Reply to Boomers' Billion-Dollar Bonanza: The Unseen Hoarding Behind Millennial Struggles

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[quote=Anonymous][quote=Anonymous]I don't know why we try to have a discussion about structural issues on a board like this.

For those of you saying "the government didn't help me with my housing" I refer you back to the interest tax deduction, which is *literally* the government incentivizing and supporting home ownership. So two people - one owns a home and one rents, same income, same monthly outlay for mortgage or rent, one has an appreciating asset, flat (and in real terms, shrinking) monthly payment, and less taxes than the other. That homeowner also had the timing and luck to have been able to find a home they could afford, and the privilege of qualifying credit and down payments (which at times the government has also subsidized). The renter is faced with increasing rents and not building longer term wealth. Which then increases wealth inequality.

In the last 50 years, housing costs have far outpaced inflation (as have college costs). 
https://anytimeestimate.com/research/housing-prices-vs-inflation/

[quote]In fact, home prices alone have increased 1,608% since early 1970, while inflation has increased just 644% in comparison. In other words, Americans have seen a steep decline in their purchasing power across the last five decades, especially when it comes to homeownership.

In 2021 alone, home prices rose 20%, while inflation grew at a 7.5% pace.

If home prices grew at the same rate as inflation since 1970, the median home price today would be just $177,788.

Instead, home prices have increased far faster than inflation, soaring to $408,100.
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https://ipropertymanagement.com/research/homeownership-rate-by-age

Home ownership rates have been declining by age as this has gone up. The average age has increased by 10 years to 57. Homeownership rates among those 30-34 have consistently declined, from 9.2% in 1993 to 5.9% in 2019. Among 34-44, similarly rates dropped from 23.2% in 1993 to 15.7% in 2019. Whereas there has been some noise up and down in the older brackets, in 2019 all 55+ were at the highest they had been in this data.

Another fun insight:

[quote]Furthermore, younger potential homeowners have spent much of their adult lives in periods of economic uncertainty while the average worker’s earnings steadily lost value with inflation and reduced benefits. These financial struggles and more significant student loan debt may deter potential homeowners from buying. Even if they are eligible for a home loan, taking on more outstanding debt can be intimidating.

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It isn't a personal slight against boomers to say that *as a whole* the generation has had structural and timing advantages that mean they were better off than gen x and millennials at the same age, and that that advantage will continue to compound.
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+1, thank you for taking the time to lay this out.

It's not a personal vendetta. The truth is that it is harder for millennials to build wealth than it was for their boomer parents, and this is not due to millennials being worse with money or any personal quality really. It's due to structural constraints that enabled boomers to build wealth via home ownership (and to a lesser extend, investment in the stock market for those who had enough cash to invest), but have made it significantly harder for millennials to do the same.

Millenials are also more likely to have had (or for younger millennial, still have) education debt, which may have postponed not only home purchases but also parenthood. This can lead to a squeeze in your 30s where you are paying school loans, childcare costs, and potentially also dealing with elder care issues depending on how well your parents managed their money, and to then face skyrocketing housing costs on top of that might make home ownership feel like an impossible pipe dream. In comparison, boomers graduated from college mostly debt free (or were able to get decent paying jobs without college, which used to be possible), which enabled them to both have kids earlier and buy homes earlier because they were not paying down education debt. If you buy a home at 25, it will be paid off by 55, which opens up many doors financially. It's a very different proposal for millennials buying homes at 35 or even 40.[/quote]

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