My father in-law rents....we also have in-laws in Ajax. Their property values have soared. It's really nice to just live your life and go to work and have your primary residence do that. My understanding is that they have no mortgage deduction, so you don't see people factoring that in and buying more house than is realistic, and also their rate is not locked for 30 years, but can be amortized as such. When more skin is in the game, the decision making comes out differently, is what I can see. I had some work out in Etobicoke in 2016, and it was a joke how much homes cost there, I bet due to proximity to the airport, and let's just say, they're are not that nice (with my luck someone on the forum lives there and says wth are you talking about you elitist!). Well, it kinda reminded me of my wife's bff who lives in Daly City, CA, I mean c'mon, a house that is over 800k there is like $45k in Albany....

(apologize in advance if I've offended people living in 5 different places in one thread)

 

I have family in Albany. Where can you buy any house for $45k in Albany? Lol. Real estate is cheap there, but it's not that cheap!

 

My point is, it is a lot harder for millennials than it was for previous generations. Housing and rent prices have literally increased by five or sixfold here in NYC since the 90ies, and this is certainly not limited to only NYC. There are millions of millennials and gen Xers that have been screwed by this, and will never be able to own a home. Argue what you want, but statistics don't lie.

 

My grandfather said when he got out of college, a coop in Manhattan costed 2X his annual salary as an engineer. Imagine that. Too bad he doesn't still own the shares, but think about how impractical that would be. We know someone in Brooklyn who has a 5 bed victorian, he bought it in the 50's. His own children are in their mid 50's, even early 60's, Ditmas/West Midwood area. That land is gold....

 

I'm not disagreeing with you about the hand dealt to younger people or the much higher cost of housing, but it is what it is. To say "the vast majority of millennials will never be able to own a home" is a really pessimistic view that I think is way overblown. Millennials age from 18-35/36. To say this group of people that have another potentially 70-80 years to live will "never own a home because of student loans and high home prices" is a statement that I just don't see as reality. My parents didn't own a home until they were in their late 40s.

To say NEVER? If they are willing to work hard, make good pragmatic choices about where they want to live, what they want to do, how to prepare and plan for it I have no doubt the vast majority of those millions of millennials will have the opportunity in their lifetime to buy a home. Perhaps not as a freelance writer or food blogger, perhaps not in SoHo or Georgetown, but they can certainly buy a nice home someplace in their lives if they want to.

 

Agreed. even after the housing market crash in 2008 never brought prices back down to what I would consider affordable for the millenials including myself who were a few years into their professional career. and now prices are back and maybe even higher than pre-2008 in some places.
Sure, you can find cheap houses out in the sticks, but can you find a decent paying job out there? I see huge houses out in the countryside by me, I have no idea where these people work. I don't see industry, office parks, anything. so they either are successful farmers, commute 2 hours to get to philly /nyc, are trust fund / retired / drug dealers, lol.

 

reminds me of central CT....one sees huge a** homes, exotic cars, yet the NHL team moved out long ago, all industry seems to be moving out, it used to be the insurance capital but is no longer, what gives? Then again a "mansion" which could be 5 mil. in Boston or Westchester is like $800k there. Yet, where do people work, and $800k is still $800k, far above avg. and has to be amortized just like a $47,000 house in Detroit...

 

Thats the question, what do you consider "affordable"? Remember real estate is a supply and demand thing, if prices are high, they're high because people are paying those prices. If nobody is there to pay those prices, prices come down until you get to a point where somebody is. Perhaps you just need to wait until you're further along in your career until you get to a point where you're more comfortable with the cost vs your income. To say "you'll never be able to buy a house" though I don't think is fair.

You can't really say "the prices are too high" when people are paying those prices.

"I see huge houses out in the countryside by me, I have no idea where these people work". Presumably if you see houses out in the countryside by you, you also are out in the countryside. Where do you work? People telecommute, people have jobs where they travel extensively and don't live near their home office. I have a good friend who lives in Albany, his company is based out of Baltimore. He travels 2 weeks a month including to Baltimore and the rest of the time he works from home, doesn't matter where he lives as long as he's close to an airport.

