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Why Milennials Are Stuck Living At Home With Parents
The Federal Reserve conducted a study on Millennials and tried to ascertain why so many of them are living at home. Is it too much student debt? Lower incomes? Or is it that home prices are simply unaffordable? The study finds that all of these factors have a big impact on why many Millennials are living at home and why the first time home buyer market is performing so badly. It also gives us insight into the shifting building demand of new construction. Many builders are focusing their energies on multi-unit structures to cater to an audience that will look for rentals or lower priced condos. There is a heavy renting trend undertaking this country. We are seeing a record numbers of young people living at home with mom and dad heading directly back into their childhood rooms to rock out the NES and attempting to pass Super Mario Brothers once again. There are major implications for housing because of this new structural change. First time home buying is down dramatically. Construction is catering to a lower income cohort. Let us look at what the Fed found in their report.
The massive number of young adults living at home
One of the interesting findings is that the trend of young adults living at home has continued on an upward slope going all the way back to 1999. Even the toxic mortgage days of Housing Bubble 1.0 didn’t really shift this figure by much. But the homeownership rate increased which means that the push came from older cohorts or young buyers that had the misfortune of buying near the top (and of course many were burned in epic fashion).
So let us look at the findings:
Nearly half of those 25 years of age are living at home with parents. The rate is up to 30 percent for those 30 years of age. These are dramatic increases from 1999. There has been paltry data on the makeup of housing composition because some were saying that many were shacking up with roommates. That does not appear to be the case:
If you were placing a bet, you would be in a good position putting your money on those 25 years of age living at home with parents. The first time home buyer market continues to perform pathetically. Of course, with investors pulling back we now have the FHFA trying to push for 3 percent down payment loans to get the juices flowing again. We are already at 5 percent down payments so this move to 3 percent will likely offer minimal help for younger Americans.
One of the better graphs from the Fed report is the combination of all these factors into one spot:
The homeownership rate of the 30 year old cohort has tanked starting in 2007 with the market implosion. That is very clearly illustrated by the green line above. Why? These were the folks buying with toxic mortgages and timed the market very poorly (or simply had bad luck). The rate of those young adults living at home has gone up unabated since 1999. Of course the increase in home prices has been driven by investors and this will simply make it harder on a cohort with lower incomes and much higher levels of student debt.
It is safe to say that many more young Americans will be renting deep into their adulthood. It is also safe to say given the current cost of college that many more young Americans will be coming back home to live with mom and dad. The Fed’s findings are simply reinforcing this trend.
Given the boom and bust nature of housing, we already see that the rate of price increases is slowing down very quickly:
The pattern seems to be clear. Prices ramp up. The economy hits a hiccup. And prices come trending lower. This even happened in the 2010 to 2012 period. Look at where we are at right now. And the recent run up in 2013 was largely driven by a fickle group in investors.
Millennials are living at home for the following reasons:
-Heavy levels of student debt
-Lower wages
-Inability to afford current home prices and in many markets, current rents
So how this sets up for a pent up demand for expensive homes or nicely painted crap shacks is really beyond the data.
The demand will be from older Friskie eating households, investors, and foreign buyers.
* * *
It was interesting to see the number of EB-5 visas being pumped out largely to those from China:
“(WSJ) To finance the concrete-steel platform, Related tapped a little-known and at times controversial federal visa program known as EB-5, which offers green cards to foreign families who invest at least $500,000 in U.S. projects that create at least 10 jobs per investor.”
It doesn’t even have to be 10 jobs necessarily but the hours have to work-out to the equivalent of 10 jobs. I’ve heard of people buying places like yogurt stores or fast food chains. Not exactly 10 great paying jobs but enough to keep young adults living at home with mom and dad. Since real estate volume is low margin in some markets, even having a few hundred buyers in one area can shift prices dramatically:
“(WSJ) These investors aren’t coming for the investment,” said Yi Song, a New York lawyer who works with Chinese clients. “They are coming here for their children to obtain a better education and to get residence as an insurance policy.”
