M.C. Swag said:

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If you want to win you have to adapt. Any young person or young couple struggling to get buy ought to forego the new car, don't buy the house, but do buy the duplex. It's not sexy, it is not even nice in a lot of cases but it will help you build wealth and the duplex living is not PERMANENT.

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That's kinda the point though. Gen Z and younger millennials have gotten hammered between inflation and a growing wealth gap. They're being asked to 'adapt' to financially harder circumstances than previous generations, especially when it comes to home owning. If you live/work near a densely populated urban area, housing prices have far outstripped real wages.

You can 'bootstrap' anecdote your way to any solution, but we're talking about an aggregate of people who just want to 'live the American dream' their parents and grandparents did.

Edit: I don't have sympathy for people who make poor life choices, but when I look around and see a middle class that is shrinking every year, and the only people who are seemingly able to participate in this financial market are 2 income households...it's undeniable things have gotten harder. Gone are the days where a single blue collar income can support a family of 4 with a stay at home parent to raise the kids in a good neighborhood. I did everything right (graduated in 4 years with a business degree, got a good job and paid off all my debt, STILL driving my old truck that is going on 14 years and even I would struggle if I didn't have a wife who also made good decisions and has a high income).

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Cry me a River!!!! You want the American Dream like the previous generations; they had it so easy! Yeah Right! Let's look at the two oldest generations left. Greatest Generation, you know those who ALL GOT DRAFTED AND SENT OVERSEA BOTH PACIFIC AND EUROPEAN FRONTS, they had it easy right, life was a peach for them. It took our government 18 months after the war ended to get all our boys home. Or do you mean the BABY BOOMERs many drafted against their will sent to fight the might Viet Cong and came back to a un-welcoming America that told them they were baby killers!

Listen up, many immigrants are flourishing in their new found FREEDOM in the AMERICA. LIFE is GREAT here if you want it bad enough. If you're willing to make excuses then yes I will call you a victim. Would that make you feel better.

Yes you have to adapt, life is not the same as it was before! Heck, look what changes technology alone has caused us to change. Today you could start a business never leaving your home. Internet as provided so many opportunities that previous generations did not have. ADAPT to the times and quit telling me how great other generations had it.

Most young couples today don't have any where near the responsibilities as families 30 years ago. Most families 40 years ago had one car the family shared, smaller homes with more kids, eating out twice a month was a Bonus! What these younger generations take for granted, you know like $4 coffee, $800 cell phones, $400 watches, $500 purses, $60,000 cars; older generations think this is stupid, unless of course you had your retirement secured. Get pregnant today and the world gets to stop for 3 months (maternity leave, not only for the mother but the father too!), something not offered to the older generations.

You have to adapt! Yeah I know this message will not be embraced, especially with the younger crowd, but if you want to succeed you will find it to be true and that is not necessary a bad option. A college degree is less valuable today than say 30 years ago. Just getting a degree then set you apart. Today no, but a strong work ethic, passion for what you do, and the entrepreneurial spirit will.

Don't get me wrong, I do agree with you there are DIFFERENT challenges that younger generation have to cope with! Some are more difficult than others. The advent of the two income families has significantly contributed to a higher divorce rate and more broken homes. That alone makes it more difficult for future generations. The bottom line is that we all need to re-evaluate how to best overcome the obstacles presented and then execute a plan that works for you. Cheers!

I never said Gen Z has it the hardest. I said financially, today is harder to buy a home than ever before WHICH IS THE POINT OF THIS THREAD.

You can go stroke it to WW2 highlights now.

M.C. Swag said:

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I never said Gen Z has it the hardest. I said financially, today is harder to buy a home than ever before WHICH IS THE POINT OF THIS THREAD.

You can go stroke it to WW2 highlights now.

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Everyone else reading this thread:

I was with you on a lot of it. But very few people in the US get 3 months maternity leave. Yes, if you work with a company that complies with FMLA, you get 12 weeks, typically unpaid. Older generations may not have had that, but they did have the economy where one income could generally support a family- which is not something many people in the younger generations have.

