Posted on 01/06/2022 9:19:02 AM PST by SeekAndFind
Home prices and rent are soaring faster than wages. This shattered home buying plans of generations Y and Z and put them in a rent squeeze as well.
Things have really changed in three years according to Yardi's latest Generational Survey on Homeownership Dreams.
Three years ago Yardi found that Gen Z was enthusiastic about the prospect of owning a home, whereas Millennials were pessimistic about their homeownership outlook.
Nearly two years into the COVID-19 pandemic and its economic and societal fallout Yardi has different findings.
Affordability concerns have noticeably risen in the past 3 years, with home prices unaffordable for 66% of renters.
1 in 5 adults living with family say they can’t afford rental costs while 56% of non-owners have nothing saved for down payment.
Gen Z’s expectations for homeownership tempered in last 3 years with increasing concerns around credit scores & job security.
Millennials are still behind homeownership, with 55% of them dissatisfied with their current home – the lowest of any generation.
Nearly 40% of Millennials & Gen Z postponed buying a home due to the pandemic.
Suburbia becomes top option for Gen Z and even formerly city-minded Millennials, while Gen X’s interest in rural living grows
38% Live With Parents
33% Rent
29% are Homeowners
In the previous survey 83% of Zoomers expressed a desire and planned to buy a home within five years of 2018.
Only 29% of adult Zoomer respondents are now homeowners.
Millennials remain the most disgruntled generation, with respondents from this generation reporting the lowest levels of satisfaction with their homes (55%), as well as the highest levels of outright dissatisfaction (17%).
For Gen Xers, the home’s state of repairs is the most significant worry with one in five dissatisfied with it, while more than one in five Millennials and Gen Xers are unhappy with the size of their home.
26% of all respondents who were unhappy named the home being too small as the main factor. This was closely followed by insufficient space for work and insufficient space for recreational activities, while one in five named overcrowding as the main factor. Only 3% of our pool of respondents said that their home was too large.
Just over half (52%) reported no effects on their homeownership plans, while 41% of Millennials and 36% of Gen Z non-owners had to delay buying their own homes. Furthermore, 4% of all non-owners reported losing their homes due to COVID-19, with Millennials most affected at 5%.
With the eldest Gen Xers now 56 years old, elder Millennials looking at 41 this year, and the forefront of Gen Z hitting 27 in 2022, homeownership rates among respondents from the three generations stand at 78%, 64% and 29%, respectively.
So, what’s keeping 22% of Gen X, 36% of Millennials and 71% of adult Zoomers out of the housing market?
The main issue is affordability. Of all non-owners who participated in our survey, 53% view today’s housing market as just as inaccessible or even more inaccessible than in 2018, with Millennials most pessimistic. And, for those living with parents or other family members, the outlook is even more stark than it is for renters, with 59% of Millennials who live at home feeling that the prospect of homeownership is now even further removed.
No, but it sure didn't help either.
The real issue is wages have not kept up with prices making saving a nonpayment difficult if not impossible.
My charts show the problem.
Home prices have soared out of site. But rents are rising so fast that Zoomers and Millennials want out.
Home prices have seriously disconnected with rent.
But compounding the problem for Zoomers and Millennials, rent and OER (Owners' Equivalent Rent) have been rising way faster than the CPI and wages since 2013.
Earlier today I noted Real Hourly Wages Have Risen Less Than a Penny a Year Since 1973
In real (inflation-adjusted) terms, people are making no more than they did 48 years ago (yellow line).
Nominal wages have soared but have barely kept up with inflation, assuming of course you believe inflation is not understated.
My housing-adjusted CPI measure stands at 9.31%.
Try buying a house now on an additional half-penny per hour. It was actually possible factoring in a second wage earner per household until the year 1999 or so.
For details, please see Every Measure of Real Interest Rates Shows the Fed is Out of Control.
Meanwhile most Zoomers have to find a partner, live at home, or have roommates. I will see if I can get Yardi to conduct a survey on roommates.
* * *
Big deal. Those folks want communism anyway. Under communism no one but the senior party members owns anything. And that’s just how they want it.
Home prices tend to be self-regulating. It is only worth what someone is willing to pay for it. And not one cent more.
“ The real issue is wages have not kept up with prices”
No. The real issue is the Fed is creating money at a pace not seen in the history of the USA.
We just closed on a house in Florida, escaping this blue state. Just in time, as rates are increasing.
As for prices, I hope they will moderate as interest rates rise, but there is so much cash sloshing around in the economy, that in hot areas, all-cash transactions will prevent much of a bubble pop. The cash has to go somewhere.
My son and his wife also go to closing later this month with a nice, low, locked-in rate.
