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Comment by atonse | Hacker News Reader

(Genuine questions, please don't misinterpret as negative judgement):

How much of this is actually new as far as income vs costs, and how much of this is unwillingness to make sacrifices that older generations did? For example, in my 20s (20 years ago), it was very common for 20somethings to live in shared housing with 2-3 roommates. They would share kitchens, fridges, everything. And these houses weren't even that great to begin with.

Is the younger generation less willing to do things like that? Or move further out, or move to a smaller town where the prospects are better? Are the prospects actually there in smaller towns? They might be more with remote work now.

Like I barely hear about families moving to different cities for a job anymore when that was more common growing up in the 80s.

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> How much of this is actually new as far as income vs costs, and how much of this is unwillingness to make sacrifices that older generations did?

Considering that the costs of everything have not only skyrocketed but wages were stagnated for decades (https://www.pewresearch.org/short-reads/2018/08/07/for-most-...) before declining (https://www.axios.com/2023/09/12/real-incomes-fell-last-year...) - the largest decline in real wages in 40 years, and that the standard of living for Americans has also been declining for years, long before the recent massive hike in inflation, I doubt it has much if anything to do with an unwillingness to make sacrifices. In fact, it seems like young adults today are being forced to make sacrifices left and right. In the 1980s young adults had homes, full time employment, cars, health insurance, babies, pension plans, $60,000 less debit from their student loans, and hope for the future.

It's pretty smart for young adults to live somewhat near family because they can get a lot of help and support that way, but the fact that they can't even afford to leave their parent's home is a very bad sign for our economy. When kids move out they pay for a ton of new things like furniture, cars, silverware, irons, vacuum cleaners, towels, streaming services etc. When they're at home there's no need at all to buy a lot of things because their parents already have them.

It makes me sad that “not making sacrifices” can be said with a straight face to the latest generations growing up in our never ending housing and affordability crisis. I’m really starting to get fed up with people in my own generation (Gen-X) who increasingly seem to be losing the plot.

If you chart Case-Shiller housing price index vs median income over time[1] you can start to see that housing as a proportion of income has increased. Versus the 1960s and 70s, housing costs today are twice the proportion of income they used to be.

In other words, all other things being equal, someone today is being asked to sacrifice twice as much with respect to housing.

If the goal is to get young people into houses, that line needs to go down substantially. That's much easier said than done when many people's wealth depends on that line being high.

1. https://www.longtermtrends.net/home-price-median-annual-inco...

The sale price isn't the full story though, as interest rates were much higher when the prices were super low. The relevant thing is monthly cost (mortgage payment or rent) over hourly (post-tax) wage.

Please post this as a chart or supply the data. It would be great to have a more accurate picture of what's happening.

> all other things being equal

That is the case in countries with both access to cheap food and free education: i've heard that Berkeley used to cost 100$/year in the 70s.

Also medical care costs are balooning everywhere (even where it's socialized). I'm not talking about huge cost you can read about US healthcare: when you're young, you will probably be lucky enough to avoid needing critical healthcare, but the price to do regular checkup and preventive care is higher than it was, everywhere in the world. That will have a cost on everybody in the near future imho.

> in my 20s (20 years ago), it was very common for 20somethings to live in shared housing with 2-3 roommates. They would share kitchens, fridges, everything. And these houses weren't even that great to begin with.

That's how people live in their 30s now. People in their 20s aren't developed enough in their careers to afford that sort of living.

> Are the prospects actually there in smaller towns? They might be more with remote work now.

The prospects in small towns are atrocious, that's why they're small towns. If you want to see what a post-apocalyptic world is like, just drive through a random small town in the midwest. There's a downright spooky vibe to them, they're sprinkled with abandoned and rotting buildings.

The dream of remote work is largely dead, or at least back to pre-pandemic state. Only top tier talent can get remote work, there's a ton of competition for those jobs.

> This place is like somebody's memory of a town, and the memory is fading.