 

Bucks County is where a lot of the Pharma execs live to get away from NJ state taxes.

 

I forget what the number was, but it was not substantial....Christie was going to cancel the reciprocity eff. 1/1/17 but back tracked just before Thanksgiving 2016.

NJ is quite unique imho. Where else, can a person live in one state, work in Manhattan, pay taxes to NYS, and then owe some more to NJ (getting credit for what was paid to NYS)? NYS is pretty high as it is. Then, to go from what, the second cheapest gas tax, to the 7th highest, in one day? lol

I live in the state with the highest gas taxes in the nation, but not the most expensive gasoline, which shows that the tax isn't necessarily the determining factor affecting the selling price...

 

I got curious, and I did just make that number up, but... lol

http://www.realtor.com/local/Sheridan-Hollow_Albany_NY

 

Yeah NJ is a show lol. The property taxes are insane. My wife is from NJ and her whole family lives there...I *hate* it there.

For Albany, LOL did you look at the houses for sale in that neighborhood? Terrifying lol. Decent real estate in Albany is costlier than that, my sister in law and brother in law live in Delmar, which is a suburb of Albany, they have a nice 1,200 square foot (2400 with the basement) 3BR rambler on a 1/2 acre they paid $160k for, its probably worth $190-195k now. 10 minutes from Albany. The guy I mentioned above who travels and lives up there lives in Clifton Park, he has a nice 4 BR house with a basement, colonial on a nice lot he paid about $360k for. The rambler would be $350-700k here depending on where it was, and the colonial would be $600-$1M same thing.

 

Wow, this was a fascinating and interesting thread. Since I live in the SF Bay Area, 1M homes are the norm, not the exception. Its scary to hear what SW15LS is saying, because it sounds a lot like what we were doing before the mortgage meltdown, or at least it feels like we're on the same slippery slope. Since folks need to put so little down on their home purchases, will they not be inclined to simply walk away if home prices drop substantially?

 

Yeah SF bay area, yikes. I was out in CA a couple years ago at a property management conference (35% of my business is that) and I met a lot of managers and real estate agents from the SF bay area. Crazy expensive.

Its really different than it was before the meltdown, the biggest difference is qualification of borrowers. Before the meltdown plain and simple, people were being given mortgages they could not actually afford. Fraud was happening, people were victims of predatory lending. We had these 3-2-1 buy downs where people were qualified on a low 3% below market rate that would step in over 3 years, well...no duh the people couldn't make the payments when it got to the full rate...3% has a HUGE impact on the payment. Stated income loans, crazy.

I bought my house in 2007. I kid you not, nobody asked me for one bank statement...not one tax return, not anything. I did not seek out a no doc loan either, they just didn't care. Like buying a car.

It is TOTALLY unlike that now. Income has to be documented in a very strict way, borrowers are underwritten thoroughly and vetted. You can find stated or alt doc (meaning they will document say bank statements instead of tax returns) loans, but they are not mainstream nor will they ever be again. That will always be a weird pseudo hard money portfolio deal. 99.9% of all loans involve a thorough income and asset verification process, thats not going to change.

Even with lower down payments, if you have good borrowers with good credit and good jobs, they're not walking away from their homes, and in any event...thats what mortgage insurance is for. The MI insures the loan against default...you have MI on ANY loan with a less than 80% LTV, whether you pay it monthly or if its LPMI (lender paid mortgage insurance) its built into the rate.

So no, we are not headed for that sort of thing again.

 

^^^ I was just thinking about this.

I am not a millennial (currently age 40). I bought my first house in 2006. We just bought a new house this past spring. I felt like everything was different. I had to provide way more documentation than I did back in 2006, even though I am significantly more qualified now than I was then. The appraisal process was different as well.

Now my wife and I are hoping we don't have to do that again for another 20-30 years.