Proving once again that, no matter what Communists say, there is no such thing as free money.
What you have is multiple generations of little cowards, afraid to move out of their parent’s homes. They’re all afraid they can’t afford a rent payment or a mortgage payment, plus all the related other bills, because they are used to blowing all their earnings on frivolity.
It’s not so different from other generations, except we had the courage to bite the bullet and venture out, assume the responsibility and pay the money. Now the kids are waiting for the government to save them, and blaming their crushing student debt.
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OK, to be fair, this humongous home price appreciation was already happening BEFORE Slo Joe became President.
After having moved to Texas 5+ years ago, our late 20-something kid (tail end of the the Millennials) just closed on a first house last week. House prices are ridiculous here in Central Texas, but the apartment they were living in was about to spike rents by almost 20% over last year at the end of this month. With 20% down and a good credit score, that 3% rate may start looking good down the line if (when) interest rates spiral upward.
Realistically, why would you expect wages to increase in “Real” terms when the workers aren’t any more productive than they were in 1973? This inflation is just a fake construct to allow governments to pay past debts with future inflated money, so it is really a tax of sorts.
The real housing problem is one of availability, due to social engineering by government, ours or anybody else’s.
China has lots of housing that nobody wants or can live there. We don’t have enough in places where people want to live and work. This is by design, however irrational that design may be.
Lessen the power of government and things will improve.
>>>Home prices tend to be self-regulating. It is only worth what someone is willing to pay for it. And not one cent more.<<<
That’s not true imo. What you find in other western countries is a variety of housing. A varied mix that you rarely find here in America. What is the cause of this? Local zoning laws. Over the decades here in America cities and suburbs have made zoning MORE RESTRICTIVE. This can be from zoning entire towns SINGLE FAMILY, to requiring ever larger and larger lot sizes to build on or the quiet discrimination and refusal to permit apartment buildings. Where I live, try to build a new apartment building with three bedrooms. LOL NO......No town around here wants families to be able to rent an apartment. If you send your kids to the local schools, YOU NEED A HOUSE. At least that’s how the towns see it in regards to property taxes.
Contrast this with the America from 50 years ago. There were more “CREATIVE SOLUTIONS.” Maybe the attic was finished into an apartment. Think of the Cunninghams letting Fonzie live in their attic that they converted to an apartment. Or maybe a garage was converted to a coach house at the rear of the lot. Try doing that today and see how fast the authorities come down on you.
So you fiddle with supply and restrict it and what else can happen but have prices go up. And everyone knows the supply is restricted. That’s the entire point of zoning laws when it comes to residential. It’s all to restrict how dense you can pack people together in a given area. Those with the means are HAPPY TO MAKE HOUSING MORE EXPENSIVE FOR THE LESS AFFLUENT. Whatever it takes to keep them out of living near me is the motto.
Here is just one anecdote to illustrate my point. I know of some vacant land that has been sitting for ten years on the market. To develop it you need to build roads, sewers, sidewalks among other things. And it just sold. Not to a developer but to a rich man who is going to use it for himself. He will build one house and use the excess land for his horse. While it was on the market, developers simply couldn’t justify the expenses with the current density the local town would allow. Instead of adding dozens of homes to the supply in this particular town they were happy with zero new supply. And now the land is off the table. And they will be stuck with exactly one new home. And this probably makes the local town and neighbors happy. And this also does nothing to alleviate high home prices.
That’s the way to lower rents and home prices. Sometimes you have to be patient.
The RENTING chart is the reason why Blackstone and other real estate investors continue to buy rental properties.
23% of people will ALWAYS be renters.
Rent almost never goes down. With the exception of some of the deep blue cities. These are the corporations that are buying multifamily houses and single family houses for cash. It makes it very difficult for the small investor to compete.
Yeah, but Joe did such a great job in screwing up things even more... ;-)
Zoomers? Is that what the latest gen is called?
They should be called DOOMERS 🤪
bkmk
“Rent almost never goes down.”
That’s because expenses never go down, and always go up.
I sold all my rentals right as Covid hit. They were great for 20 years, but creeping expenses made them less exciting, even owned free and clear.
I can buy REITs if I want, no hassles.
I’ll leave the rental market to the big boys in retirement. I’m looking for rural and vacation land these days.
I don’t blame half of them...When I was young, the rents in CA took like half your income or more. And the rents went up every year while wages were pretty much stagnant.
It was like getting choked off in slow motion.
“Big deal. Those folks want communism anyway.”
Yeah... everyone from the last 3 generations really wants communism. There have been no non-communists born since 1970 I guess.
Oh wait, I guess that makes me a communist, I better get ready to vote for Comrade Biden. Thanks for clearing that up for me.
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