You're right about smart phones, but I'm not so sure about housing. Credit is ridiculously cheap, and housing everywhere is on sale. If you have a job, why wouldn't you buy as much house as you can afford?
I'm pretty much a spot on example of what this article's describing; I live in DC where the average person in my peer group is still single, makes <50K/yr, and has student loans. A decent metro-accessible 2BR apartment here is 350K+, a house in the gentrified or gentrifying parts of the city is 500K+ (if school is a concern, make that 700K+).
This is COMPLETELY different from the experience that my friends back home in my small city in Missouri have, many of whom are married and buying houses for a song (<100K on 25-80K combined incomes).
The car thing fits this pattern too, a car in DC (and especially NY) is a total luxury item. A parking spot alone in my building is more than my rent was in MO. In MO, it's a necessity.
It's not that the author is right or wrong, they're just using a very broad brush to talk about a specific (albeit usually trend-setting) group of people.
My wife and I just bought a house. We could have afforded something big an shiny and new, but the prices being asked for that are simply unconscionable. Houses are not worth that much, and anyone who thinks otherwise is delusional. We are still in a bubble.
Instead we bought a rather nice small house in town, for less than my yearly base salary (i.e. not counting my wife's income or bonuses). It's not showy, but it's exceedingly comfortable. We'll spend some cash to make a few changes, but our payments are half of what our rent was previously.
We could have easily spent five times as much money, for a house that wouldn't suit our needs any better than the one we bought. How could the underlying asset possibly be worth five times as much? It can't be. Bubble. I'll invest my surplus income in something with sound fundamentals instead, thank you.
I rent at present, it's not ideal, but it means that I'm not tied to a certain geographic region - if I need to move, it's a hassle, but I don't have a house on a 25-year mortgage that I'm stuck trying to sell in a terrible market, I can just say to the landlord - right, I'm offski, here's the keys, bye.
- Leave more money in the bank.
- Get to maintain a positive net worth.
- Am much more free to move if I need to.
- Don't have to worry about sudden, large, unpredictable repair costs.
- Can demonstrate that I have learned something from watching the preceding generation recently get taught a very brutal lesson about the dangers of habitually buying as much as you can afford.
Because you may not have a job next month? You don't need the space? You have better things to spend the money on? Bigger houses come with bigger energy bills? While I do agree that the biggest factor here is economics (if people can't pay, they won't), I also think that there are other non-insignificant factors. Some of it is getting away from cars and houses as status symbols (a good thing), others are more practical (trying to offload a house while looking for a job is not easy). In this day and age, long-term employment is not a sure thing, so why settle down and grow roots when you'll only have to rip them out again?
Furthermore, demographics in much of the affluent world is likely to create a further surplus of housing which further reduces over the long term the value of entry level housing as an investment vehicle. The population is greying.
Because interest rates are likely to go and then I wouldn't be able to afford that mortgage any more?
I'm kinda thinking about buying a house, so I filled in an online mortgage calculator to work out what sort of money i'd have to work with. It said i'd qualify for a mortgage that was twice as high as what I think I need to get somewhere really nice, or three times as high as what i'd need for somewhere quite good.
I don't need that much extra debt to worry about.
That said, I suggested buying as much house as you can afford, not for how much they are willing to lend you. That will be different for everyone.