patrick.net

Pre-Covid our cohort of Millennials in California were already living at home in dramatically large numbers. The total was 2.3 million Millennial adults were living at home with mom and dad because they were unable to afford high rents, let alone purchase an overpriced crap shack built during World War II with popcorn ceilings and horrid looking carpet.

Flippers think that a little bit of lipstick on the pig is enough to charge $1 million for a piece of junk. It should come as no surprise that Millennials are struggling even more during the pandemic. The bulk of job losses have come from industries where young people dominate. So it is no surprise that the median age of a home buyer went from 31 in 1981 to a whopping 47 today. All of a sudden many of the new buyers are looking like the Taco Tuesday baby boomers that rail against Millennials for not affording a home when they went to college during a time when college was affordable enough to pay with a paper route. Of course many of these older Americans couldn’t program their way out of a paper bag yet rant on social media platforms built by Millennials.

We are basically sacrificing the young at the expense of older Americans. How so? Just look at the average age of our politicians. Many of them can barely get around technology without their younger handlers in the background posting for them and they are increasing the country debt load to a point where this will saddle our kids and younger Americans for a generation to come. But if it isn’t obvious in 2020, many Americans are entitled “Karens” ready to flip out at Old Navy because they are being inconvenienced when our parents and grand parents fought in World Wars where they risked their lives (many did not want to go but did and many never came back). They are probably spinning in their graves watching what is unfolding.

You see this sense of entitlement with housing as well. Tax policy has favored those that got in early at the expense of younger generations. Yet that is changing. In places like California, you already see strides being taken to roll back Prop 13. Why in the world should there be government welfare for homeowners and not renters? This is like giving someone a tax break to buy Google stock over Apple stock. It is a simple preference. Yet this is changing and Millennials understand and see how the game is rigged.

The chart above is incredibly telling showing that the median age of a homebuyer went from 31 in 1981 to 47 today. That is nuts. Normally, home buying was tied to a time of settling down and starting a family. 47 is on the old side to start a family. But given the current structure of the market we are favoring a rentier corporate welfare culture that penalizes work at the expense of gathered and accumulated wealth. Case and point? There are plenty of jobs open in essential jobs that put you at the front lines of the virus. Yet look at the pay. However, we have Wall Street traders and other speculators bidding up Kodak or Hertz, with blatant front running and manipulation and these are the companies we favor with tax breaks? It really reflects the deep issues in our system of financial welfare and somehow beating down the working class and making them feel guilty for not working hard enough.

The massive increase in age for buying a home is also stalling out other industries that rely on this growth. Think of towns that build out retail centers – do we really need those anymore? Many people are now getting comfortable working from home, shopping online, and ordering food to be delivered. Commercial real estate is getting smashed right now. You see the insane debacle of WeWork – not exactly a good company for the current time.

So commercial real estate is getting smashed because there is less demand. So what happens? Prices and rents come down! Incomes are smashed for younger Americans yet somehow people think real estate is going to stay inflated in price? The inflation in real estate right now is tied to all of the tax breaks and welfare we create around it – interest deduction, insurance breaks, and essentially low mortgage rates thanks to Papa Fed. All of this is artificial however. It must hurt with the level of cognitive dissonance some have when they talk about “communism” and “socialism” yet are totally fine with socialism to the next level on home buying.

So we are seeing mega crony capitalism today. The older age in home buyers is a reflection of throwing younger Americans under the bus. A bill is coming due and the massive strife in our system shows that older Americans are nothing like the Silent Generation. We truly are living the Taco Tuesday baby boomer wave of Karens and Kens and maybe in a few years, the median age of buying a home will be well into the 50s.
Millennials are slated to be the next big wave of home buyers in the system yet that is not materializing. The economy just saw its worst quarterly contraction ever. Yet somehow home values are going to stay disconnected from market fundamentals. Well if bankrupt companies can increase by triple digits purely on speculation, why can’t housing stay inflated a bit longer?


http://www.doctorhousingbubble.com/the-home-less-millennials-in-1981-the-median-age-of-a-home-buyer-was-31-and-today-it-is-47/