Posted on 08/26/2014 11:37:43 AM PDT by Lorianne
Generation X homeowners are far more likely to be underwater on their mortgage than millennial and Baby Boomer homeowners, a generational block that could limit the market for years, according to the second quarter Zillow® Negative Equity Reporti. The overall national negative equity rate fell to 17 percent in the second quarter, with more than 8.7 million homeowners with a mortgage owing more than their home was worth.
Approximately 42.6 percent of Generation X homeowners (those aged from 35 to 49) are underwater on their mortgage, compared to 15.3 percent of millennial homeowners (20-34 years old) and 31.1 percent of Baby Boomers (50-64 years old). Because it is very difficult for an underwater homeowner to list their home for sale, the wide disparities among generations stand to have ripple effects throughout the housing market. Baby Boomers may not be able to find move-up buyers for their homes as Gen X remains stuck, and millennials can't move into the more affordable starter homes currently occupied by Gen X.
(Excerpt) Read more at seekingalpha.com ...
Add their student loan debt to that.
Young adults, listen well: stay out of all forms of debt. You will be glad you did.
This doesn't make a lot of sense to me. If GenX homeowners - that's people in their late 30s to late 40s - were living in "affordable starter homes," they wouldn't have negative equity. And if Millenials (like my daughter, who prudently rents) want to buy more low-priced housing than is available, new construction will provide it.
I don't see much low-priced (for this area) new construction. What's being built nearby is priced 20% to 50% than current prices in my subdivision.
The problem I have seen among my kids and my friends kids are the baby boomer houses, that we bought because we could afford them and stayed in them, are not good enough for the younger generations. They all want the bigger, better, more expensive homes.
We have a very nice home that we bought within our price range and stayed in. My daughter and her husband, whose income is 1/3 of ours, bought a home that is almost double what ours is worth right now. There was a very nice home down the street that was large, nice, and had a beautiful pool for sale that I tried to talk them into. It was too old was their response. Instead they bought a top of the line home in a gated neighborhood that they can barely afford.
It must be hard to be in the hole for the equivalent of a mortgage payment a month, before you even get started.
Harder still when your degree is in "fill-in-the-blank Studies", and you're working 29 hours a week (thanks Obamacare!!) as a Starbucks Barista.
Yes, nobody in the real estate business has learned a thing from the previous crash. The banks, the builders, and the owners all still fantasize that they can demand similar market prices as they did 10 years ago, when everything was inflated well beyond its actual value.
A friend of mine buys commercial properties in Seattle.
Well, he USED TO. Problem is that if a person owns a property they paid a million for, but it’s only worth $500k now, they CAN’T sell. They’d rather let the bank foreclose. So most stuff is priced far higher than it’s worth, if it’s for sale at all. So he buys elsewhere now
My advice to anyone wanting to buy a home?
You better have a bullet proof super secure good paying job, which offers great benefits and yearly raises and ya better have a great retirement along with it.
Otherwise it’s a damn good chance that home will become your worst enemy...
Gen Xers are the ones who got caught in the middle of the housing bubble collapse. They bought in high, at artifically high prices (even for starter homes) in a sellers market and had their (artificial) equity stripped out from underneath them.
Millenials are both hurt and helped by this. They may not be as to find starter homes, but where they can it’s going to be in a depressed buyers market with lower prices.
It’s probably been inflated for over 30 years. The house my dad built in 1982 was a 3 bed/2.5 bath (2,500 sq.ft.) and he paid about $60,000. It was considered expensive back then.
I know nothing about the world of most of these Generation Xers. But one thing I'm pretty sure of is that they'll never be far enough out of debt to save for retirement.
You have got that right, what was a good investment twenty years ago needs to be looked at with new eyes. If you pay cash it’s maybe okay, but it’s location, location, location...still.
Baby Boomer here who paid cash for his last two homes.
In my neighborhood, the trend a few years ago was to borrow against the bubble-inflated home values and do extensive renovations. Now the trend is to tear down the cheap older homes and build larger houses in their place. But the lots are tiny, and the new houses stretch from setback to setback, so the kids don’t have any yard to play in. It’s sad.
Because people would call them bums.
I have done this with my son; he pays bills, is responsible for chores around the house, etc. My peers cannot believe he lives at home.
Imagine how different the housing market would be if we followed the biblical model of “no loans longer than 7 years”.
BINGO...
If ya can’t pay cash, and don’t have a super secure great paying job with benefits, retirement etc....Ferrget it...
It’s a plane crash waiting to happen...
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