents, mine included, who would love to have their kids eat at the same table.
Well, they definitely didn't learn it from me or my wife. We both work all the time and barely take time to stop and rest. When they were growing up we would have them work with us on house projects, in the garden, at the food bank, etc. Apparently our work ethic didn't get picked up.
Early tech? They were born in the 90s. The only early tech they were exposed to was the VCR. Neither got their own phone until they were in their 20s (we told them they could have a phone when they could buy it themselves - it took until they were in their 20s for them to be able to buy their own).
I have seen family's give all the right guidance and opportunities and children still end up a mess. I have seen horrible families do everything wrong and seen children become quite successful.
Environment plays a part but self determination plays an even larger one. One of my current favorite sayings is "you come into this world looking like your daddy, you leave this world looking like your decisions."
That’s a funny saying, considering who your daddy (and mommy) is most predictive of your future. Obviously perseverance and effort are important, but so is being born to the right parents.
Not to dig too deeply into a single example, but... what should they be doing? Are they employed or in school? If not, what is your expectation of what they should be doing?
I agree that if they're living with you, they should probably be doing chores, cooking, and getting some exercise in. But if they're financially constrained and have nothing to do, futzing about on the Internet and social media isn't a particularly bad use of time (even if it's also not a particularly good one).
Basically what you said, helping out around the house, cooking, helping younger siblings with their school work, etc. Everywhere I go there are help wanted signs, but neither displays any interest in seeking employment (even though they both could really use the money). Both are on a hiatus from school right now.
What are the prospects behind these "help wanted" signs? Jobs for minimum wage, not covering gas for the car or masks, that will put you in the frontline facing other people?
I'm not in favor of my children sitting idle, but if the alternative is for them to go work outside only to bring back £1000 and COVID, well, that's a pure loss, I'd rather they stay home a couple months doing the chores. University should resume soon enough.
It's crazy when I think about it. Masks can be £1-2 a piece nowadays (the good ones). If my daughter is going to work and has to change masks 3+ times a day, it's 1 hour of bullshit job a day just to pay for the masks. It's insane. :O
To all those who are jumping on @irrational, chill.
I guess, all @irrational was trying to do is vent his/her frustrations in a semi-anonymous forum. I sort of understand how he feels (having a younger kid of my own).
And @irrational, maybe they behave in the way they do to mask their frustrations. They probably don't like coming back and living with you because of all social stigma surrounding it.
I don't know about your life, so I maybe entirely wrong, but them watching streaming media and browsing social media may not be productive but is also probably not the worst thing to do. That maybe the only way for them to connect with their peers, any other topics to talk about are just chaos, to be honest. 21 and 23 maybe adults, but they shouldn't be blamed just for being a bit lost in the current state of affairs, at least, IMHO.
You are taking a lot of heat for this comment. I hope things get better for everyone. In the mean time, can't nothing be done to help them get back on track ? 21/23 is still young and such habits can have a hefty price later on.
My kids are 14 and 8. The rule is simple no phone/devices in your room after 10pm - yes the 14 year old whined and protested when we implemented this rule last year. Now it's just the norm (kids adapt) and she puts her phone on the charger in our bedroom every night.
I don't expect this rule to change regardless of their age. In our house being 18 doesn't mean anything - our house, our rules.
Of course, and you've completely failed as a parent if you've cultivated such a dysfunctional relationship with your children that instead of being able to confidently have an adult conversation with them about this you're biting your tongue and waiting for them to go away.
At 21 and 23 the ship has largely sailed, enjoy sleeping in that bed.
They are adults. They can make their own decisions. I'm not going to tell them what to do. I tried to teach them the right things to do when they were growing up. You can lead a horse to water, but you can't make it drink. They have their agency and have chosen the path they want to take.
I'm guessing that they can sense the way you feel about them. It probably makes interacting with other people through social media more pleasant than interacting with you.
I'm sure you didn't mean it to, but commenting that way crosses into personal attack. Please don't do that.
Family connections are the most emotional things in our lives. It's one thing to comment on one's own experience, but quite another to step into judging someone else's. It's usually best to stick to the former, since that's almost all we're really talking about anyway.
I realize that the GP comment was provocative but we need to find other ways to react to provocation than butting heads—otherwise we just spiral into conflict.
As a 23 y/o, the future seems bleak to me. Our government and leadership has failed us, nobody is doing anything about climate change, and there is record unemployment.
On a personal level, especially with covid but also just life in general around now, all of my friends moved elsewhere and while we can keep in touch with social media it's still not as good as it was.
There just doesn't seem to be anything worth building towards, or anything much more meaningful than trying to keep close to what few friends you can.
I don't know your situation or your daughters but I can see myself in them somewhat.
Life has it's ups and downs. Things seemed bleak at times during past recessions, the 70s energy crisis, the cold war, etc. But life also has it's ups and they will come sooner or later.
> Life has it's ups and downs. Things seemed bleak at times during past recessions, the 70s energy crisis, the cold war, etc. But life also has it's ups and they will come sooner or later.