That's a quote from the first season of True Detective. It's stuck with me because it's almost exactly how I've always described the small midwest town that I grew up in.

I started working part-time remote around 2010, and full-time in 2016 until June of 2023. I stayed close to tech hubs because I never felt like it was a particularly safe arrangement.

Small towns have fundamental economic problems that make living there a hard compromise. Third tier cities away from hot spot destinations can be comfortable places to live with much more affordable housing.

25 years ago, I was spending just over 1/3 of my take home pay on rent. That used to be a normal thing that people could do, only 25 years ago.

The exact same apartment is listed today for over four times what I was paying then. The same job I had then now pays 25% more. Rent for the same apartment is more than that job's entire gross pay.

20 years ago in São Paulo I was spending 1/3 of my salary in rent to share a flat with a friend in a quite nice neighbourhood, the same place now would cost 2x my salary of the time adjusted for inflation.

10 years ago in Stockholm I was renting a small flat 3 stations away from central station for about 9-10k SEK, the same flat nowadays is almost 2x that rent.

It's insane and happening in every major city it seems...

Housing has had a real appreciation at a rate that far outpaces real median wage increases. This is fueled partially by incentives to buy homes, but largely by speculative real estate purchases by older generations. People over the age of 35 own nearly 85% of real estate in the U.S., with people over the age of 55 owning nearly 45%. In both of these categories, ownership is extremely overrepresented and trending up.

We need to stop bailing out the housing market and incentivizing home purchases — this is the only reason that it’s rational for people to do this.

You need to distinguish between the market for houses and the market for housing (which includes rentals). Speculative real estate purchases and home buying incentives have a much larger effect on the market for houses vs the housing market. But the housing market is what drives the cost of leaving home.

With zoning and building codes we've just made it a lot more expensive to build housing. Just building codes probably increase the cost of building an apartment by 1-2% per year, and with zoning added in that could lead to 2-3% appreciation above inflation and wages which over 30 years adds up to quite a bit.

I don’t think you’re wrong — I just think that zoning is primarily driven by viewing houses as a speculative asset rather than a functional good.

NIMBYs are the reason housing prices don’t seem rational. When supply can’t increase any increase in demand will cause prices to shoot up. When an area is controlled by nimbys speculation becomes easy.

But NIMBYs don’t exist to keep the quality of life high in an area — they exist as a cartel working to keep property values high.

>How much of this is actually new as far as income vs costs, and how much of this is unwillingness to make sacrifices that older generations did?

Joking right ? Where I live, you cannot get a 1 bedroom apartment for less than $2000. When I moved out on my own, one year's rent was 10 to 15% of my yearly salary, and that was a 2 bedroom. In today's dollars, my salary was 50,000. I could have easily bought a single family house at the time.

Based upon those numbers, my rent would now be a bit over 50% of my salary for a 1 bedroom. Never mind even thinking about buying a house if you are young.

Also Medical Insurance in the US comes into play. Back then, my insurance contribution was almost nothing. Now it would be around 10% of my salary, if I even was allows to get Medical.

Twenty years ago the Case-Shiller index was 140. Today it's 312.[1] The index tracks individual home sales over time -- that is a single home sold repeatedly. I interpret that to mean someone purchasing a home today must have roughly twice the resources to purchase the same home as someone in the past. Which leads me to conclude it's harder to own a home today than in the past all else being equal.

What's your interpretation?

[1] https://fred.stlouisfed.org/series/CSUSHPINSA

> I interpret that to mean someone purchasing a home today must have roughly twice the resources to purchase the same home as someone in the past

Case-Shiller is not adjusted for inflation. In addition, it does not take into account interest rates. Until recently, mortgage rates were extremely low. It takes less resources to pay the mortgage on a $1,000,000 house at 3% interest than it does to pay the mortgage on a $250,000 home at 19% interest (which is where interest rates topped out at in the 1980's).

Inflation: according to several calculators online, $100 in 2003 is roughly $170 (rounding up) in 2023 dollars. So 70% over 20 years. Meanwhile Case-Shiller has grown 123% over the same period.