$60,000 vehicle? Yes- 5 years ago a $60,000 vehicle was a luxury vehicle. Today, 60k doesn't even get you all of the new vehicles in the middle class friendly brands (GMC, Ford, Chevy, etc). Don't have cash to cover a new or used vehicle? Enjoy a high interest rate.

The younger generations today do have it easier in a LOT of ways. But financial stability isn't one of them. You talk about $800 phones- is there somewhere to get a cheaper phone that meets the requirements most employers expect their employees to have? The ability to immediately access email, servers, and the internet has become an expectation of employers, meaning you HAVE to have a smart phone (which many employers don't cover for you). With that, you get a pretty hefty monthly bill (certainly not the $10/month per line bill that was around when I was a teen. Must have internet at home- that's another hefty bill that older generations didn't have. Health insurance has over doubled since ACA- we get to enjoy those mandatory rates. We also get to fund social security- which we will likely never get to utilize. Cost of gas- roughly 300% hike since I started driving in the mid 2000s. Auto insurance rates have sky rocketed.


All of these mandatory things (and basic goods) have increased at insane rates that don't match increase in salary. I have used this example on other threads before. I worked for TAMU in financial aid. I did compliance audits on scholarship accounts, had access to tons of student private information, donor information, account information, and parents tax information (including social security numbers), among other things. I had prior experience in that exact role in a different university system, utilizing the exact same database and software (I didn't have to be trained on it), as well as relatable experience from other industries (graduated college in 2010, this was 2017). My starting salary at TAMU was 36,400 in 2017, when I left, I was around 42k. 30 years ago, that was entirely liveable, and a decent salary for the amount of access to personal information I had. Today (and when I was hired), that's pretty laughable. If I had been single, or a single mother, I would have been losing money each month here in BCS (which is ultimately why I quit- we save more each month by me staying home than what I made after having to pay daycare and after-school care). Pay has not increased at the rate goods and services have. You can say today's generations have it so much easier, and in some ways we do. Yes- we didn't get drafted and have to go to unwanted wars, though many of the young men in my generation willingly went off to an unwanted war and died overseas. They, too, have not been welcomed home with open arms. But we also don't have the luxury of low prices of goods, housing, and basic necessities, coupled with salaries that ACTUALLY cover those things with room to set money back.

You also mention the entrepreneurial spirit- young people today cannot easily be entrepreneurs thanks to the boomers and gen-x ruining the banking industry. Banks don't loan money out like they used to. Unless you have a substantial amount of your own capital, being an entrepreneur is a pipe dream for the younger generations (with the exception of the tech industry, which is Hella cutthroat)

Edit- sorry for the rant. It's been a day, and it's only 10am. Lol

Medaggie said:

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If I didn't help, they would have 200K debt + 200K down payment/closing/furnishing. So yeah, I will cover both for them b/c if not, they would not get into a house for 10 years.

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Why in the world would a new grad need a $200k down payment, even including closing & furnishings?

This is why I roll my eyes a lot when this conversation comes up.

First, I graduated in 2010. Yes, housing prices have gone up substantially and I do feel for younger generations because of it. But still, I don't know a single person who came out of school with 20% ready to go to a house. Everyone I know rented for several years. First, to save. Second, we probably weren't ready for the responsibility of home ownership. And finally, most are moving to new cities and we had no idea where the hell we really wanted to live within that city.

Second, where are they living where starter houses are going to cost them $1mm? I'm in central Houston, in a popular area for young professionals. Houses around me can still be had for $400k+. As I said, it's still substantially higher than when we bought. My coworker is currently in the market for smaller, older houses in the heights and his budget is $450k. Yes, they need work, but they can be had.

htxag09 said:

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Medaggie said:

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If I didn't help, they would have 200K debt + 200K down payment/closing/furnishing. So yeah, I will cover both for them b/c if not, they would not get into a house for 10 years.

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Why in the world would a new grad need a $200k down payment, even including closing & furnishings?

This is why I roll my eyes a lot when this conversation comes up.

First, I graduated in 2010. Yes, housing prices have gone up substantially and I do feel for younger generations because of it. But still, I don't know a single person who came out of school with 20% ready to go to a house. Everyone I know rented for several years. First, to save. Second, we probably weren't ready for the responsibility of home ownership. And finally, most are moving to new cities and we had no idea where the hell we really wanted to live within that city.

