Another Housing Market Crash Looming?

[Deleted member 28227]

There is a strong possibility in the next 6-12 months that a 20-30 year old will be able to purchase their first home significantly below current market value with interest rates at historic lows.

The individuals that are going to be most effected by the coming recession/depression will be those at the bottom. People making just above minimum wage/ getting into the job market. The real winners will be... boomers/gen-x/millennials who set themselves up well, have established and insulated careers, and therefore have money. (The oldest millennials are now almost 40)

Sure when I graduated in 10' houses were cheap relatively, but I was a freshly minted college grad and the job market sucked. I worked 2 jobs and was grateful to have them... there was no way I was cobbling together even 5-10k to get into a house.

The class of 2020 is going to have it rough, they won't be buying houses even if the housing market takes a 50% hit, they will be lucky just to make ends met. GenZ is likely going to be living at home post college to even an even greater degree than millennials did.

 

[Bigjay73]

Is there a run on the banks? Working on a office building with a bank inside, there's a loooooong line of cars in the drive thru. Looks odd, maybe it's just afternoon deposits

 

[Doublecluck]

1980 bra, missed it by a few years... damn..

 

[brymoore]

The individuals that are going to be most effected by the coming recession/depression will be those at the bottom. People making just above minimum wage/ getting into the job market. The real winners will be... boomers/gen-x/millennials who set themselves up well, have established and insulated careers, and therefore have money. (The oldest millennials are now almost 40)

I have an insulated job, financially secure and I’m set to make money on the stock market correction.

 

[VikingsGuy]

Gen Xers - our time to shine

It Took a Global Pandemic, But Generation X is Finally Getting Love

The Baby Boomers were born to the Greatest Generation. They have changed nearly every aspect of society ― by their sheer numbers and their dominant

www.papercitymag.com

 

[rwc101]

When you're a millennial who bought a house last year.

 

[BigHornRam]

For Christ sake put down the bong, there is a strong possibility in the next 6-12 months that a 20-30 year old will be able to purchase their first home significantly below current market value with interest rates at historic lows.

Only if they give up flying around the globe for 3 months out of the year on their credit cards.

 

[Deleted member 28227]

Only if they give up flying around the globe for 3 months out of the year on their credit cards.

So help me BigHorn, you know I won't hesitate to give you the door as well...

 

[Doublecluck]

The individuals that are going to be most effected by the coming recession/depression will be those at the bottom. People making just above minimum wage/ getting into the job market. The real winners will be... boomers/gen-x/millennials who set themselves up well, have established and insulated careers, and therefore have money. (The oldest millennials are now almost 40)

Sure when I graduated in 10' houses were cheap relatively, but I was a freshly minted college grad and the job market sucked. I worked 2 jobs and was grateful to have them... there was no way I was cobbling together even 5-10k to get into a house.

The class of 2020 is going to have it rough, they won't be buying houses even if the housing market takes a 50% hit, they will be lucky just to make ends met. GenZ is likely going to be living at home post college to even an even greater degree than millennials did.

Yea ok I’m 40, my oldest two daughters are 18 and 20, MY 20 y/o has managed to save over 10k For her wedding working at a restaurant while going to college. My 18 y/o, (class of 2020) has 4k saved from working 2 years while in high school. I can totally see how someone could graduate high school, get a bunch of student loans, a degree with no jobs or jobs that don’t pay, a couple vehicle loans And never afford to buy a house. But I also see people graduate high school, go become a electrician or any number of 1000 other trades and start making 35-40 bucks an hour in a couple years and build some credit and purchase their first home at 22-25 years old.

Looking back on my life, if I had just one piece of advise I wish someone would have pounded in my head and I would have followed earlier, it would be purchase real estate. No point in paying someone else’s mortgage.. just tossing money in the can.

 

[Deleted member 28227]

Yea ok I’m 40, my oldest two daughters are 18 and 20, MY 20 y/o has managed to save over 10k For her wedding working at a restaurant while going to college. My 18 y/o, (class of 2020) has 4k saved from working 2 years while in high school. I can totally see how someone could graduate high school, get a bunch of student loans, a degree with no jobs or jobs that don’t pay, a couple vehicle loans And never afford to buy a house. But I also see people graduate high school, go become a electrician or any number of 1000 other trades and start making 35-40 bucks an hour in a couple years and build some credit and purchase their first home at 22-25 years old.

Looking back on my life, if I had just one piece of advise I wish someone would have pounded in my head and I would have followed earlier, it would be purchase real estate. No point in paying someone else’s mortgage.. just tossing money in the can.

I think the thing to keep in mind with all of this as well is that anecdotes are just that; my experiences, your experiences while interesting aren't necessarily representative. You have to look at the data in aggregate, on a nationwide basis. In part that's what I'm referring when I talk about loans, mortgages, and jobs. There certainly people who will do fine and a lot of them through hard work. Though I think the data will show that there are way more people that are going to get wrecked by this through no fault of their own.

All I'm suggesting is that being 22 in 2020 puts you in a category of people with lower than average lifetime earnings and home ownership rates. Just as graduating in 09-12' did.

