A long-time friend of the blog writes:
I am so sick of hearing about things that millennials will “never have.” I am not that much older and I don’t think things were all that much different when I was in college, renting or buying a house. Perhaps the difference is in mindset- I didn’t expect to afford rent on apartments with marble countertops and rooftop spas when I was earning minimum wage just out of college. I didn’t expect my house to be perfect, either. I just needed it to be structurally sound. Sweat equity was fine.
To the point in this post that the market isn’t working for millennials, I would say it is to a fault. Millennials are demanding perfection, to move in to brand new, high end amenities. They won’t settle for less. Most of the rest of us have pkaces to live, or want to move up, as generations have before us. That millennials are refusing to rent or buy affordable housing, which in turn is being torn down to build luxury and market rate units is the market working. The affordable housing was there for millennials who wanted to start out like the rest of us. But, because they won’t buy or rent it, there is no market for affordability. That they “won’t have houses” is really just their own choices. Kinda like “we can’t pay our college debt ever” when they choose to get multiple degrees from the most expensive colleges in non-marketable skills, like fine arts, literature, etc.
I don’t mind people getting “non-marketable” skills, provided they don’t whine about their prospects after graduation (or show me their draft notice they got before being taken against their will to study Womens’ Studies at Oberlin).
What I’ve noticed? They seem to collect maladies and diagnoses the way they used to collect Pokemon.
Maybe some – how do you say… – realignment of priorities is in order?
Instant gratification and unreadonable exoectation wasn’t invented by millennials. I remember my cohort in the 80’s buying houses they couldn’t really afford and living in them with no furniture. I remember them leasing expensive cars to park in the driveway of those houses. Oh yeah, those fake cell phone antennas! Lol!
I think we called them yuppies back then, and as I recall, they were just as annoying as millennials are today.
A contributory force has been local government. Time was, you could rent a shanty for little, buy one on a contract for deed for a little more, or buy a decent house for a little more still. The bottom end of the market has been eliminated by government and social justice do-gooders insisting that renters need decent housing (third tier) when the truth is they can’t afford it. So taxpayers subsidize renters and cities terrorize lower-tier landlords and presto – no starter homes anymore, even for those who want them.
It’s a bit like the Cash for Clunkers program – snatch up all the cheap cars so people are forced to buy new ones or ride public transit. Great for car makers and gummit union lackeys, not so hot for Average Joe trying to make ends meet.
Swiftee Bot;
You are correct! About the time my wife and I were looking for our first house, circa Houston, TX in 1981, the prevailing advice from everyone was, “if you aren’t stretching to make your house payment, you didn’t buy a big enough house”! Of course, my wife and I were smarter than those “experts”.
I remember mortgage rates in the 20% range. When I bought my first home in ’84, I was thrilled to get an 11 7/8% mortgage that the developer bought down to 10 7/8% the first year. Woo-hoo! In ’06 when we took a home equity loan out to do a remodel on our current house, we borrowed only 30% of what we qualified to borrow in those heady days. The loan officer couldn’t believe it. “Why not take all you are entitled to?” We asked, “Why?” The reply was we could travel, buy cars, anyting! We declined that generous offer, and in the coming years we stayed well “above water”. More recently, we refi’d the house in order to buy our third rental property, which is now paying our mortgage.
And, as a landlord, I can tell you that the pressure is tremendous on people trying to find “affordable” places to rent. We have seen desperation in some people whenever we’ve had an opening, especially when we tell them that their income isn’t enough to reasonably cover the rent. We have moderate prices (and nothing with a granite counter top), and could raise these significantly to match the market, but we have solid tenants and it’s worth it to us to stay below market for long-term, reliable folks. It is pretty scary out there right now for lower middle-class folks, and I don’t see it getting better for a long time.
Having said all that, let me take the other side. A buddy owns a couple of houses near a local private college. He’s been renting them to students for 20 years and complains students today are not like students back then. Modern students turn up their noses at houses that lack dishwashers and industrial strength WiFi and cable TV jacks in every room. They insist on having “comfort animals” but refuse to pay pet deposits. Groups of housemates form and dissolve at whim but can’t understand why the landlord won’t let them walk away from the lease leaving the house vacant in the dead of February. There’s a definite change in tenant expectations at the private college level, looking for a place as nice as Mommy’s house.
Public college level, too. My daughter has watched some of her friends move around quite a bit. I think the standards at Winona are a little more spartan, at least judging by student housing there that I’ve seen, but there is quite a bit of high expectations. On the flip side, my daughter’s in her second apartment in part because her first landlord didn’t adhere to fire codes and didn’t have a fire extinguisher in the kitchen. I hope the fire department starts moving on a little bit stricter enforcement!
That noted, I also remember making fun of yuppies with Swiftee back in the day, too. There is always a desire for better, sometimes not properly weighted down with realism. I for one am grateful for my depression era grandparents helped me understand the hazards of debt and all, and the joy of simple pleasures like BLTs.
Joe D – Your comments on college kids housing is something that I’ve noticed as well. For all the talk about college debt, I’ve never heard someone suggesting that students re-evaluate their housing. I frequently run around the U of M, and am bewildered by the apartments that are being built there. Amenities such as a fitness center, game room, movie theater, yoga facility, rooftop terrace, and indoor moped storage (This is the Bridges apartment building). It’s nicer than anyplace I’ve lived. Especially when I was in college.
A quick search answers my question of how can they afford it. Student loans. I’m wondering how many students are taking out an extra $20k a year in loans to cover their lifestyle. These are likely the same knuckleheads that will be protesting for student loan forgiveness in a few years. All housing can be affordable. It all comes down to how many roommates you have. Having a private bedroom and bathroom is a luxury, not a necessity.
Night;
Yea, we had the same issue in 81 when prime was 21%. We bought a new semi custom tract house and the builder bought it down to 15.9%, because I had a VA loan. After the oil industry tanked in 83, we stayed current on our mortgage, even though thousands of people were walking on theirs. In early 85, prime had dropped significantly and our lender approached us to do a no cost re-fi to 8.25.