Second, where are they living where starter houses are going to cost them $1mm? I'm in central Houston, in a popular area for young professionals. Houses around me can still be had for $400k+. As I said, it's still substantially higher than when we bought. My coworker is currently in the market for smaller, older houses in the heights and his budget is $450k. Yes, they need work, but they can be had.

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A $200k down payment is aggressive but not entirely out of the question if we're projecting 10 years out. I graduated the year after you and idk what it's like in your city, but rent has gone up drastically since I was an apartment dweller. It would be next to impossible to save for a down payment if I had to rent anywhere near a city center like my job required.

Having said that, it's a huge benefit to any kid that can graduate simply debt free from college. I have no idea how anyone can walk out with $100k of debt and participate in this housing market before the age of 30.

As a millennial, I disagree with a lot of the "millennials got the short end of the stick" comments on this thread. As with most things in life, if you work hard and make smart decisions you'd have done fine. In general, all generations have had advantages and disadvantages over others. Its not all doom and gloom.

What I find plagues a lot of folks is the lack of self-control and unreasonable expectations which prevent them from living within their means. When I graduated from A&M, there were several folks I knew that expected to have their parent's current quality of life as a new graduate. Half the folks I knew went and bought brand new vehicles, got fancy apartments, went on fancy vacations, and went out 4-5 nights a week. When people started buying homes, a lot of folks were trying to buy homes like their parents had as their first home and bought at the top of what the bank approved them for.

I didn't live like I was in the poor house but I did live a lifestyle that corresponded to my income level and stage in life. This allowed me to save money for both retirement and for future purchases. Too many folks I knew were trying to live the same lifestyle as their parents were at the end of their careers when they were just starting out.

Anecdotes are good but ultimately meaningless. The data is overwhelming that home affordability today is worse than it has been in many many years in the US.

There is a reason that there are a whole lot of us millennials that are successful contributing members of society that own homes and aren't up to our eyeballs in debt.

Sure, home prices are more than they were in the past but so are incomes. Yes, home prices have increased at a higher rate than wages but the reality is they haven't become astronomically more expensive. Let's use an example from earlier in this thread: The poster that said he bought his house for $90k when he made $30k vs. his son at $350k and $65k.

1989 purchase:

• 10% down payment - saved $9k or 30% of a year's income
• 10.32% interest rate on 30 year loan
• $730.06 monthly payment ($8760.72 annually or 29% of a year's income)

2023 purchase:

• 5% down payment - $17,500 or 27% of a year's income
• 6.84% interest rate on 30 year loan (in July when poster posted)
• $2176.52 monthly payment ($26,118.24 annually or 40% of a year's income)

So the affordability of a home has decreased 11% since 1989 in this example. However this is about millennials and not gen z (which the 2023 graduate engineer would be unless he is a non traditional student) so let's do a millennial example to compare to the 1989 purchase:

2013 purchase:

• Average home purchase price in 2013 was $268,900, average engineering starting salary was $55k
• 6% down payment - $16,134 or 29% of a year's income
• 3.98% interest rate on a 30 year loan
• $1203.83 monthly payment ($14,445.96 annually or 26% of a year's income)

In this scenario, for the millennial, homes were actually 3% more affordable than in 1989 example. Millennials that had their stuff together were able to take advantage of some of the lowest interest rates ever which made homes more affordable despite an increase in "cost."

I used the average down payment and average interest from these time periods based on some quick google searches. Also where I got average home price and salary for 2013.

At the end of the day, I wouldn't want either of the mortgage payments with either of the gross incomes the other poster shared. However its not painting an accurate picture to say the price of the home increased $260k while the income only increased $35k as it doesn't take into consideration interest rates, down payments, etc. Prices increase in lower interest rate environments and they decrease in higher interest rate environments.

I get it though, its much easier to feel like you were dealt a bad hand and the world is mean and evil while feeling sorry for yourself than to actually do the analysis to compare apples to apples.

falconace said:

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I get it though, its much easier to feel like you were dealt a bad hand and the world is mean and evil while feeling sorry for yourself than to actually do the analysis to compare apples to apples.