 

[jlong17]

My real estate predictions: housing in the suburbs and more rural areas will see an uptick in interest. This quarantine has opened peoples eyes and some self examination has taken place. Folks will see that they don’t really “need” all those amenities the big city offers, and they really don’t want to be packed in like sardines anymore.
You thought the California exodus was bad before!?! As a Californian and a millennial (it cause more pain for me to say that than for you to hear it- but hey, I’m not a vegan), I have never desired a simpler life and a slower pace more than now. Time will tell.... carry on with the more sophisticated talk

 

[homers]

I think a credit crunch is coming, which is the worst. Many countries have gone on a borrowing binge over the past few years with very low interest rates. Trillions and Trillions of dollars. Companies are going to go bankrupt and will ripple into everything. I hope I am wrong, but I see a another major drop in the markets coming in the next couple of months.

 

[Deleted member 16014]

My real estate predictions: housing in the suburbs and more rural areas will see an uptick in interest. This quarantine has opened peoples eyes and some self examination has taken place. Folks will see that they don’t really “need” all those amenities the big city offers, and they really don’t want to be packed in like sardines anymore.
You thought the California exodus was bad before!?! As a Californian and a millennial (it cause more pain for me to say that than for you to hear it- but hey, I’m not a vegan), I have never desired a simpler life and a slower pace more than now. Time will tell.... carry on with the more sophisticated talk

I can see that side of it, but I guess it depends on what you mean by rural. In many out of the way towns there just won't be very many jobs available for early-mid career folks. Especially with the energy industry and supporting businesses changing so fast. Maybe the mid sized western cities have big enough local economies to support a more diverse offering for those interested.

 

[Deleted member 28227]

While you're likely right, I do wonder how this whole thing changes the acceptance of working remotely. We were already headed that direction as is.

Exactly what I was thinking.

 

[JohnCushman]

I wish you guys would stop discouraging me so much about selling my house 5 BR 2BA, 4 car garage, 9 acres, a town of about 8,000 within an hour of a city.

 

[Nick87]

I wish you guys would stop discouraging me so much about selling my house 5 BR 2BA, 4 car garage, 9 acres, a town of about 8,000 within an hour of a city.

How much and what's the taxes lol?

 

[JohnCushman]

$125K and $456 a year

 

[Nick87]

$125K and $456 a year

That ain't bad, 3 br 2 ba on 10 acres here is 375k and taxes are 10k per year.

 

[Deleted member 28227]

$125K and $456 a year

Cushman I’ve been spending all day look at apartments... 450sqft, $2500 a month... first-last- damage deposit- broker fee $2500. So 10k to sign the lease. FML

 

[Big Fin]

I wonder if the 20 and 30 somethings find it ironic as hell some grumpy old folks would worry about how they are spending their money............

Good point.

All eight of my employees are in their 20s and 30s. They are all hard working, frugal, and savers. They all paid their way through college or worked jobs while the parents helped. They saved up for down payments on houses or they make the conscious decision to rent and not incur the additional overhead of taxes, insurance, or maintenance tasks that imposes on their time. They mostly drive old beater rigs, buy used stuff, and laugh at how the 50+ year-old generation blows their money on material things, as generalized as that last statement is.

The value they place on the most precious commodity of time seems to be far advanced from what my grasp of that concept was at their age. If I asked any of them the choice between a $5K bonus or a month off work, they would be logging off their computer and headed to their next adventure without blinking an eye.

Yet, I know a ton of people my age who are on the great American treadmill hoping for just one more stock market run so they can pay off their second mortgage that was used to buy a European vacation and new SUV, vehicle four in the garage. And to avoid generalization by single example, I know many my age who got off the treadmill in their 40's and gave the middle finger to the the great American idea of "More is better. Just give your employer more of your time."

The generalizations of either group are just that, generalizations. I see my age groups does more critiquing of the younger generations than the other way around, which could be a function of my peer group. I get why young folks came up with the "Boomer" memes and responses.

As a CPA that gets to see just how much debt a lot of 50+ year olds are dragging around and how poorly prepared they are for their later years, I don't see that level of debt in younger people I know. Maybe younger folks have surprisingly healthy balance sheets compared to a lot of 50+ folks, as they haven't been around long enough to acquire the same level of debt.

I did have a December conversation that was a bit sticky when a 63 year-old started railing on millennials, socialism, lazy asses, Bernie, AOC, etc. You know, the topics with trendy memes on FB these days. About two sentences later he talked about how his health care costs will go waaaay down when he can get on Medicare in less than two years. I smiled and quipped, "That socialism shit is a bitch, isn't it." He knew full well what I was saying and laughed along with me. I picked up the tab for breakfast.

Point of reciting that encounter is that when we generalize these topics, we can find many examples that support our position. And, sometimes we accept the pedaled narrative without much examination of our own habits and tendencies, however hypocritical (myself included).

The 20-39 folks I talk to are fully aware that when they entered the workforce, the 50+ folks and generations of single-issue voting tendencies have resulted in fiscal irresponsibility that has each of these youngsters saddled with over $70K of US debt that was spent before these young folks were even old enough to vote. And if you add other future promises not on the books that the 50+ crowd has made to themselves in the way of future benefits, it is triple that amount per millennial. They accept that huge US debt as part of their situation in life. If they whine about it, they do that whining where I don't hear it.

Given their frugality, as has been my anecdotal observation, and comparing it to the lack of financial responsibility (individually and collectively) that I have seen in many of my 50+ peers, along with how much debt we have saddled them with by making future promises to our collective selves, I'm not inclined to comment on the spending habits of younger people. I do admire the priority they (the ones I know) place on time and freedom.

Not sure what this diversion about generational behaviors has to do with a housing crisis. Carry on ........