The EB-5 program was virtually non-existent in terms of volume even just a few years ago. That is no longer the case.
But again, the demand isn’t coming from younger Americans that are suddenly making so much money that they are buying real estate. Short of better paying jobs, the first time buyer market is going to have a tough time.
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Let's see ... does that new house come with an Allodial Title? No? Well, I guess I will rent then so I can take my tax donkey self someplace else when the politicos run out of other peoples money.
Regards,
Cooter
Rent is not tax deductible, mortgage interest and property taxes are. Why are you playing checkers when the rules where made for playing chess.
The rules were made to make you a tax donkey.
In my opinion the only way own land is if there is a return on investment.
Owning a house on farm property will get you low taxes and you can rent out your fields for income or use them to make hay to sell on the open market.
Renting rooms out in suburbia gives you a return. Having a home buisness etc.
Owning just to own is a suckers investment as it really puts the slave chains on. That is unless you can really can afford it cash, which most people can't right now.
I will live with my parents. I will stack metal, pay my minimal amount of taxes and be a good donkey for now. Fuck rent and mortgages, fuck marriage (birth rates at record low for non minorites), fuck everything that ruins my potential at this point. Just go galt until the parasites come loose.
I get you, I've been there 15 years b4 you. I'm Gen X, never married, no children of my own , not yet. If I had rented my entire life instead of owning, I'd be a poor sucker right now. I sold a shitty condo investment last year for 350k and bought more silver than I could have ever stacked in my life. Life is how you play it bro. to each his own. BTW-I'm very aware of windfall taxes that are coming.
You must be a right miserable cunt?
Misery you feel is just sand in your vagina young lady. Time to douche.
yo cooter...easy on the allodial title schtick. or they'll be fittin ya with a new pair of thumb screws
Cooter, as a landlord I heartily approve of your message. Keep those monthly checks a comin'.
Rent + invest savings in good commercial REITs = same as being a landlord except can pull out at a moment's notice.
I don't disagree with anything you've said except for the 'no marriage/kids' part. You need to juice up and pop the kids out. That is your potential. You're either potent or impotent.
If you think you need your own house to have kids then you've not spent enough time looking at how they do things in India or Africa. At the end of the day everything else is bullshit if you're not reproducing.
My wife gave birth to 4 kids. Not my idea. She was going for the breeders cup or something. I raised enough for me and Camancho.
I hope comancho is too dumb and weak to have kids. It simply means that my kids will have less morons to compete against in the future.
'You better watch out mrpxsytin or we're not going to have any kids. That'll learn you!'
'riiiiiiiiiiiiiiight, have fun with that.'
It's got electrolytes!
If you make enough money to even have to file for income tax, you ought to consider yourself a fortunate little donkey.
Most millenials I know of either have no job at all, or work at Ralphs/Wal-Mart/Target. They're not tax donkeys, just donkeys.
True, a percentage of interest and taxes on a purchased home are deductible, but that means you are still paying the majority of interest and taxes out of your pocket, and only getting a "rebate" of 20-50%, based on your income.
Now add in maintenance and upkeep costs, as well as realtor commissions at buying and selling and there is no way in most markets in the US that one can do the math and come out on top buying a property to live in.
Add the fact that in this economy it may be advisable or required to move in order to remain employed, or get a better job, and the cards are stacked against purchasing a home in the vast majority of cases.
I realize there are exceptions, but they are few and far between.
Timing is everything. Purchased a REO in 2009 with $200k down, everybody told me I was a goddamn fool. This was after watching everyone buy their dream homes from 2000 - 2007, and I was the only naysayer. It's 2014, just got my appraisal for a refi, 333% gain. So, I'm sucking the equity out to redevelop an old bank using federal and state tax credits (45% gubmint money) to rent to all these idiot millenials, build myself a penthouse apartment for essentially free. Five years later, I'll condo them off and do it all over again.