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My guy, you brought up the emotional anecdotes, so don't try to lecture anyone else about getting lost in their 'fee-fees.'

I like that you cherry picked 2 specific years to compare as your apples when talking about a GENERATION of homebuyers. Millennials are born between 1981 and 1995 - that means the absolute oldest millennial was 33 in 2013. Not a whole lot of buying power if that's your apex age demo.

Here's some key inputs for each decade since the first Millennial was born.
1980 (the cutoff before millennials) -

• Median Home Price: $47.2k
• Avg Int Rate: 13.7%
• Calc'd P&I payment w/20% down payment: $446
• Median Rent: $243
• Median HHI: $21k

1990 -

• Median Home Price: $79k
• Avg Int Rate: 10%
• Calc'd P&I payment w/20% down payment: $555
• Median Rent: $447
• Median HHI: $30k

2000 -

• Median Home Price: $119k
• Avg Int Rate: 8%
• Calc'd P&I payment w/20% down payment: $699
• Median Rent: $602
• Median HHI: $42k

2010 -

• Median Home Price: $221k
• Avg Int Rate: 4.6%
• Calc'd P&I payment w/20% down payment: $906
• Median Rent: $694
• Median HHI: $50k

2020 -

• Median Home Price: $329k
• Avg Int Rate: 3.11%
• Calc'd P&I payment w/20% down payment: $1,125
• Median Rent: $1,104
• Median HHI: $67.5k

2023

• Median Home Price: $416k
• Int Rate: 7.5%
• Calc'd P&I payment w/20% down payment: $2,300
• Median Rent: $1,180
• Median HHI: $74.5k

Now here's the nut -
% of Rent to Income:

• 1980 - 14%
• 1990 - 12.7%
• 2000 - 17.2%
• 2010 - 16.6%
• 2020 - 19.6%
• 2023 - 19%

% of Mortgage to Income:

• 1980 - 25%
• 1990 - 22.2%
• 2000 - 20%
• 2010 - 21.7%
• 2020 - 20%
• 2023 - 37%

The 1980s were clearly not a good time to buy a home, but every decade after certainly was....until today, which is the basis of OP's post. HOMEBUYERS TODAY. And by any metric, buying a home in 2023 (whether you're a millennial or not) is harder than it's been in generations (arguably ever). Which is being compounded by the fact that average rent prices have run amok as well. It used to be considered smart to save money and rent until you could afford a home. But even that strategy is now becoming harder to implement.

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There is a reason that there are a whole lot of us millennials that are successful contributing members of society that own homes and aren't up to our eyeballs in debt.

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Giving the amount of effort I did into my post was hard after reading this as your opener. Like, grow up you absolute tool. People don't take on massive debt because it's fun and it doesn't make you a better person because you have none.

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Like, grow up you absolute tool.

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No need for name calling. There is a good chunk of this thread that is people complaining about how the deck is stacked against them and they were doomed from the start. Not quite the case and a good chunk of millennials have been able to somehow overcome the terrible hand they've been dealt and have been able to do as well as or better than their parents did at their age.

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My guy, you brought up the emotional anecdotes, so don't try to lecture anyone else about getting lost in their 'fee-fees.'

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If by emotional anecdotes, you mean what really happened to me and others I know... it is a statement of fact. Guess what, life is tough sometimes and requires sacrifice. Not everything can result in immediate gratification. I refuse to feel sorry for folks who spent years blowing through paycheck after paycheck on wants and not needs without planning for the future.

This thread has several instances where folks lament over saving for retirement/homes/etc. or enjoying their 20s. It doesn't have to be an either/or situation. Trigger warning, upcoming anecdote: In my mid twenties, I lived in Boston. I could have lived in the city, walked to bars, and lived in a tiny apartment. I chose to live outside of the city (in fact, outside of the last subway stop) in an apartment 3 times the size for 1/3rd of the price. I still spent most Fridays and/or Saturdays downtown and would crash with a friend or take a taxi home... saved me probably $1500-$2k/month and didn't feel like I lost out on a fun part of my 20s. As with most things in life, its about balance.