You sound deeply out of touch with the younger generation. The younger generation understands the fundamental flaws in our society more than probably any in the past. And, to them, it sounds pretty hopeless. Many educated people I've met speak more and more about not wanting children because they don't want to bring them into a cruel world that was ruined by their ancestors.
Just sayin' - there are many reasons to be displeased. Things back then were temporary - things now are permanent.
Speaking from the younger generations perspective, this is a great way to destroy the relationship with your adult children.
I'm sure it doesn't feel great for them to be dependent on you and face your scorn on a daily basis. I just hope the situation will never be reversed, for your sake.
From my experience, feeling constantly judged by my parents is damaging (speaking for myself and my siblings) and leads to avoidant behaviors. This holds true whether I am working or not, whether I live with them or am on my own.
Maybe you can have a conversation with them to reset expectations? Part of this process should communicate to them what your expectations are and then, if they meet those expectations you should try not to judge their lifestyles.
Would you care if they slept until noon if they were otherwise productive?
The fact that there are nebulous unspoken "rules" is a likely source of tension.
Apologies for the judgment in my last comment, clearly I do not know your family and am just projecting my own familial dysfunction. To put it bluntly, your comment hit a nerve but my response was uncalled for.
If their actions were productive and healthy I would agree with you. Yet their behavior sounds unproductive and unlikely to lead to a quality life. As such scorn is warranted.
Younger generations 40 and below have a tendency to believe that regardless of what they are doing no one can have a negative opinion on what they do, otherwise the other party is to be blamed and shamed. There is little to no self accountability.
What's needed here is sympathy. They could as well be depressed, addicted or have any other problem they're trying to run away from. Or just a broken sleep cycle. Bottom line is, if you're bitter about it, you're unlikely to change anything and only get to accumulate resentment.
Agree hard with this. For one, we all know how addictive screens are. Many people commenting here are part of the firms that design/support these addiction machines.
What I would want older generations to understand is that modern lifestyle is more and more of an attention trap that expresses itself both mentally and physically.
I live with my wife's parents. Well, really, they live with us. And I think it is glorious. Always someone around to chat with, play a game with. We get last minute childcare help and sit cooking, cleaning and upkeep. For them, well they get super cheap rent in the place they want to live and tons of grandkid time.
Multi generational housing is the the norm in so many societies. For the US to constantly bemoan it speaks mostly to our fucked up family culture and little else. I couldn't be happier living with extended family and hope to do so for a long time.
Funnily enough, there was a thread on hacker news where this guy was saying that his friend who lived with his parents was a coward and therefore everyone that lives with their parents are cowards.
Important thing to consider: a majority of 18-29 year-olds also probably normally live in dense cities, and dense cities have lost nearly all of their appeal during the pandemic. So it might not be a financial thing necessarily, but instead people just wanting to go back to having a room in the suburbs to escape their shitty box in the city.
Historically, and in other parts of the world, families would live together for longer periods of time like this.
I'm not sure why much of Western culture got away from this behavior, but it's interesting that a lot of the driving factors are economic rather than (only) issues of family connection.
I think HN is insulated from the stresses of growing up in the US today. I'm on the younger side and many of my friends felt tremendous relief when they moved away from their parents.
So I'm sure it's good for some, but don't discount the people who are feeling trapped right now.
I hope to build a household that the kids will consider staying without won't havinc to wait until a disaster strikes and 20 governors panic to find a way to avoid accountability by being "firm and comprehensive" rather than finding a balance.
I'm a huge fan of the multigenerational house, having grown up in one myself and now being the middle generation in a 3 generation house, it's really amazing there's always help and conversation to be found.
I've lived my 20s far away from home, and having moved back in in my 30s now, even if it took some time amd awkwardness, my parents understand I've grown and changed and they respect my need for space and intimacy.
Some of this is voluntary. I have no financial problems but my wife and kids and I moved in with my parents / her parents alternating every few months to avoid total isolation.
I'm 34 and bipolar. I'm stable on medication but my dad doesn't believe mental illness exists and attributes every symptom to a lack of moral character... or demon possession.
I don't see myself changing how I feel about him any time soon.
It can't help but be a little frustrating, however well-intentioned, when someone without the experience to accurately inform the comment says something like "but he's still your dad", "she's still your mom", et cetera. Bridges burn just as well from either end. And I think it's genuinely difficult for most good or even decent parents, in particular, to imagine how bad bad parents can be.
yeah, and these are still the scars from the cigarettes she put out on my thigh. Sometimes bridges are burnt, and sometimes they were never built in the first place.
"The blood of the covenant is thicker than the water of the womb"
I'm glad you have good experiences with your parents, but some people don't. I really clearly remember a guy I worked with at one point telling me about the murder trial his father was in, really brutal stuff. It's not like everyone is possible to live with, unfortunately some people are seriously fucked up in a way that doesn't improve with time.
I'm willing to give HorizonXP the benefit of the doubt. Devoid of context, my statement isn't all that different from what some young adults would say. Parents or/and their children can mature as they grow older and relationships can heal.
My father was physically abusive too. But I'm merely providing my own perspective on my own experience. Your perspective on your experience is your own. I would never try to compare or equate.