Interest rate: in 2003 the interest rate was in the high 5's. Today it's in the mid 6's. So let's call it a wash.[1]

What I'm saying is, today someone is buying the same house, at roughly the same interest rate as someone twenty years ago except that today 1) the house is twenty years older, 2) it's also about 30% more expensive after adjusting for inflation.

I grant that means the person needs fewer than 2x the resources, but my point still stands.

[1]: https://fred.stlouisfed.org/series/MORTGAGE30US

I'm probably as old as you, perhaps older. I got by an a relatively expensive city for a fraction of what it costs now relative to income. I went to school, worked part time, rented my own place, and had a kid.

That kid is now an adult and is highly educated, has 2 jobs, and can't reasonably afford to rent their own place. They might be married and have children of their own now if things were the same as when we were younger.

All the young people I know would gladly trade what they have now for the meager "sacrifices" of older generations.

My son found work last year in a seaside town, I helped him in finding an apartment over summer timeframe. I looked online in the usual places and there was near zero apartment inventory which I though was odd. Then I pulled-up AirBnB and there were hundreds of listings, all unaffordable of course. He did eventually find something, but only a 6-month off-season rental unit. Next summer will be same issue.

Sure I am still sharing my flat, but doing so since 20 years with no end in sight. Living in a metro area in Europe, barely any holiday travel, saving to buy a little flat someday. And my income is above average.

In my area, renting a room in a shared house is less expensive than renting an apartment. Most young adults I speak to that live independently have such an arrangement.

Mechanization of labor has destroyed the economies of small towns. My wife's father is a farmer, and the small town she grew up in shrinks every year as young people leave. The families that remain buy up all the available land and are able to farm it all. Their only limitation is availability of land. Those without land may eek out a meager existence dressing hair or something, but in general it's not necessary for humans to do anything.

The costs of housing prevent people from moving to other cities. I could earn double my current salary by moving to California, but that wouldn't cover the cost of living differential. This actually reduces net economic output, since I and many others are not working at places where our output would be highest. Please read the article "The housing theory of everything" by Bowman, Myers, and Southwood.

The unfortunate reality is that income is much lower now than when you were young. Rent seeking behavior has become the path to wealth, and rent seeking reduces net economic output. You should listen to Peter Turchin's discussion of wealth inequality and the wealth pump, it's very enlightening.

No, the vast overwhelming majority of people in major cities (where the jobs are) rent houses with roommates or live in small apartments. Moreso than in previous generations. Renting a house with roommates is increasingly the best long-term plan even many 30-somethings I know can ever hope to afford

The instinct to assume that trends affecting entire generations of people are "personal choices" rather than economic issues is a common delusion that usually comes from listening to the messaging of companies responsible for these problems when they are discussed

It's insidious. Here's a translation of something I just read today:

> Shared accommodation is on a roll. Traditionally aimed at students in search of cheaper rents and conviviality, it is now attracting young working people looking for flexibility and quality solutions to the increasingly restricted access to home ownership.

> Amandine Cloot and Paolo Leonardi are journalists with the Economy division. They came into the studio to talk about young people's current real estate real estate.

> Translated with DeepL.com (free version)

They make it sound like it's a choice.

It's getting clearer to me everyday that journalists are just parroting bullet points from "experts". Just like they call on temporary employment agency to talk about labor law reforms. We are fucked.

In my country they are trying to transform social housing (housing built by the state for low-income households or people who can't work anymore) into a investment product. They try to get deals with private investors to finance the buildings in exchange of interests on the rents or monopolies on services. Social housing can't bring in enough money to be an investment product. This won't end well.

Here's the data you mention.

https://www.pewresearch.org/ft_18-01-12_sharedliving_feature...

> it was very common for 20somethings to live in shared housing with 2-3 roommates.

In my experience this is still the norm in high CoL west-coast cities. Single people living alone are the exception rather than the norm. Couples tend to rent a 1- or 2-bedroom.