Nice! Being a 'fool' is hard.
Don't count your chickens before they hatch.
You have only walked one mile on the path that many have walked and thought themselves "successful", only to find out things end differently at mile ten, twenty, etc.
Nonetheless, best wishes.
Just because they didn't have 200k to drop on a house like you did in 2009 doesn't make them idiots.
Happiest ni*ga on the plantation!
Kids want to live at home with subsidized rent and board.
Mom and dad get rent under the table.
Win-win.
Why?
Because you can't do business with people who don't have any money...
No jobs, no economy, no production. Too few Americans with jobs making a decent income to have a rising-tide effect.
$9 Trillion in admitted National debt added in last 6yrs; soon to add Taxpayer Backstop for $330 Trillion more. What's a third of a Quadrillion of guarantees for the bankers between friends? Except they ain't our friends. None of the $5 or $20 Trillion given to them under the table since 2008 has been loaned into any entity that would stimulate the economy. Rising indexes just smoke & mirrors.
Every loose nickel being sought and stripped away from American middle-class and poor. Another food stamp reduction coming. Jamie Dimon needs it more than your children do, so suck it up you miserable failures.
Ross Perot foresaw the situation; just never figured it could be so ruinous and corrupt.
Rent from my kids? HA! I have better luck getting blood from rocks. :(
If you don't have a mortgage you don't have to worry about paying mortage interest at all...and if you rent you don't have property taxes. You seem to have checkmated yourself...king me.
How come none of these survey's ever include the 40 - 54 age group???
Oh right, their the ones that got thrown to the sharks...
Hmm, not really. They're probably the only ones who aren't buying into the BS socialist meme. Everyone else seems pretty hopeful to me.
moved
Around here, we all left home as soon as possible. We lived together in shacks and worked hard and raised hell.
I loved pussy and rock & roll way too much to live with my parents.
Cars were also much bigger back then. Many cherries were lost in the back seat. I get your point though, but it's a different world.
Yep, at 5'-9" I could stretch out (on top of my date) in the back of the '76 Monte Carlo.
"I loved pussy and rock & roll way too much to live with my parents."
Fuck you & your rock & roll bullshit story.
Odds are that your parents were DIVORCED & you moved out because your stepfather was either beating the shit out of you or fucking you in the ass.
Projecting much? odds are your mom was a feminazi.
You would have a much worse gay hissy fit if I told you more.
So I will give you a break.
Sometimes the truth is stranger than fiction.
you forgot ur meds today
:) You had a Monty? That was a big deal when I was a kid. I used my fathers Bonneville on the weekends. My father was cool about things like that, mom never have a clue.
I had been my grandparents car when they lived in Phoenix. It was canary yellow and had white vinyl seats. This was the early 80's. Yeh, had a lot of fun it it.
I lived in some shitholes. Nothing to lose.
Why are they stuck?
Like the FED doesn't know THE FED is the goddamed muthafucking root cause!
I agree to a great extent. Other large factors are: Government shrinking the number of overall jobs by regulating/strangling businesses to death. And, the government making sure that anyone wanting to go to college can get a loan no matter how unmarketable their degree. Stop government backed student loans and college tuition prices plummet.
yep moved into a 70 year old mansion turned into 3 apts, with steam heat and no ac. didn't have a pot nor a window but i had more fun than at any other time in my life. my wife now laughs because the first time she came to my bachelor pad i had a 6 pack of coors and a half a bag of butterfingers in the entire place.
That's cute when you're 25. Try that at 45.
Im a millenial with a "good paying job", relatively speaking...I work at a big corporation, albeit as a contractor and I can say this; the millenials who have good jobs are either:
1) Parents work in corp america / big busienss and have connects
2) Are smart/talented engineerings/programmers/STEM type people
3) went to trade school and learned a trade
The rest? All worthless takers, obama supporters and liberal idiots, just like their Union paycheck fuck parents.
