I knew it had climbed but I had no idea how high. Note, no references here but I am sure one could easily go out and validate the statement.
“These patterns are two sides of the same coin. Just 30 years ago, the median age of first-time home buyers was 28. Today, it’s 38. In 2000, the typical price of a single-family home was three times a family’s annual income — today, it’s six times,” he wrote.
The former mayor stated that this is one of the primary reasons that “a full third of young adults now report a sense of despondency.”
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“This shouldn’t be some mystery: American democracy became unstable at almost exactly the same time the American Dream became unaffordable. And because that’s not a coincidence, we need to tackle the homeownership challenge head-on,” he added.
All Economics, not politics. This issue is non-partisan. Despite the occasional thread here in favor of renting over owning, home ownership has been the largest and most diverse method of family wealth retention since our founding.
About 2/3 of American families own their own home. Such folks skew older - and older means more likely to vote. Therefore, most voters will gain economically if home prices rise (or at least stay flat) and will lose economically if home prices fall.
My parent’s first home, late 1960s, was a 1,200 sq.ft 3 bedroom ranch. My first home (1999) was 50% bigger. I would wager finding any new home under 1,800 sq.ft is difficult these days. That explains at least part of the increase in cost.
I’ve heard reasons for this, including that small homes are impossible to build and sell at a profit. But how many people today will want their starter home to be the size of an apartment?
Maybe. I might be an exception to the rule, but as a 69 year old retired attorney, I just want my retirement home to remain affordable. A $250,000 increase in assessed value over the last five years adds up to an additional $2,200 in annual taxes. Many aging retirees think of their homes as expenses to be managed.
Supposedly these ‘youngsters’ are not living life according to the way their elders mandate.
When a large group of one age cohort do not fit the paradigm, that changes the ‘median/mean’. For example, see the famous ‘life expectancy pre 1945’ (63-65 years) vs the ‘life expectancy post 1945’ (68 years, to now late 70s). between 1940 and1945, babies quit dying with such frequency before age 5, which caused the post 1945 mean/median life expectancy to rise substantially.
Looking back, I was just 28 when we bought our first home, scary for us, 1968, it was a 1,000 sf ‘Young America’ home, single car garage, wall heater, undeveloped yard… But it was ours! $13.8K, we sold 6 years later, '74, and came to where we are now, 51 years later, a 1500 sf 3 BR, 2 Bath, for all of $28K… Today’s market, if appraised, likely $1M with all the improvements, pretty much every room has been redone, more insulation, A/C, hardwood replaced all the carpet, windows w/double panes, plus an RV pad, 16x24 shop. Not going anywhere…
Meantime one GK & husband, now in their 30s, erred on their first home buy, didn’t have an inspection, are spending a lot on fixes, ongoing, never talked to any of us, just dove in… Bummer…
We learn by our mistakes, hopefully they are in-process…
Rather than home prices falling, wages could rise to make home ownership more affordable. It’s been touted here several times that typical working class wages have not - or just barely - kept up with inflation.
When I was around 28 and thinking about marriage I consulted with an insurance broker, friend of the family, about buying a home, his advice, “It depends, if you are going to be an employee, buy the home. If you are going into business, put your money in the business.”
I didn’t get married, started a business (management consulting), and didn’t buy a home.
My gut sez the most young cannot afford a house today.
But, if rainphakir is correct, they could be choosing not to buy as house pricing is at a high. How much higher can housing go? They could be renting while waiting for a downturn. intercst bought in 2008-2009 when the real estate market bubble blew. A few could be doing this choice. But my gut sez it ain’t a significant number.
I would say that you are correct, but allow me to show my old man-ness for a moment.
My nephew, of one of the “Gen” [alphabet] categories graduated college and decided he was going to be a manager. Wasn’t sure of what, and when we told him “that’s not where you start” he was surprised.
Also wanted to buy a house, but not a starter house, it had to be 2500sq ft, with a new kitchen, back yard, 2 car garage, etc. and we didn’t say “that’s not where you start” because, well, family.
I do believe there are some in the various Gen [alphabet] groups who don’t understand that you don’t start where the rest of us have ended up. But maybe I’m just cranky today because of those kids on my lawn.
Only problem, at least here in CA, is that rents are sky high, so maybe not an option for many… No easy solution… Maybe a shack in the boonies, but most require web connects at the least, so they’re stuck in the 'burbs, if they can ever get started…
Everyone, POTUS included, seems to be focusing on interest rates. When we built our house in 1979 our interest rate was 10%. To me it seems that mortgage interest rates are not what is making housing unaffordable. If mortgage rates had kept pace with home prices, increasing six fold, they would be over almost 20%.(1) I wonder what the size and fixtures were like in that typical home 30 years ago. Are we really comparing apples to apples?
