Posted on 05/09/2011 5:19:20 AM PDT by SeekAndFind
If you're a 20-something or even younger, your economic future is at best clouded. Your taxes will almost certainly be higher than today's; your public services (schools, police, sanitation, defense, scientific research) will almost certainly be lower. Paying for old people, covering rising health-care costs, repairing dilapidated roads and servicing government pensions and the huge federal debt will squeeze take-home pay. Is there any hope for economic gains?
Well, yes - and from a surprising source. Housing. Say what?
Almost everyone considers the housing collapse a disaster, and it is. Since 2007, roughly 8 million homes have gone into foreclosure. Housing prices, according to the widely cited Case-Shiller index, are down about 33 percent from their 2006 peaks. They're still falling, albeit at a slower pace. In some cities (Atlanta, Cleveland, Las Vegas, Detroit, Phoenix), they're at or below 2000 levels. Home sales are stunted, and construction is a quarter of its previous peak. Housing's implosion retards the economic recovery. Aside from unemployed carpenters and real estate agents, there's much unsold lumber, carpet and appliances.
But housing's troubles may have a silver lining. If you're a homeowner, the steep fall in prices is calamitous. But if you're a future buyer, it's a godsend. What we're seeing is a massive wealth transfer from today's older homeowners to tomorrow's younger homeowners. From year-end 2006 to 2010, housing values fell $6.3 trillion, reports the Federal Reserve. Assuming there's no sharp rebound in prices - a good bet - that's $6.3 trillion the young won't pay.
Up to a point, the lower home prices merely deflate the artificial "bubble." But there's evidence that the declines transcend that. The National Association of Realtors routinely publishes a housing "affordability" index, which judges the ability of median families to buy the median-price home at prevailing interest rates. By this measure, existing homes are the most affordable since the index started in 1970.
yeppers, 20-somethings are gonna be rolling in clover
as long as the tip jar yields anough for a 20% downpayment
Whoo-Hoo! All the young people can rush out, toss down the big down payments, and scoop up the cheap houses! Happy Days!
Realtors like to tell half truths, houses only appear more affordable because our dollars are worth nothing. Try the same home price at say a reasonable 7.5% interest.
Eating dog poop is a great source of iron... jueeeeeeeez louise.
LLS
You still have to live in an area that you are able to have a decent job in order to buy a house. The Washington DC area is still almost impossible for a single person to buy a house.
However, if you buy now, at say 4.8% on a thirty year mortgage, the coming inflation will not only precipitate a rise in the value of the house, the interest will be free and paid by the devaluation of the US$.
If you want a house....... now is the absolute best time to buy. In 6 weeks or so when rates begin to rise, the situation will change. There will be the inflation in value but some of the interest dividend will be lost
They can buy a house with their savings from working all the new McBama jobs.
I saw a house listed in the neighborhood where we bought our first “starter home.” It was selling for about the same price we paid for a house in that neighborhood almost 25 years ago (it may have needed fix-up, but so did the one we bought.)
Difference, we paid high interest...put a third down, and the buyer carried the note for 8 years at 10 percent (and we thought 10 percent was cheap as the banks were charging 12.) The house cost was equal to the cost of about one year’s salary.
Say our 23 year old were to buy in that neighborhood today. Interest rates (at this point) would be low, and the cost of the house would be 1/2 of his yearly salary.
So on the surface seems like quite the deal for younger people, but I’d have to drive past that neighborhood and see if the area had “deteriorated.”
What I’m telling all our young friends is to sock away money like crazy because they may be able to get a great deal on a house...but besides the down, they’ll need cash to fix it up because so many are fixer uppers. (Dad’s teach your sons skills so they don’t have to pay others to do house projects.)
there’s govt jobs, govt-contractor jobs, and “will that be for here or to go” and “would you like a change of towels” jobs
illegal aliens buy houses and then rent them out to groups who sleep in the beds in shifts, which does wonders for the housing values in the suburban neighborhoods
hint- don’t by a house in the MD suburbs where you hear roosters crowing before dawn....
find the remaining high schools with the highest college attendance and SAT scores- buy houses only in those school districts
best indicator of “value”
Realtors cannot tell you that, they can direct you to sources to do the research
(also check out the number of sex offenders in the neighborhood and vicinity ... Megan’s Law)
The place I am renting now is cracking down on this by requiring that renters carry renters insurance of $50,000 in liability and charging for parking. I have noticed in the past few months not so many amigos living in my area.
oh, they found a “law” that ...illegals...actually respect?
LOL!
Maybe if they start towing away excess cars
This is true about young benefiting except the wealth transfer claim is BS.
The author makes the same Democrat/Republican popular mainstream mistake in stating that the " ...Almost everyone considers the housing collapse a disaster...and is a wealth transfer from today's older homeowners to tomorrow's younger homeowners"
. The disaster was the huge run-up in prices that was based on nothing but low interest rates, lax regulations and loan requirements, a misguided Federal government home ownership program, paper values that meant nothing and a country (government and citizens) that basically loved that make believe economic growth party until the music stopped and few chairs were left. Heck, the housing bubble was a major argument for illegal alien amnesty in 2006-2007 to 'fuel our growing economy'. Poor hispanic immigrants were pounding the nails and buying houses themselves. Look at AZ,NV,NM.
The run-up (the party) was disaster and couldnt last. Claiming the collapse is the problem is like a crack user claiming the rehab is his problem.
The twentysomethings won’t purchase a home. They are entitled to a home!!
ROFLOL, not one thing you said made any sense, since it is all I feel and their is no way to calculate an I feel. Housing values will continue to drop this year and probably next year, we have not reached bottom and there has been no job growth to produce purchasers , most people that graduate this year will not be able to find jobs. Problem is the fed is between a rock and a hard place, if they do not raise rates the dollar goes further in the toilet, if they do raise rates the economy goes further in the toilet.
Only if they can find work that pays a salary large enough to support a mortgage or substantial savings.
Wouldn’t work in our area...kids go to schools by lottery...lots of magnet schools and IB programs in high schools, so two kids could live next to each other and go to separate schools. They tend to place the most “attractive” magnet programs, or IB schools in the schools in segregated neighborhoods to attract in a racial balance.
You are correct, the ding bat authors also over looks the trillions of dollars added to the debt, that someone will be paying interest on for years. There is no free lunch.
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