Posted on 11/10/2023 2:15:16 PM PST by Aquamarine
An analyst, who was once dubbed the 'Oracle of Wall Street', has warned how not owning homes hurts the 'avocado toast generation.'
Meredith Whitney, who is known for successfully forecasting the 2008 financial crisis, said that younger Millennials and Gen Z have missed out on $21 trillion in equity which older generations have built in home ownership.
We are seeing record low homeownership levels for those under 38,' she told DailyMail.com.
'Homeownership has been a forced savings vehicle in the US, but particularly in the last 12 or 15 years, because interest rates have effectively been at zero. We have seen $21 trillion of equity built up in homes over the last decade, which is obviously an incredible wealth creator.
'We are seeing record low homeownership levels for those under 38,' she told DailyMail.com.
'Homeownership has been a forced savings vehicle in the US, but particularly in the last 12 or 15 years, because interest rates have effectively been at zero. We have seen $21 trillion of equity built up in homes over the last decade, which is obviously an incredible wealth creator.
(Excerpt) Read more at dailymail.co.uk ...
I feel really good about my trailer park after reading this. Here I was mistakenly thinking I was living in squalor but I’m actually rich according to this.
Housing prices are up 30% since 2020, while interest rates have almost tripled. Something has to give. If you own a home pre-2020 and locked in 30 years at 3% you have almost no incentive to sell and trade your 3% mortgage for an 8% mortgage. New home buyers have to pay 30% more in property taxes on top of a more than doubling of interest payments. It’s a sellers market almost everywhere in the country; in the few instances where some inventory is available. Buyers are in a bad spot unless they are quite financially secure.
relatively newish starter homes are now $350,000-$500,000 dollars now!
how can someone starting out afford that? it wasn’t that long enough when that was the price of a dream home.
That is WAAAAAAY beyond most people’s ability to come up with the required 20% down. Young people are screwed going forward, I feel sorry for them. Because it is only going to get worse for them, because believe it or not.. raises to rents lag raises to prices. Rents will double or more in the next few years.
You’ve got a lot of folks from India driving the prices up, they are all over the place here in Frisco, TX.
If I were to buy a place, I would probably start with a 1 bedroom apartment. Then, sell that when it is paid off and buy a two bedroom. Then sell that and buy a three bedroom. Then sell that and maybe buy a house.
Smaller mortagages saves a ton on interest.
well whatever it is, there is nothing even remotely affordable anymore, as a home or an investment.
As an investor, you can only make a tiny amount of money (5-6% at most) if you can pay in cash because the ratio between the price and the rent is so far out of wack at the moment. Rents are going to skyrocket soon because of it, and then the real gut punch to the young will happen.
even 1 bedroom condos near me are going for $300,000+
There are always going to be Winners and Losers.
But I am highly suspicious of the claim, the “science”, and the motive.
Okay, suspicious of writer’s agenda.
Since when is an alleged genius on stocks (typically a game where the performance is measured in quarters or years) become an expert on residential real estate?
Owning a home is fraught with risks and costs. GWBush hurt a lot of people when he got the Feds even deeper into home ownership.
Of course, his father had something to do with the advent of Resolution Trust Corporation.
We are all on merry-go-round.
If they voted for the RAT party, they deserve everything they get.
My cousin lives in an average subdivision in Illinois. She pays $8000.00 a year in real estate taxes. Then there is insurance and maintenance. Young people are much better off living in a small apartment and not having kids.
“home pre-2020 and locked in 30 years at 3%”
You’re a bit off. We got a 2.75% in September 2021. Rates held until about spring 2022.
My point about pre-2020 was more about the valuation than the rate. But OK point taken. We tried to buy a home in 2021. It got over 20 bids and the winning offer was 21% higher than the listing price.
That’s crazy. A lot of that is driven by illegal immigration.
Some of that $21 trillion is going to evaporate.
Got some downtown commercial real estate for sale at 2021 prices? Good luck.
I only had to come up with a 3% down payment and pay the closing costs. I had enough money on hand to put 35% down, but I figured it was a no-brainer to make the minimum down payment when the rate on the mortgage was just over 3% fixed for 30 years.
So I moved my business into a 500 square foot walk-out basement in a newer detached home, and my mortgage payment is about 40% less than what I had been paying in rent for a two-bedroom condo and a 125 square foot shared office.
We scored about that above what we thought we would list at. It was stunning. The property has since lost about 5% of its price since.
They would be better off creating a REIT and buying a home as a group, just to keep the price from rising.
I almost used the same word, stunning. The country was shut down, unemployment through the roof, and yet mobs of people were bidding up homes.
I have no idea what happens next, or when, but something has to give. It may take a very long time since as I said, it is not very compelling to trade your 3% mortgage for an 8% mortgage among other issues that will prevent inventory from becoming available for the next generation.
I guess I’ll have to find a way to make a lot more money.
Home ownership is the number one way to build wealth in this country. Anyone who rents is missing out on that opportunity.
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