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Comment by snowwrestler | Hacker News Reader

This is a temporary consequence of the 2008-2009 housing crash.

Housing construction is a lagging indicator because of the regulatory and capital requirements to build a whole bunch of homes. So what we see right now is that demand is growing because the economy is growing again, but supply has not yet caught up. Result: fewer affordable houses.

In my neighborhood a new row house development was just breaking ground when the shit hit the fan in 2008, and of course they stopped. Well, they're building fast today, and selling every unit, but they're still not done. It just takes a while to build houses.

The only connection is Millenials is that they are the youngest generation currently looking to buy a home, so they are more price-sensitive than Gen Xers or Boomers.

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I'm curious if we're going to see a glut in housing with so many Boomers entering retirement, wanting to downsize or needing to extract their equity to live on.

Also, economics for Millennials have been terrible. They're of course going to have a terrible time trying to get a down payment together as well as afford a reasonable mortgage payment. Even assuming they use a 3% down mortgage program, they then have no equity, and are locked to the property if they need to move/relocate unless they're willing to default on the property (which then keeps them out of buying again for 3 years).

EDIT: As someone who has seen deep into the real estate market, the game is rigged.

Hasn't happened in Sydney yet. I think we're still beating out SF in real estate prices.

It'll happen first in the US. We're not known for a big influx of foreign money except in SF, NY, and parts of Texas. I could see Chinese money picking Australian cities over second-tier US cities.

> the game is rigged

Could you elaborate? And what does it mean to the demographic described in the article?

Unless you've won the economic lottery or lucked out, its going to be very difficult to climb the housing ladder (starter home->family home->empty nest home) for Millennials.

People don't want to subsidize first time homebuyers, but they have no problem with the government subsidizing landlords (depreciation allowances, tax deductible mortgage interest). After so much distressed property ended up on the market after the housing collapse, private equity money swooped in to suck all the property up and charge "market" rent.

Millennials either need to adjust their expectations (get remote jobs, not be tied to areas with high cost of living that are going to extract a large part of their income from them) or fall into enough money to not only buy a property, but to weather any financial disasters they have so as to not lose their equity by losing their home. Hustling hard for years on end while being frugal is another option, but it is no guarantee of success.

That all makes perfect sense. For a moment I thought you were referring more to the NAR (market) than the tax regime/REIT side of things.

As a millenial with hope of some sort of real estate in my future, I've been thinking of buying an empty/distressed lot and rebuilding it, but I don't know how realistic that is.

> As a millenial with hope of some sort of real estate in my future, I've been thinking of buying an empty/distressed lot and rebuilding it, but I don't know how realistic that is.

Very reasonable. I've done this before. Let me know if you'd like to chat over email, and I'll get you my contact info.

I would certainly welcome any guidance. Email in my profile. Thanks!

I've been thinking about this, as well, and would be interested to see your thoughts on it, even if just a cut and paste of your advice to ak217. My email is brerlapn at fastmail.fm. Much appreciated...

> Hustling hard for years on end while being frugal is another option, but it is no guarantee of success.

I know more than a handful of people who have done this successfully, so I respectfully disagree.

I agree with the rest of your comment, just not the discounting hard work and being frugal part.

Forgive me, but your few anecdotes don't replace entire datasets showing how badly off Millennials are economically.

It's not a matter of working hard; sometimes there just aren't enough jobs to go around, or existing demand for someone to start a business to satisfy that demand.

I've known people who have saved for years, put down payments down, and then lost it all when their builder went bankrupt (and they had no recourse). Welcome back to square one.

Forgive me, but entitlement is a fun idea, not reality.

People wanting to start a business that isn't viable, bummer. Not enough jobs: I delivered papers, barbacked, worked a day job, figured it out. If they picked a bad builder, that sucks. Find your recourse. Be smart, be mature, figure it out.

Entitlement is a problem, working hard is not.

I'm sorry your opinion and reality are incompatible.

5 years after my dad (a Boomer) finished college, he faced unemployment and mortgage rates over 8%.

5 years after I (a Gen Xer) finished college, I faced unemployment and mortgage rates just under 6%.

Today the unemployment rate is 5.5% and the mortgage interest rate is under 4%.

While buying a first house is never an easy thing to do, there are plenty of indicators that it's not harder today than it was in the past.

We're already seeing local gluts in housing in cities that retiring Boomers are abandoning. For the price of my DC-area half duplex, I could buy a literal mansion in Cleveland or Detroit.

Overall, the population of the U.S. is still (slowly) increasing, so even when the Boomers move into assisted living facilities and/or pass away, there is not likely to be a national surplus.

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