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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWhy Millennials Can't Afford to Buy a House
In his magisterial 2005 history, A Nation of Realtors, Jeffrey Hornstein laid out the country-shaping effect of 20th-century housing policy. In the decades following the Great Depression, the federal governmentas well as states and citiessubsidized the creation and consumption of single-family homes. The American dreams most important archetype became buying a home. Americans, Hornstein wrote, particularly white Americans, came to think of themselves as inhabiting a classless society, composed of one big middle class, its membership defined to a large degree by actual or expectant homeownership.
Recently, however, weve lost the plot on the classic life arc of yesteryear. Places where real estate is cheap dont have many good jobs. Places with lots of jobs, primarily coastal cities, have seen their real-estate markets go absolutely haywire. The most recent evidence of this remarkable change comes in a new report by the real-estate firm Unison. The company, which provides financing to homebuyers by co-investing with them, calculated how long it would take to save up a 20 percent down payment on the median home in a given city by squirreling away 5 percent of the citys gross median income per year.
Nationally, the gap between income and home value has been rising. Using Unisons methodology, it took nine years to save up a down payment in 1975. Now it takes 14.
But the aggregate numbers make the decrease in access to the real-estate market seem gradual, albeit troubling, and underplay the spikiness of the country. In Los Angeles, it would take 43 years to save up for a down payment. In San Francisco, 40. In San Jose and San Diego, 31. In Seattle and Portland, 27 and 23, respectively. In the east, New York and Miami topped the list, requiring 36 years to save up that down payment. Only Detroit, at seven years, was under the national average from 1975.
Generationally, this has huge consequences. Imagine youre a 30-year-old in Los Angeles with the median income. By Unisons math, you can imagine buying a home at 73. For young people in high-opportunity metro areas, the route to home ownership is basically blocked without the help of a wealthy family member or some stock options. Meanwhile, older people who bought under much more favorable circumstances have seen their equity stakes grow and grow and grow.
https://www.theatlantic.com/technology/archive/2019/06/why-millennials-cant-afford-buy-house/591532/
mnhtnbb
(31,392 posts)our first house. We couldn't afford to pay $75,000. which was the minimum we'd need to spend to buy a little house in Santa Monica where we'd been renting since we had married in 1972. So we ended up buying in the Valley, a small post WW II 2 BR 1 1/2 BA house on a fairly nice sized lot for $63,000 in Studio City. Two years later we sold it for double what we'd paid and traded up to a larger house in Woodland Hills.
I've watched that little house over the years. At one point someone added on to the house in the back using the large lot. It wasn't knocked down to mansionize because it still has much the same look from the curb.
I just checked on Zillow and they give it an estimated value of just under $1.4 million.
It took us 4 years to save our down payment and we both had decent jobs after he finished his PhD and I finished my Master's, both from UCLA, and neither of us had any debt .
That little house is no longer a starter home.
BSdetect
(8,998 posts)Insurance rates rise as do property taxes.
We started with property tax at $4800 in 2004. Same place is now $6800 mainly due to constant addition of bonds.
uponit7771
(90,347 posts)... middle class tax increase.
former9thward
(32,025 posts)It is a starter home. It is on the low end not the middle. You buy what your household's income can afford -- not what you may want in the future. And you buy where you can afford. The idea that the only places there are good jobs are on the coasts is ridiculous.
Act_of_Reparation
(9,116 posts)I couldn't afford a home until I was 36 because I was too stupid to look at smaller homes or take jobs in West Pigsknuckle, AK. You really sussed it out.
raccoon
(31,111 posts)That just MIGHT be one reason why millennials can't afford to buy a house.
Average Size of US Homes, Decade by Decade
It's nearly tripled since 1950
By Newser Editors, Newser Staff
Posted May 29, 2016 12:17 PM CDT
(Newser) 24/7 Wall St has a list that shows how the typical American home has changed from 1920 to 2014. And that mainly means the homes have gotten way bigger. The list tracks various stats year by year, including average square feet. Here's a sample, with the figure referring to the average floor area of a new single-family home:
1950: 983
1960: 1,289
1970: 1,500
1980: 1,740
....
2014: 2,657
https://www.newser.com/story/225645/average-size-of-us-homes-decade-by-decade.html