Buying a house these days is a liability and a career killer.
personally. I have enough $$ to put down a payment on a house, im holding out until the market crashes again so in the mean time im trying to take my derivative & forex trading to the next level :)
~DipshitMiddleClassWhiteKid
Good plan. There are a ton of "trendy" apartments going up where I live that are inhabited by 20 somethings paying $1,800 to $2,100 for a two BR. In this part of the country you can buy a decent house in the burbs for 1/2 of that rent amount. But there is risk as the house is an anchor and hinders the hunter/gather/nomads following the jobs. Plus there is an excellent chance that the house will be going down in value in the near future.
the millenials who have good jobs have to be nomads. shit changes fast in the STEM world
Most of 1/2/3 aren't supplying services directly to the top creditors, they are supplying the "worthless" takers ... without them nearly all of us would be just as worthless. Feudal overlords only need so many servants after all.
edit: double post
They are saving money to buy GUNS, KNIVES, And ROPE ! ..... FED BANKS they are thinking of you ! and I believe they have a DEBT TO PAY !
FUCK YOU FED BANKS
Am I the only one sick of reading about this statistic? Probably.
Young people are living at home in order to reject the reality that they are actually as poor as most living in the ghetto or trailer parks.
I see the poverty among college kids at the universities.
They hide it well, dressing like their peers, toting a cell phone or sporting ear buds, but it's always there. Most don't have cars, or travel on weekends like we used to. They are bored and scared and pissed, but still don't know quite what to be angry about. This won't end well.
Do they own guns and can they shoot straight?
Yes and yes here.
I've found firearms to be an excellent tool in protecting "wealth" both in the sense of retaining their value and also to protect what small amount of personal effects I possess.
I live at home, but I accept this reality.
This is to be expected. Multi-generational family housing is the norm in the third world because housing is so expensive that only large families with incomes can afford it. The US will increasingly move toward the multi-generational family housing paradigm as we slide into third world status. And this surprises you?
It's actually not a bad idea, having more family sharing homes. That's the way it USED to be you know...young people generally didn't leave their parents house until they were ready to start families of their own. And they grew up in a house that often had grandparents living there too.
This modern notion of everyone encapsulated within their tiny little walk-ups, like cysts, is fairly modern. It also enables those who prefer to keep folks as separate and alone as possible, makes it easier to pick 'em off.
I'd like to see more families buying homes next to each other, and forming family compounds. The citizenry isn't quite so vulnerable when they are backed by strong, established families.
many cannot follow the jobs AND stay at home. Mobility is a MUST now.
I have long felt that one of the main drivers of high house prices has been the grey generation. Not those who live in those houses like norm's but those in power who own housing and see the short fall of their generation in pensions and savings - all of which is needed right now. It also nicely fits their signatory on agenda 21. Simply put, Boomers, if you have not saved don't thret, we will inflate your large farm house plot so you can sell up and cash in. Thus solving who's gonna fund all of the nursing care. That's an expensive bum wipe and soup with a straw for gramp in the OAP home courtesy of those futurites...
The idiotic get rich fast scheme of endless house flipping has totally destroyed the starter home market. The only place you can buy a starter house is in a war zone urban area. Most of the nice blue collar areas of town have been destroyed by the flippers and the ah-hem, demographic shifts...
This is the end result of failed Reaganomics/ consumerism.
You can't outsource good paying jobs for 30+years and think everything will be ok economically.
Yes, endless blocks of concrete apartment housing should have been erected by the workers, for the workers.
UTOPIA!
Want to see unaffordable homes.....?
Come to Melbourne Australia.....it will make your head spin........
The Government in Australia does not value home ownership....
That is why they give a 'tax break' to 'home speculators' who borrow to 'invest' in mutiple homes.....they call it negative gearing......
This tax law has fucked home affordabilty for most young people.....and hence the only thing Aussies care about is the price of their stupid home.
wtf is the Fed doing these studies for? It should be the elected govt.
