Housing and young people – why is this not a solution?

[Anonymous]

We all hear about inflation, housing costs in the DC area, and the hardships that face young people. But is this really so dire?

Let’s say you have a young person who lives at home with their parents after graduating college, from age 22 to 30. And let’s say their income averages $100,000 per year over that time (starting at $80-90,000 and ending up at $110-120,000 at age 30).

Of their $100,000 income, they pay $25,000 in taxes and only need to spend another $10,000 per year since they are living at home. That means they can save on average $65,000 per year—or $520,000 over the eight years (ignoring any potential investment gains).

That’s enough for them to buy a $400,000 condo in cash (or use that amount as a huge down payment if they’re getting married and need to buy a house instead). On top of that, they have enough to buy a solid $25,000 car, furniture for their new place—and still have enough left over for an emergency fund and maybe even some investments. That sounds like a pretty darn good place to be in as a 30-year-old.

Obviously, that only works under certain conditions. First, the kid has to major in something marketable. And the parents have to live in the same area and be at least middle-class/upper middle-class—but that describes most of the DCUM demographic. Thoughts? Why isn’t this the solution?

[Anonymous]

What a bubble you live in.

[Anonymous]

Yes, its obviously the solution but its not considered cool so people dont do it.

[Anonymous]

The solution is they get a bunch of roommates. It's part of life, or should be. Too many want to live alone.

[Anonymous]

That's a failure to launch scenario. It's more important to launch than save money for a condo. A condo is a bad investment in most cases anyway. Bad advice all way around.

[Anonymous]

Anonymous wrote:The solution is they get a bunch of roommates. It's part of life, or should be. Too many want to live alone.

+1 a compromise good solution could be live at home a couple years to save the condo downpayment and then get roommates to help pay the mortgage. Still start on the property ladder but fewer years living with parents.

[Anonymous]

agree, cut taxes down for everyone making above 100k

[Anonymous]

You're assuming the kid has a high paying job that's commutable from the parents' house (or remote).

It's interesting to note that we've gone from a country of opportunities and geographic mobility, to a country where your best option is to move back to your parents' house.

[Anonymous]

Anonymous wrote:We all hear about inflation, housing costs in the DC area, and the hardships that face young people. But is this really so dire?

Let’s say you have a young person who lives at home with their parents after graduating college, from age 22 to 30. And let’s say their income averages $100,000 per year over that time (starting at $80-90,000 and ending up at $110-120,000 at age 30).

Of their $100,000 income, they pay $25,000 in taxes and only need to spend another $10,000 per year since they are living at home. That means they can save on average $65,000 per year—or $520,000 over the eight years (ignoring any potential investment gains).

That’s enough for them to buy a $400,000 condo in cash (or use that amount as a huge down payment if they’re getting married and need to buy a house instead). On top of that, they have enough to buy a solid $25,000 car, furniture for their new place—and still have enough left over for an emergency fund and maybe even some investments. That sounds like a pretty darn good place to be in as a 30-year-old.

Obviously, that only works under certain conditions. First, the kid has to major in something marketable. And the parents have to live in the same area and be at least middle-class/upper middle-class—but that describes most of the DCUM demographic. Thoughts? Why isn’t this the solution?

For UMC families it's more common for the kid to rent and live independently and then help them with a downpayment

[Anonymous]

Anonymous wrote:You're assuming the kid has a high paying job that's commutable from the parents' house (or remote).

It's interesting to note that we've gone from a country of opportunities and geographic mobility, to a country where your best option is to move back to your parents' house.

That what happens when housing inflation outpaces wage inflation. The best jobs for young grads may still be in major cities, but now you also need parents who either live nearby (I spent two year after college commuting into new york on the path train with my father, would not recommend) or have parents rich enough to subsidize you

[Anonymous]

Anonymous wrote:We all hear about inflation, housing costs in the DC area, and the hardships that face young people. But is this really so dire?

Let’s say you have a young person who lives at home with their parents after graduating college, from age 22 to 30. And let’s say their income averages $100,000 per year over that time (starting at $80-90,000 and ending up at $110-120,000 at age 30).

Of their $100,000 income, they pay $25,000 in taxes and only need to spend another $10,000 per year since they are living at home. That means they can save on average $65,000 per year—or $520,000 over the eight years (ignoring any potential investment gains).

That’s enough for them to buy a $400,000 condo in cash (or use that amount as a huge down payment if they’re getting married and need to buy a house instead). On top of that, they have enough to buy a solid $25,000 car, furniture for their new place—and still have enough left over for an emergency fund and maybe even some investments. That sounds like a pretty darn good place to be in as a 30-year-old.

Obviously, that only works under certain conditions. First, the kid has to major in something marketable. And the parents have to live in the same area and be at least middle-class/upper middle-class—but that describes most of the DCUM demographic. Thoughts? Why isn’t this the solution?

Sure, let’s just go ahead and assume that they make more than I do after 15 years of teaching.

[Anonymous]

I know multiple well-off kids who grew up in NW DC or CCMD, went to well-known private schools in this area, and moved back in with their parents during the initial years out of college to save money to buy a home. They had well paying jobs, but parents encouraged to not waste money on rent.

Also know lots of people who worked on the Hill after college and their well-off parents were paying their rent for 3-4 years before they went to law school. Very common on the Hill.

[Anonymous]

Not uncommon for kids to do this in my Asian community. But it's more like 2-4 years after college than 10+ years, and the parents will often still help with down payment when its time for the kids to move out and buy. It basically avoids the renting/roommate years as others have been saying.

Or, parents help you buy immediately after college, but maybe you get roommates to help pay the mortgage. Basically UMC Asian parents don't like kids to pay rent to another landlord. They'd prefer to be the landlord.

[Anonymous]

How does dating work though when you live at home? My parents were crazy and I had a 10pm curfew, midnight on weekends (I lived at my parent's home in the summer during my internships). I also would never have been allowed to bring someone home to stay the night, even a long term boyfriend.

I think it's much better to live with roommates. We split cheap apartments with 3-5 other people.

[Anonymous]

Anonymous wrote:Not uncommon for kids to do this in my Asian community. But it's more like 2-4 years after college than 10+ years, and the parents will often still help with down payment when its time for the kids to move out and buy. It basically avoids the renting/roommate years as others have been saying.

Or, parents help you buy immediately after college, but maybe you get roommates to help pay the mortgage. Basically UMC Asian parents don't like kids to pay rent to another landlord. They'd prefer to be the landlord.

My white parents did this too. They wanted to be the landlord instead and they made a lot of money doing it. They had me live there and I paid them rent and my roommates paid them rent too.