15 Year Low in Home Ownership

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LBriscoe's picture

Is this a good or bad thing?

itera's picture

Good thing, it means buy now.  Ownership will come back, sure it might take several years, but with the ridiculous borrowing rates and lowest prices in a decade, now is the time to deviate from the herd.

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

Palantir's picture

Good in the sense that its a correction to the arbitrary notion of homeownership being a “good thing” and the prevailing view of a home being an investment rather than simply a place to live.

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

Sweep the Leg's picture

First time in a generation it’s cheaper to buy than to rent, so that’s good.  It’s amazinly bad for the economy so - you know - that sucks.

pimpineasy's picture

link?

Hope this helps

LBriscoe's picture
FrankArabia's picture

CFAvsMBA, time to get your mansion, do it now and pimp it up like floyds house……

ohai's picture

I think it means that home prices will fall some more. People want to buy houses. However, savings and income have declined a bit. However, home sellers have not yet marked down their prices to meet the real demand. Hence, the homes are unsold.

Alternatively, like mentioned above, the “dream of home ownership” has diminished. Unless this is temporary, it would also imply a further decrease in home prices. Past home prices could be thought of as {economic price + irrationality premium}. If the irrationality premium goes down, total price would also go down. 

“I’m a CPA! I got money b***h!”

Sweep the Leg's picture

Two very significant things are happening with 20-40 year olds.  They’re not sold on home ownership like their parents and grandparents were; and they don’t invest in stocks.  The latter was from a paper I’ll try to dig up, but basically, young adults don’t trust the housing or stock market (who can blame them?).

I don’t think these trends will last forever.  These people will come back around and that’s when we’ll see our next secular bull market in both stocks and housing.  Probably still a good five years from the start though.

The Righteous Hacksaw's picture

Agree with Sweep.  I’ll add this:

Basically, while you mellenials have been sitting at home watching “Girls” in your parents basement thinking about how your never ever gonna move out, your parents generation has outsourced your career and future to Asia where people like Chicken Tikka have been hard at work building homes for the Asians who are actually willing to work. 

I can’t tell you how much pent up demand we have in Asia.  We still have whole families with advanced degrees living in tiny little apartments.  We haven’t even gotten close to the point where Asians get to move out on their own.

So, we’re moving towards equilibrium. More Westerners are gonna move in with their parents and stay there.  More asians are gonna move out and buy a new aparment that they can now afford because they have your job.

But I am fairly certain that you won’t see anybody suddenly begging to buy your parents house off of them when they retire.  Why, because mellenials are broke and have no future and already live in their parent’s house anyway.  Zero ability to buy that house from their baby boomer parents once they start to retire en masse.  So probably just a handmedown. 

I expect house prices to continue to drop in the US in suburban Hells long term.  American Suburban Hell is dead.  Long Live Asian Suburban Hell.

This was a Pizza Hut Now it’s all covered with daisies….

And as things fell apart

Nobody paid much attention

No Homo

higgmond's picture

^ you got it, you got it.

I’m a creepy-ass cracka.

FrankArabia's picture

its more like they don’t understand the stock market as oppose to not trusting it……

krazykanuck's picture

FrankArabia wrote:

its more like they don’t understand the stock market as oppose to not trusting it……

Most people are lazy. They don’t want to put in the effort to learn. It’s also easier to blame other people and not take responsibility for their own financial future. Blame the rich, blame Wall Street, say the game is rigged, whatever; then not take responsibility when your likely meager savings aren’t enough to get you through.

ohai's picture

You don’t have to understand some investment to buy it. People who borrowed 10x their income to buy houses in 2007 probably didn’t understand the real estate market. However, they believed that they were making good investments due to their belief (trust) that prices would go up. 

“I’m a CPA! I got money b***h!”

CFABLACKBELT's picture

Agree with Sweep as well.  Though I’ll add to the idea of home ownership changing for “millenials” such as myself.  Personally I find owning a home a big burden right now.  It essentially ties down all my capital and adds a lot or responsibility that frankly I just don’t want to deal with right now.  Add to the equation that I may decide to get up and move at any time for a new job (or perhaps any job if I got fired).  Owning a house would just add more headache with trying to deal with that.

I realize I’m pissing away thousands of dollars each month, but I really like the idea of mobility.  Its anecdotal, but I find a lot of my friends in similar positions as myself  (or even those with more $$$) doing the same.

I don’t know if this is a trend, but I wonder if it means some changing elements in the future of homeownership. 