To figure out who to fleece next.
Top tier companies, like the FED, do studies like this so they can determine who of the millenials and gen x'ers has the easily programmable, malleable mind(s), for supporting the FEDs ponzi industrial complex.
Currently going Galt, my own way, no marriage, no divorce, no child support, no debt (I've some good savings for my age), no shit given to anyone, living with parent also and stacking, investing on my charts, using Bitcoin (fuck tax), and starve that fucking beast to death (our decadent "civilization").
If one day I want to get married I will not do that in the gynocratic West (more credible option in Russia/China/"East" when it come to wife material), but I will still require full prenup and separation of assets just in case :)
So, some of us are "Happier Abroad".
Well it's not anytime soon, but I'm quite happy with my current situation.
Burn Babylon, let it Burn !
Well, that explain a good part of what the millennials think and act today, well a very good part...
Japan is in the same case with only the sole difference: they are 10-20 years ahead ;)
They're going to open up reverse mortgages to these people. but then again not sure if they can even pay the utilities and property tax.
Rock and Roll plus Hot Pussy was all us Gen Xr's needed. We were the last generation before the great fucking.
Hot pussy sounds painful! Warm pussy is my personal preference :)
My parents are dead and I am 40 so I am Gen X or whatever. Dead are my grandparents too. By the time I was born the majority of them were dead. There are no parents for me. It is just me. There is no one but me. So go about life as if there is no one but yourself. I can not knock it too much because it makes what I am. Maybe it was not all that bad. There are some things you do recieve as a result. I can not explain that. Let us just say that I am fear no one.
I have 23 stitches in my left arm from a broken booze bottle. I have a false front tooth because I had that knocked out in a bar fight one night. I have had a few broken noses and black eyes. I only ever lost one fight but that was bullshit anyway because I got set up. I got a cheap shot that night and do not think that I forget about shit like that. I have not forgotten about the cheap shot that busted my front tooth out. One day it might just happen that I meet up with that asshole and I finish the game. I am in good shape even at my age.
Milennials do you want to do this fight with GenX? It can be bloody. We are getting old though. I do not think that you guys want physical contact. GenX does. The scars on my body agree,
most millenials can be cracked like an eggshell... that's what happens when you sit all day and skip meat and dairy in your diet...
im a millenial and i look forward to the opportunity to kill you and my parents generation off (baby boomers)
seriously, bring it!
I am waiting for the day to get the opportunity to go bashing anyones head in who is part of a union or works for .gov
Why do people even find this some kind of surprising issue?
People living with their parents into their 30s is pretty common in most of the eurpean continent from the Atlantic to the Urals.
Hardly a "milennial thing", just something that's been building as wages are low and housing gets expensive.
What is never mentioned in thsi whole article is what goes on with US veerans... the people who get special home loans from the government (rather, the citizens) and seem to be the last to hit foreclosure?
So these kids' Boomer parents all bought 4000+ sq mcmansions, with now no one to sell to. So why NOT have the kids live at home - the kids stay mobil, not tied to selling a house to move for a job, less money overall is spent on housing costs for all family members, and fer chrissake, there's enough space in 4000 sq ft to fuck all the pussy you want whilst Mom and Dad are blissfully unaware in another part of the house.
Makes sense to me.
One of my kids lives at home 6 months of the year bcause his job is abroad the other 6 months (not consecutive, usually). So this kid should buy a house just to leave it empty 6 months of the year? Not good sense to do that - until and unless this kid transitions out of an intensive travel schedule, this kid will not buy a house.
FUCK BABY BOOMERS!!!
Disgruntled members of every generation want to blame their forefathers for their current situation. Boomers grew up in the aftermath of two world wars and a cold war; waiting 3 blocks in line to fuel their cars and having to push it to the pump when the tank ran dry. Nowadays, Millenials have fits when their phone batteries run out. So no, killing your forefathers will not make your situation better.