Interestingly this seems to still be true for many highly-paid young people who could easily afford their own place but end up with roommates to save up money. No idea how representative my sample is.

I wonder about the moving further out part. I know my grandparents moved into a town that was way out there but as more and more people moved to the area it became less remote. Same thing happened with my parents. It was not uncommon for less desirable areas to be where starter homes where purchased. I guess the data that would disprove/prove this would be population size vs prices.

When I graduated and moved out -- mid 1980s -- I had no desire to share an apartment with anyone, and no need since apartments were still kinda affordable. They were not the majority of your paycheck -- maybe 30, 35%. When we got to the early 2000s rents started to climb and I started hearing a lot more about people needing roommates. Wages have not kept pace with rent, not by a long shot.

On the last point, young people don't really start families any more. Or, it's on a significant decline.

Well without a stable home to do so in we aren't comfortable trying to start a family. We (me and my partner) are genuinely trying to follow the same playbook my parents, grandparents and great grandparents did, but even with a household salary about 3x median we're not yet able, at 30 years old.

We're not "not starting families", like its a choice. It's not economically feasible.

Apparently both categories have been growing since at least 1990.*

1. https://bostonagentmagazine.com/2018/07/11/young-adults-choo...

With apps it should be very easy to find a room to rent in a shared unit, but there is no good way to do that. I've tried, and the system for long term rentals isn't as polished or usable as something like AirBNB.

There are co-living companies out there. like you said, they aren't as polished as Airbnb due to the nature of the market, because building a site as good as Airbnb is expensive as hell.

I wonder why AirBNB doesn't take the app they already developed and open it up to long term rentals. They've already done the work, it would be trivial to add in month-by-month agreements.

A pathological sort of comparison is much more common now. They assume that what their parents have (with 20+ years of work), or what they see on social media, is what they should have too. That they don't is perceived as a great injustice.

You can see someone that has what you want and either a) work towards it, or b) complain.

There's always a mix of both, but b) is very loud right now.

Or perhaps they think they should have what their parents had 20 years ago when they were children and their parents were in their 20's?

Depending on your choice of measure, they are either greatly beyond their parents or mildly behind.

More importantly, why is that a reasonable expectation?

Young people today eh? A refrain as old as time.

And, as we know, there are no cultural changes between generations.

Some things provably never change: https://www.snopes.com/fact-check/nobody-wants-to-work-anymo...

This is cute, but not data. When you look at actual data, it shows that it actually has changed over time. There is a gradual rise in the labor force participation rate as more women enter the workforce, up until a peak in ~2001. It's been dropping ever since.

https://fred.stlouisfed.org/series/CIVPART

Depends on which data you look at:

https://fred.stlouisfed.org/series/LNS11300060

That seems like very little change.

Excluding people 16-24 would definitely remove the vast majority of the population addressed above.

The largest drop appears to be the in 16 to 19 age group -- hardly the group trying to be independent. Outside of that group it again doesn't seem very different.

> unwillingness to make sacrifices that older generations did?

Ah yes the avocado toast theory. What makes you think that people have changed so much in the last 20 years?

The people didn't change, they are mostly the same. The cost changed. It's now no longer sustainable for many or no longer worth it. Renting with roommates means you will see 10%+ rent increases a year in major US cities now. The greed of the landlords cannot be satisfied. Over time this pushes people back home that cannot stay on the fast moving economic treadmill.

Reading comments like that, if they are not loaded questions or trolling in disguise, really saddens me. How out of touch some people are that even in the face of raw numbers and interpretations they come up with "but what if people are just lazier now ?". It's like reading climate change deniers routine.

It's the same as it ever was. I remember the same hand wringing about home ownership among Generation X in the mid-90s, and largely for the same reasons. This is nothing new.

It has been getting harder for each generation. So it is nothing new that it is harder for Generation N+1 than Generation N, but that doesn't make it not news.

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