The Righteous Hacksaw's picture

Yep, that makes sense to me, as a millenial, as well CFABlackbelt.

Things that aren’t that cool to millenials: 1) mortgages 2) marriages, unless they are between gays 3) anything else that ties you down.

We are the generation that got taught to think that we are all unique snowflakes and are therefore quite flaky. 

I’m in my late twenties now.  I really thought by now I’d see at least my female friends falling in line and popping out babies and living in the same suburban hell that they were borne in.  Surprisingly, it just aint happening.  They are for the most part still hanging out in urban centers, dating the same loser, and nowhere near being able to afford a kid with their combined shitty salary and still play urban hipster.

I know they can’t play chicken with their fertility forever, but medical science does seem to have given them the impression, or at least the belief, that kids and what not, can wait until they are in their mid 30’s which was just a plain terrible idea a while back. 

My male friends aren’t up to the task either.  The ones that can afford it, don’t want it. 

I am legitimately considering a time horizon of 40 before I settle down and while I would have thought that was ancient when I was 20, it seems about right now. 

Did you guys see the latest episode of Girls?  OMG, ROFL, LOL!

No Homo

bodhisattva's picture

krazykanuck wrote:

FrankArabia wrote:

its more like they don’t understand the stock market as oppose to not trusting it……

Most people are lazy. They don’t want to put in the effort to learn. It’s also easier to blame other people and not take responsibility for their own financial future. Blame the rich, blame Wall Street, say the game is rigged, whatever; then not take responsibility when your likely meager savings aren’t enough to get you through.

I work in this business, I do well financially and I save I also take responsibilty for my life.  But quite frankly the game is rigged, it’s not an overt conspiracy but social/economic mobility and opportunity does not exist in the same way many of the people on this board believe it does.

Where’s alphaseeker though? I am looking forward to his poorly communicated and thought out rebuttal based on delusion and make believe.

ohai's picture

I agree that social class is mostly predetermined. However, US “middle class” is not a bad place to start. Even if you are born at the 50th percentile of US people and go nowhere from there, that’s still a pretty good life with lots of opportunities to save money. If the average American can’t put together a $1000 emergency payment, it’s hard to argue that it’s not their fault…

http://money.cnn.com/2011/08/10/pf/emergency_fund/index.htm

“I’m a CPA! I got money b***h!”

krazykanuck's picture

Tikka, bodhisittva, and ohai are all onto something there.

Yes there is the change for social class mobility but I agree it is a lot predetermined based on your family and what comes from that. My family is upper middle class and relatively well off, so I always attended the best schools I could hack it in because my parents could pay for it. Now by following the path I was put on and a bit of effort on my part, I have a good job where I am making at least double what many of my dead end-wanna be hipster friends from school are making, and making more than the national average salary. At 22.

People born into the lower socioeconomic classes don’t have the same advantages, and when you start with less… It’s always easier to start with more!

But running with with tikka said, I have no real desire to “settle down” anytime soon. I lost too much of college in a long relationship with the wrong girl and I don’t want to make that mistake again, so I’m just working, being social, studying for this f*$^% L2 exam, and enjoying life as much as I can. That being said it would be nice to have a house, I just don’t want the responsibility of one, even though I could realistically afford one.

The Righteous Hacksaw's picture

Right on Kanuck, did you see the latest episode of Girls?  OMG, PMSL! ROFL. 

Shit, I gotta go tweet something for my screenplay. 

No Homo

Sweep the Leg's picture

Dude, back off HBO’s new hit show Girls airing on Sundays at 10:00 Eastern/ 9:00 Central.  And after Girls be sure to stick around for Julia Louis Dreyfus in Veep.

FrankArabia's picture

are you guys serious? should a real man be watching a show called “Girls”?? 

higgmond's picture

^ my thoughts exactly, unless of course it is packed amazingly attractive women who frequently take their clothes off.

I’m a creepy-ass cracka.

I watched the first 15 minutes of the first episode of Girl with my gf.  She actually insisted I turn it off after the main character started talking about how she got a bunch of children’s book illustrations as tattoos as a way to take back control of her body after gaining a bunch of weight.  I kid you not. If I were the dude listening to her I would have said that diet and exercise may have worked better for taking back control of her body.

I can’t even put it in the “so bad it’s good” category, but maybe I’m missing the point.

“Some people make shoes. Some people make houses. We make money and people are willing pay us a lot to make money for them.”

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