After only a few months, Chris Swanson is sick of shopping for houses in what the 39-year-old calls a “dumpster fire” of a market for first-time buyers like himself.
Though he has a steady job and has paid off his student loans, it feels like he’s two decades too late: He missed out on rock-bottom interest rates, and homes are far more expensive. Landing on the one property that will fit his needs and his budget is daunting enough, but there’s also pressure to move fast. “I’m in that weird position,” said Swanson, a marketing professional from Mentor, Ohio.
Homeownership — the main driver of wealth for most Americans — is out of reach for large swaths of the population. But the pinch is most pronounced for millennials, who are buying homes at a slower pace than those before them. Baby boomers, in fact, represented the largest share of home buyers this year — a spot millennials had held since 2014 — according to research by the National Association of Realtors.
“Boomers are absolutely in the driver’s seat,” said Jessica Lautz, deputy chief economist at NAR, because they have built up home equity and can pay in cash. “Unfortunately, that has pushed many millennials to the sidelines.”
Those born between 1981 to 1996 have been called the “unluckiest generation.” Since entering the workforce, they’ve experienced the slowest economic growth of any age group. They’ve also been weighed down by student debt and child-care costs, Lautz said.
Rising interest rates and persistently high asking prices have further eroded their buying power. The median U.S. home sold for $416,100 in the second quarter of 2023, a 26 percent jump since early 2020, Federal Reserve data show. Median sales prices were significantly higher in the Northeast ($789,600) and the West ($547,900).
Meanwhile, the average 30-year, fixed-rate mortgage is now hovering near 7 percent, nearly three times the 2.6 percent recorded in early 2021.
As a result, first-time home buyers are older, with a median age of 36, Lautz said. That’s the oldest since NAR started keeping track in 1981, when it was 29. As the age climbed, she noted, the share of first-time home buyers sank to “historic lows.”
The high interest rates are “a real burden on young people who don’t have the high salaries of old folks like me,” said Joe Gyourko, 67, a professor of real estate at the University of Pennsylvania Wharton School. “You can’t get around it, and you’ve got to make a decision: Do I value the house enough?”
Like what is actually going to happen?
No one can afford rent. No one can afford houses.
How are landlords and home sellers making money if no one can afford anything?
I don’t understand it. Who are these people out there paying $2200 per month for a one bedroom, or half a mil for a 1500 sq ft house? How are there that many buyers of these services to where the prices aren’t dropping?
People need to live somewhere. Wtf is happening and what is going to happen?
Boomers are selling off all real estate to conglomerations. Either directly or through reverse mortgage.
Then the conglomerations either overcharge for rent OR they make you homeless, which makes you kitty corner from prison.
They also own stake in for profit prisons.
They are basically designing the next depression, which I am sure will work out for them this time.
My dad, a boomer, passed away a few weeks ago and I can understand why he got a reverse mortgage. He had cancer and knew he was going to die, and he did it to guarantee that my mom has a place to live for the rest of her life since she’ll be surviving on only social security and some pensions. But it sucks that that wealth will disappear at that point and us kids won’t inherit it. That’s ok, we don’t feel entitled to it, but that is definitely one way that houses are being snapped up by companies and not somehow transferring to individuals.
I feel so bad that your father passed away and had to get a reverse mortgage prior to that. Please accept my condolences.
You said “we don’t feel entitled to it,” concerning your parents home, but I think you and your siblings deserved that home.
As far as I’m concerned, the system stole it from you and I feel bad about that. I’m sorry.
Your family does understand that medical debt, especially the medical debt of a deceased person, is an unsecured debt that cannot be effectively collected on. Right?
The hospital might call and say “you owe us”, but the Estate Lawyer who cost 700 dollars earned his retainer by saying “Dont contact my client again” (a legally binding interaction) and then working out the logistics of putting the real assets in the heir’s name while dispelling the rest of the unsecured debt (credit cards. bar tabs. whatever qualifies as unsecured debt)…
I’m sorry you lost your dad, but his last offering was what sounded like a logical solution but actually just screwed over his family and siphoned money to bad people…
That’s rough. Is there any way to reverse the damage done?
Don’t think so, not if the reverse mortgage is a done deal and the medical debt is paid.
In general, hospital collectors will come at you sounding all intimidating, but will usually just waive off the debt or settle for a ridiculously low figure. Even if that doesn’t happen, mom could have filed for bankruptcy. If you already have the house, you dont need to worry about your credit for the next 7 years. right?
But once you sink all of your liquid and real assets into the unsecured debt, the liquid and real assets are gone.
But like - ok the conglomerations charge too much for rent and then no one can pay it. So then prices would fall right?
I just don’t get who is ultimately buying this stuff.
That’s the neat part, the conglomerates have done the math to figure out how much vacancy they can tolerate and still make money with shit ass prices. Then they set up some price collusion to make sure other property owners don’t fuck up the money train.
Who’s paying? The 25%+ wage earners. Everyone else it’s fucked and sharing bunk beds.
The only way this changes is a collapse or for law makers to regulate.
