And Softbank gave WeWork’s CEO $1.7 billion to resign, sign me the fuck up for that scam. I’ll even accept $170 million if my company only burns through $200 million a year just to be fair.
Even more impactful than the age is this “As buyers’ ages have increased, so have their incomes. The typical income of purchasers rose to $93,200 in 2018 as a lack of affordable options squeezed lower-income potential buyers out of the market.”
The median household income in the US is 57,652… so the whole idea of owning a home as part of a normal middle class lifestyle is basically over. The bottom 60% of the population will literally never make 93,200.
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This is even more pronounced here in Canada. Prices have exploded in the last decade and millennials are being completely squeezed out of the housing market as a result, particularly in our most populated areas (southwestern BC and the Greater Toronto and Hamilton Area). 1-bedroom condos are going for half a mil or more. You literally can’t earn enough money to afford a house in Vancouver.
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The median age of all buyers also hit a fresh record, 47, increasing for a third straight year – and well above the median age of 31 in 1981.
I wonder how many of these buyers are buying second and third homes without selling their other home, i.e., how much of this increase in median age is driven by increasing inequality and the uber-rich hoarding homes as “investments” or “rental properties”.
I’m not Uber rich but we are house shopping and intend to keep our current home as a rental property. It’s a decent diversifier, provides cash flow and is a reasonable alternative to really anything else.
It’s a reasonable thing to do, but I can’t help but think that this practice is 1000x more common today than it was 50 years ago, and that the consolidation of more of the housing supply into fewer hands is one reason why young people are having such a difficult time affording housing. Just a gut feel, no data to back it up.
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Nobody thinks they’re rich. I’ve actually heard people with 8 figures say they’re not really rich, you should see these other people with so much more. Gates is like “I’m pretty well off, but you should see Bezos’ yacht.”
Institutional ownership of single-family housing is definitely up a huge amount, but I would bet that small-time landlording is down, in part due to competition from institutions, but also because the aspiring rentier class is less likely to be handy enough to maintain their rental properties and I think it’s pretty hard to get a return on single-family if you’re not handling a lot of thing on your own.
The cost thing is interesting–it’s a bit of a vicious cycle. Because of the tax subsidy to owning a home, renting a house or a condo is generally only a reasonable thing to do if you plan on moving soon or just can’t afford a down payment on a house or can’t qualify for the mortgage you need. So you end up paying more rent than the after-tax cost of ownership for the same house, which makes it harder to build the financial resources, etc. This is the valid form of the concept of the starter house and the property ladder. To be clear, that’s mostly BS realtor marketing, but the tax subsidy to homeownership tends to exacerbate housing inequality, because people who squeak into being able to buy get big tax benefits that people who just fail to make it miss out on.
Just as an anecdote, I have a 46 y/o friend who rents his old $900k home in LA (bought for $450k in 2002) after moving into his current $1.5M home in 2016. However, he makes like $450k/yr as a big company exec (and his wife teaches at a public elementary school). His situation is “freakish” but there are a number of freakish people out there keeping the market juiced, at least in LA/SF/NY, etc.
One point that I am realizing as a “moderately” wealth person is that buying houses is one of the best ways for moderately wealthy people to access leverage to grow their assets. Regulatory and tax policy is designed to help people access mortgages to buy homes, but is generally aligned against borrowing money to buy stocks or other growth assets. So lots of people with a secure foundation of wealth are well served by mortgaging up and buying additional properties. If you try to borrow $1 M to buy a $1.5 M house, that’s pretty easy. If you try to borrow $1 M to buy $1 M of stocks, that’s pretty hard.
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Interview with Bernie:
If I want to go out and get a job today, I can get a job. That’s true. But on the other hand, and I do this all over the [country], you know, I’ve held a whole lot of town meetings and you talk to people. Yeah, I can go out and get a job, but I can’t find a job that pays me a wage that allows me to deal with healthcare and pay my rent or put gas in the car. So the economic crisis that we’re facing now is not unemployment, which is low. It is wages.
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You are tho
The economy is doing good
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Meh. I’ve had three landlords in my life. No problems with any, probably because I paid my rent on schedule and didn’t trash the place. OTOH, there are crap landlords around, for sure. So YMMV, I suppose.
MM MD
There are crap landlords and there are crap tenants. If you can swing it, it’s best to not be either a landlord or a tenant. Same thing goes for employer or employee.
Meh. Lot of people argue the opposite, from what I understand. There are benefits to NOT owning a home - although I’m a homeowner for decades.
Not disagreeing with you - I just get tired of all the “evil landlords hurr-durr” nonsense that was passing for thought.
MM MD
Yeah, owning a home sucks too.
All landlords are evil full stop.