Already have it, but the US does not make this easy.
It took me weeks of leaving voicemails that were never returned and then two months to get an actual appointment. My primary care doctor was unable to find anyone suitable in the local hospital network. They wouldn't even return his calls.
If you're able to be persistent enough, try looking at Psychology Today. They let you search for therapists and psychiatrists in your area. (Ignore the articles, please ignore the articles.) If you don't have insurance or a lot of money, some providers may still be willing to work with you for a reduced fee.
This is wild conjecture, but could it be that part of the trend of young people living with their parents is that the older generation has monopolized housing. The baby boomers have clamped down in a historically unprecedented way on the construction of new housing with height limits, environmental and shade analysis, obstructionism in local government, extremely high subsidized housing requirements for new projects etc etc. This has massively pumped up the value of their houses, but now their children can't find somewhere to live by themselves.
I'm sorry but the title is misleading. It's not that 30M young people (18-29) are living with their parents due to Corona but more that the number has grown from 24M to 26,6M in America [!] since February. Meaning the title should rather be: "The pandemic has pushed 2,6M young Americans to move in with their parents."
see the linked source from the article: https://www.pewresearch.org/fact-tank/2020/09/04/a-majority-...
edit: i see the title has already been corrected, HN is great :)
Question: How many americans have reached 18 since february?
Census says 4,021,726 americans were born in 2002, so 7 months since february: (7/12*4,021,726=2,346,006) + immigration...
I'm not so sure this is how we should read those numbers. It could also mean that the majority of young people reaching 18 chose to stay with their parents a bit longer because of the pandemic.
If the age-in population has a 75% incidence and the age-out population has a 25% incidence it won’t cancel out. The age-in population will be adding a lot more than the age-out will be subtracting.
The numbers I used are roughly derived (I rounded to the nearest quarter for simplicity of example) from the top-level poster's Pew link [0]. Splitting the 18-29 year old cohort, 18-24 year olds increase from 63 to 71%, while 25-29 year olds increased from 26 to 28%.
Pretty much, there seems to be a natural gradient pre-existing, where the age-in group seems to have a much greater natural affinity to be living with their parents even prior to the pandemic. We can all probably generate reasonable hypotheses for that, but that's the root of the mathematical assumptions.
But if it wasn't canceled out by something then this number would be rising forever, and that something ought to be people between 18 and 30 moving out, and if you suppose that most people planning to move out have postponed their plans due to COVID, then the situation doesn't look that grim.
That’s a fair hypothesis, which would result in a different interpretation of what the overall trend means. I was narrowly speaking to the discussion on the cohort age boundary, which is a valid observation from my perspective.
Maybe, but it would change the story from “The pandemic has pushed 2,6M young Americans to move in with their parents” to “The pandemic has kept 2,6M young Americans to stay with their parents”.
I would think that the number of people turning 18 would be offset by the number of 29 year-olds living with their parents that turned 30 in the same time.
Also, given that colleges shut down and people had to leave dorm rooms, it very surprising that college-aged people needed a low-cost alternative housing situation? Especially one that could quickly be found?
Shutting down dorms seems like a stupid idea, as they are both less likely to become ill, and hopefully better educated/informed and thus less likely to spread the virus.
Ironically, it's already the 3rd title on Hacker News. Two previous titles all received complaints for being misleading. let's hope this one is good enough.
"Time to grow up, at least for now, while the company to which I pay my long term care premiums is solvent and likely to be able to provide care when I am frail, though it is looking like it might not always be the case, in which case I would prefer for you to live with me at that point."
Its pretty disgraceful that for 99.99% of millennials covid is just a mild disease. We're shutting down everything for the benefit of baby boomers again. When its all over there will be no thank-you. House prices aren't even getting cheaper so young people again be shafted. Its crazy.
To be fair there are quite a few millennials for whom loss of beloved parents and grandparents to an avoidable cause would be something of a downside too...
Your argument is that we should just let older people die? No offense but I disagree, I really don't want my parents to pass away from a pandemic we could have absolutely under control if people and our government just acted responsibly. Your comment is "pretty disgraceful"
Anecdotally, I find that the lockdown is much more strongly supported among millennials than among older people. They may claim they’re doing it for the benefit of boomers, but did the boomers actually ask for it?
A majority? That's astounding. Unless unemployed, why don't millennials do what we did in our twenties, find two or three roommates and split the rent?
Many of them already are, except in many cities, it's 5-6 housemates, including 1 actual roommate (as in sharing the same room). This is the case I would say for the majority of my mid-20s friends, except those in the software industry. In the software industry there's more people managing with just their partner or 1 housemate. Living alone is the least common. Is it that unreasonable that many would choose to go back to their parents when there's now no actual reason for them to be in that situation if they're working from home indefinitely?
> I'm a dad who is happy to have his daughter and fiancé living with me. They pay the utilities and make me nice meals, and it makes it a lot less lonely here. ... I like the multi-generational thing. I know it won't last forever, but it makes life better for now.
It's so easy to get into that cold statistical mindset about these large-scale trends, but it's good to remember that these statistics are the aggregation of a large number of very human stories.