So, in essence, you are telling me that healthcare debt is one of the most solvent types of debt in America, and instead of passing real assets which follow a different set of rules, Boomers are cashing out real assets to pay off unsecured debts, which would have been absolved in the estate proceedings, leaving the real assets to be passed off to the children?
But Boomers are dumb and greedy, so they are not taking advantage of that just to make sure they can have their mojitos?
It’s all short term thinking. Does the move make next quarters’ charts look better? Do it!
Supply and demand is never so cut-and-dry. People need places to live, even if they are too expensive to afford them. So people team up and live cooperatively. One of my friends went in on a mortgage with another person whom he was on good terms with. They’re not romantically involved or anything, but they live together as co-owners of a house that neither of them could hope to afford on their own in their wildest dreams.
That’s the lengths that people are getting pushed to these days, and it’s unsustainable, but the real estate conglomerations know exactly where the line is and they always make sure they are butting up against it, but never crossing it.
No, because lack of vacancy is being made up for by the for profit prisons.
Did you even try to read my comment?
They are trying to create a serf/slave class again. The last time they made a serious play was the depression.
its an increasingly small market of buyers and sellers flipping among each other. when enough boomers realise they sold out and can’t buy back in cause they blew their profits on the usual boomer shit, maybe things will change then
Right now? roommates. I guess I’ll just be my dad and stepmother’s caretakers and move in with them in a few decades? I mean, I’d prefer a revolution or two, but I just feel there’s no way that’s happening.
Edit: id settle for some crazy ass innovation that rocks the globe, like a new power source or alien overlords or a combination of the two.
I pay $1900 a month in rent. My budget is stretched thin, and Im never starving, but theres definitely weeks where I eat ramen instead of real food. The alternative is live in a really bad area, get a roommate to move in with my spouse and I, or be homeless. Sad that after being married for 8 years and doing everything “right” we are talking about getting a roommate. About 6 months ago I looked up the apartment I lived at in 2015 for giggles - in 2015 I was spending $850 a month for it and this past winter they wanted $1150. I really think that in a few years we are going to see a lot of homeless people, like a lot.
850 to 1150 isn’t even that bad. Hopefully you make more than $300 a month more than you did 8 years ago?
Um, no. My husband’s raise this year was a one time $25 gas gift card - for the whole fucking year. I’m currently not working because of school, but I was getting raises in the cents per hour every year, despite getting glowing annual reviews and the highest raise my boss could give me. Fuck companies and fuck this entire system of selling my soul and any semblance of joy just to survive. And I’m incredibly lucky because we don’t have kids and am (sort of) able to afford to live off of one income for now while I’m in school, but I’m grinding through trying to finish as fast as I can without tanking my grades
Those people you’re referring to already have cash they’re sitting on. Once you have enough in the bank that your interest is generating income, you’re set for life and can continue amassing all the things at the expense of the poor. It’s like a game of Monopoly towards the very end. It’s the top few players who own everything, and they’re bankrupting the unlucky thimbles who land on Boardwalk.
If you didn’t get into the housing market already, I’m sorry but it’s not looking good for you if you’re not rich. Something drastic needs to happen to put an end to this corrupt system.
Honestly I’m just waiting to inherit my parents’ house. There’s no other option financially possible that I can see.
If there’s one thing I’ve learned is that you need money to make money.
Until the government does something of the following nothing will change:
LVT
Buy large amounts of low density land and build high density with public transport. Even if the work is outsourced.
Build a new city.
Give first time buyers a one off monetary exchange to buy a house/ exceptionally low interest rate mortgages.
That’s only going to happen when people vote for it. Otherwise people and the economy will be caught up in non value adding wealth. I hate the Communists on this website so don’t get the wrong idea here, but the wealth held in land and housing is largely valueless as it adds nothing it’s just have value because of scarcity. That scarcity needs to be broken.
or half a mil for a 1500 sq ft house?
Oh shit, that’s a great price, where can I get that?
Fuck, in my city it’s a million to get 1500 square feet, and not in a great area (I am converting CAD to USD, so closer to 1.3 million CAD for us)
Where is this magical land where 1500sq ft is only $500k? That will cost you $1-$1.2 million here.
Corporations should not own single family housing. There is zero reason housing should continue to increase like it does.
Go onto Zillow. Look how much the house was originally built for, throw that into an inflation calculator and be shocked at how we’re being ripped off.
And now on top of being ripped off, interest rates are ridiculous.
There is not a shortage of housing, corporations are buying them up and either sitting on them or renting them out at high rates.
The same corporations buying up housing are buying up apartment complexes. I know in my area many of them are at less than 20% full and they’re still charging $1500 a month for a 1 bedroom. They’re artificially driving up prices putting a stranglehold on the economy.
If Americans didn’t have to throw most of their paycheck towards housing (or education or healthcare) the whole country would be in much better shape. Inflation wouldn’t hit as hard, we could put more money into savings and actually retire, extra money for travel or things that make us happy.
It seems like such a simple solution, maybe I’m wrong but something needs to change.
