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

[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?

Eight years? I graduated at 21 and married at 30, living with parents would really screw with that timeline.

And a freaking condo? Why not just light the money on fire. Especially $400k — where is that, Columbus Ohio??

[Anonymous]

Anonymous wrote:This is already a solution in many immigrant families. And in places like Seoul where the housing is ridiculously expensive. But all relationships need to work for this as people want to date and marry before 30.

This works in Asia because of love hotels, which are fairly well managed professional hotels.

https://en.wikipedia.org/wiki/Love_hotel

This won’t fly in Puritanical US.

You either rent a regular hotel at full fare (so a couple weekends will quickly be the same as rent), or you go to that sketchy place under the overpass, and get MSRA and bedbugs and probably have your car broken into.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Who earns 100k straight out of college with just a bachelor’s degree? That sounds like fantasyland. Even people with business degrees aren’t bringing that much in two years after graduation typically.

I appreciate that this is not "common" but new grads going into competitive jobs are routinely making 200K+ a year (including equity and sign on bonus). Kids going into trading are making even more. Just helped my sister negotiate a $200K starting offer at a large tech company in CA, and my cousin at a trading firm made $300K his first year out of college (this was also several years ago so for new grads in algo trading it is even higher now).

There’s competitive and there’s top 1%. You clearly come from a very well or maybe well educated family (lots of children of professors go into tech and finance), but this is not an option for most people.

Besides $200k in Bay Area is only $100k in a place like DMV; I’m guessing the trader is in NYC, so still applies. If they are remote jobs, sure it’s an option, but keep building those castles on the sky.

[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?

Yeah, that person is doing great. Despite crying being poor, the top 1% always do great. For every one of them, there are 10s of people who graduate with 300k in student loans, are making 30k a year as interns and spending money they do not have trying to build a network that will never accept them. They of course cannot live with their parents since, the parents had to downsize in order to be able to retire before they are 80.

[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.

Exactly. 20-somethings aren't entitled to live alone, nor remain at their parents house. Live with roommates and save.

[Anonymous]

I told mine I hope they live at home and save.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Who earns 100k straight out of college with just a bachelor’s degree? That sounds like fantasyland. Even people with business degrees aren’t bringing that much in two years after graduation typically.

I appreciate that this is not "common" but new grads going into competitive jobs are routinely making 200K+ a year (including equity and sign on bonus). Kids going into trading are making even more. Just helped my sister negotiate a $200K starting offer at a large tech company in CA, and my cousin at a trading firm made $300K his first year out of college (this was also several years ago so for new grads in algo trading it is even higher now).

Just curious but what percentage of new graduates do you think make $80K per year? I bet it is less than 10%.

So even if this advice works for a small section of the population it doesn't move the needle on expensive housing for the population as a whole.

[Anonymous]

Anonymous wrote:

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.

Exactly. 20-somethings aren't entitled to live alone, nor remain at their parents house. Live with roommates and save.

For high caliber families, family is better than roommates.

[Anonymous]

Anonymous wrote:

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?

Eight years? I graduated at 21 and married at 30, living with parents would really screw with that timeline.

And a freaking condo? Why not just light the money on fire. Especially $400k — where is that, Columbus Ohio??

Out of touch on all points.

My partners got along with my parents. Timeline improved because it helps filter out bad mates.

Median price for a condo in Bethesda is $320K.

[Anonymous]

Anonymous wrote: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.

I did this 20 years ago. Moved back home after grad school for three years to save the $ for a down. Bought my first house at 28. It wasn't cool living at home and I did sort of hide it from a lot of people but the years flew by quickly. It got me on the ladder so no regrets. My father said the earlier you own a house and the earlier you pump money into your 401k the better off you are in the long run. He was right, even when you're in your 20s and your 40s seen like an eternity away.

Cohabiting couples in serious relationships also did well, living together to save money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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?

Eight years? I graduated at 21 and married at 30, living with parents would really screw with that timeline.

And a freaking condo? Why not just light the money on fire. Especially $400k — where is that, Columbus Ohio??

Out of touch on all points.

My partners got along with my parents. Timeline improved because it helps filter out bad mates.

Median price for a condo in Bethesda is $320K.

So you don’t have sex until marriage? Or had sex in your parents home? And you say I’m out of touch?

Improved timeline you advocate marrying even later than 30?

BS. There’s one unit for sale in Bethesda for under $400k, and has a $300/month HOA ; one bed, one bath from 1951 (though it is a nice little townhouse given all that).

https://www.zillow.com/homedetails/6726-Offutt-Ln-201A-Chevy-Chase-MD-20815/37196792_zpid/

[Anonymous]

Anonymous wrote:

Anonymous wrote: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.

I did this 20 years ago. Moved back home after grad school for three years to save the $ for a down. Bought my first house at 28. It wasn't cool living at home and I did sort of hide it from a lot of people but the years flew by quickly. It got me on the ladder so no regrets. My father said the earlier you own a house and the earlier you pump money into your 401k the better off you are in the long run. He was right, even when you're in your 20s and your 40s seen like an eternity away.

Cohabiting couples in serious relationships also did well, living together to save money.

It can pay off, though we bought a condo on 2005 and only were able to sell it for the price we paid for it around 2020.

[Anonymous]

My friend’s daughter did this. She is a RN and made around 70k then, lived at home for 4 years, parents didn’t charge money for rent or food/utilities etc. The only condition was that she gets to have $1000 a month in spending money and save the rest. She ending up saving 100k, parents matched the 100k and she bought a 2 bedroom plus loft apartment for 450k at 2.75% interest in 2020.

Her apartment is worth 525k now and monthly payment is very manageable, now she is on her own and can live her life as she pleases. She is currently 27 and plans to have it fully paid by 35 ( she is doing travel nursing so she is making more money) then can have close to 600k for down payment on a SFH.

[Anonymous]

^ she is currently 30, not 27, don’t know where that came from.

[Anonymous]

Anonymous wrote: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.

That is precisely why so many do NOT live at home. If you want your kid to live at home to save money post college, you must treat them like the adult they are. They should be allowed to have BF/GF stay over, they should be allowed to come and go as they wish. However, they should be respectful. Just like my husband doesn't just come home at 11pm when work is over at 6pm without telling me. If he has a dinner or event after work, he lets me know. I expect anyone living in my house to tell me if they wont be home by a reasonable time---and if a 25 yo is not coming home, then just tell us so we dont' worry. But also don't come in at3am on a Tuesday night and make major noise as we have to go to work at 8am. You can come in at 3am, just be quite and respectful, and tell us you are out late, so we don't worry.