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I like that you cherry picked 2 specific years to compare as your apples when talking about a GENERATION of homebuyers.

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I didn't cherry pick. I took the only example that had been discussed in this thread comparing now to a past date. Another poster provided the dates and details. If I wanted to cherry pick, I could have picked other dates that would have turned out way more favorably.

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The 1980s were clearly not a good time to buy a home, but every decade after certainly was....until today, which is the basis of OP's post. HOMEBUYERS TODAY.

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So you agree with the point that I've made in this thread. The OP title is that millennials can't afford homes, not that this decade is the worst time to buy a home since the 1980s. If you are a millennial and haven't been able to figure out how to buy a home until this decade, in most instances its because you did something wrong and not because as a generation we've been so unlucky.

In 2020, the oldest millennials would have been 40 and the youngest would have been 24. The vast majority of millennials were over 30. If you couldn't save up for a down payment which didn't have to be anywhere near 20%, get a job with a salary to qualify you for a mortgage, and take advantage of historically low rates before prices exploded, then that is on you. Plenty of people were able to do that and saw their equity rise drastically in the past couple of years.

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the basis of OP's post. HOMEBUYERS TODAY. And by any metric, buying a home in 2023 (whether you're a millennial or not) is harder than it's been in generations (arguably ever). Which is being compounded by the fact that average rent prices have run amok as well. It used to be considered smart to save money and rent until you could afford a home. But even that strategy is now becoming harder to implement.

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I'm not arguing that buying a home in 2023 is not harder than it has been in the recent past. The OP's post is titled "Why Millennials Don't Own Homes" not "2023 is the hardest year in recent memory for home buying." Initially, you have several millennials sharing how they bough starter homes in their 20s and then upgraded later on but then quickly devolved into a pity party about how tough millennials have had it our whole lives. If millennials would have been making smart financial decisions along the way, the vast majority would have been able to purchase a starter home and either still be in it or have upgraded at least once along the way.

That is my point. Not that its hard for gen z to buy a home or that it is more expensive for anyone to buy a home today than it was 5 years ago. It is that millennials haven't been beat down their entire lives and never had an opportunity to purchase reasonably priced homes. Life is full of choices. If you make crappy choices for years, you don't get to complain that its not fair because now you don't have what you feel entitled to have.

That's bs and you know it. Stop trying to be a victim and go back and read my post. There is a difference in having debt and being up to your eyeballs in debt.

Can't speak for other markets but in BCS especially starter homes there is quite a big spread. The issue now is existing home pricing has ramped as well as well as interest rates along with property taxes and if you go back to 1980 in Texas it used to do the exact opposite such as 80-81, mid 80's, 90-92, 2000-2002, 2006-2008. The past 3 years caused a rampant run up that we did not really follow in the past. What used to be 3-5% annual appreciation jumped to 40-50% total over a 3 year period. Also as another posted pointed out, everything else has pretty much increased substantially from insurance to gas to even groceries as we reached inflation levels not seen since the early 1980's.

Can't speak for all states, but it is very difficult to own a home. Actually, you really never own your home.

Yeah, Millennials have more stuff to spend on and they choose to spend on stuff that Gen X never had. Millenials definitely have more "experience" costs.

But Millennials have by far a more difficult time buying/owning a home. Just property tax along in a big city is ridiculous and you are just better off renting.

Starter home with 1800 sq feet in Austin with an Austin Address not in the hood is 400K entry. At close to 3% tax rate is about 10K with homestead. Add on 2K for Insurance and $1900/mo on a 300K mortgage.

That is a yearly cost just to carry the home of a hair under 25K. A lucky person making 100K after college is taking home 65K after taxes/retirement funding. 40K to pay for all the other blls/utility/car payment is essentially living paycheck to paycheck. If the HVAC dies, there is 10K. New roof, 15K.

It is just plain hard. Not impossible. But hard even for successful college graduates esp if they have a 6 figure loan.

maybe 40-50 years ago. 1,200-1,400 sqft hasn't been the norm in single family for a long time, even for starter homes.