There is no reason for a large private rental market to exist. You don’t even have to ban private landlords, just make them compete with the most cost-effective provider: the state. Governments can borrow cheaper than any landlord and rent out indefinitely, turning a surplus (aka profit) at a fraction of private rents.
I’ve been watching a lot of not just bikes and YouTubers like that.
The suburbs aren’t event sustainable. They only exist because the government funds a shit load of money into them to make them work. They weren’t sustainable at the start and they aren’t now. Now the money is drying up it’s a fucked up asset to have in a city because you still need to fund them
We’ve already let our 13-year-old daughter know that we will do our best to support her if she wants to live on her own when she turns 18, but that she almost certainly is not going to be able to once she gets out of college dorms on a starter income, so she will always have a place to live with us if she wants/needs it. I hate to be the bearer of harsh reality on her, but she needs to know that, unless things drastically change, she may not have the independence she wants when she becomes an adult. And a lot of parents are in our position.
What makes it harder is that we’re basically told as parents to never respect our child’s privacy because they might be hurting themselves or having suicidal thoughts or communicating with pedophiles or doing drugs (I trust my child and respect her privacy, but this is what parents get bombarded with). And then they become adults and expect you to treat them like adults but they still live with you because they have nowhere to go. A lot of parents are going to have trouble with that.
And the SCOTUS ruled that student debt can’t be forgiven, so that’s one factor already gone thanks to Trumps SCOTUS nominees (don’t forget, Trump got THREE conservative nominees in)
Also I’ve met so many boomers in my life who have summer homes, vacation homes, winter homes, homes that are not even used for half the year, it’s absolutely insane. The real estate market in this country is completely unhinged
That’s it even factoring the looming probability of all this collapsing on us.
It really is amazing how many people think their home value and ability to make their mortgage payment is infallible. 2008 wasn’t that long ago. Then it was mainly investors buying consolidated mortgage loans. Now it’s investors buying the homes themselves.
Even the word is kinda scary.
I don’t think most people think it’s infallible. I certainly don’t. But we hope…
From what I have seen in my area, a lot of first time homebuyers are stuck buying houses that need a lot of work that flippers don’t even want to bother with.
The previous owners stopped fixing things because they were going to die or be put in a home and didn’t have money or didn’t care. I have had sellers straight up tell me that they won’t bother fixing anything and that it is the next person’s problem. They will only sell as-is.
That further hurts new homeowners because they are buying houses that need tons of work that require tons of money they don’t have, or they would have bought a nicer place. The decent homes are bought over asking by people looking to rent out or boomers who cashed out on equity to downsize and pay with cash.
New homes are all family homes and not starter homes, because builders make more money on bigger houses. Older starter homes are being demolished to build houses that are big as local laws allow on the plot, further reducing the starter home market availability.
The real estate market is clearly in a massive bubble that should have exploded in 2008, but was reinforced and inflated further. When it does finally pop, it gonna be bad.
Your area must be polar opposites than mine, then. I live in Southern California, which is extremely, ridiculously, competitive right now, and for the foreseeable future.
The old fixer uppers are typically estate sales from elderly that passed or moved to assisted living. They are generally fine, but outdated because the elderly owners didn’t renovate since they moved into the house 30+ years ago. They or their family isn’t going to bother updating it, and they don’t need to in this market.
Depending on the location, and the quality of the build, that means there can be some serious issues with the place too. I saw tons of houses up on hills that have clear signs of erosion causing the house to slope towards the hill. This isn’t an upkeep problem, but a problem with poor to mediocre build quality, with 50-70 years of age to expose these kinds of issues.
New homes are all comparatively small and built on top of each other with no yards, to maximize lot space. Most new construction I see are houses to close together, you can touch your exterior wall and your neighbor’s at the same time. Rooms are tiny so they can advertise more bedrooms, street parking sucks, and you’re at the mercy of an HoA.
Yeah, California has its own set of housing issues due to topography and the CoL.
I’m in the Midwest. New developments are 2500-3000sqft on .25ac for $500-600k+. They are demolishing ~1,500sqft homes on 0.14ac to put up 2,500-3000sqft homes that cost 3-4x as much in the older post-war neighborhoods. Street parking only is uncommon unless you are into the greater metro area. In both cases they have basements that are unfinished and get completed after the builder’s mortgage is switched over, so the sqft is higher than those figures in reality. Finding a starter home in the 200s is asking for outdated and disrepair. Houses in the 100s are out in the boonies and are nearly rehabs. Even mobile homes are 30-75k, may include meth contamination.
Covid pushed more of the city out into the burbs and really wrecked the affordable house market.
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Kevin Drum calls bullshit on this specific article: https://jabberwocking.com/millennials-are-doing-fine-part-xvii/
He shows charts to establish that
Through 2021, Millennial homeownership is at its average for the past 30 years. The average mortgage payment is the same as it was for Boomers and Gen X. Income is higher than both Gen X and Baby Boomers at the same age. And average student debt is lower than either Gen X or Baby Boomers (although only 10% of Boomers have student debt compared to 20% of Millennials).
