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.
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.
I occasionally get roped into watching the flipper shows on HGTV with the wife unit. I am always amazed at the number of under 35 types who are purchasing an 1500 square foot house for $550,000 and then spend $50,000 on renovations. Where is the money coming from? Better yet what morons pay for that kind of property when you can buy a lot cheaper in the south and midwest (excluding tech boom areas like Austin, but it is still cheaper)?
You can buy 1800-2300 square feet down here all day for $100-$165 a square foot not a suicidal $300+.