Here's Why You Can't Buy a House (It's Not Just the Market)

[shrubberyvaluation]

Tucker is talking about something the legacy media is all but ignoring. I talk to guys in that age group frequently and it’s a problem that is only going to get worse. I listen to them and sympathize and tell them not to give up. They’re not lazy socialists, they’re stuck in low paying jobs with little hope of improving their status and zero hope of ever owning a home. I bought my first house at 28, it was a foreclosure that I had to fix before moving in and I share that story with them. When Tucker hits a nerve with a subject like this, the legacy media’s response is to attack him and ignore the problem. This is why people in that age group are listening to Mamdania, AOC, and Fuentes. I can understand now what caused the French Revolution to gain traction.

I bought my first property at 24 years old as a foreclosure by myself, fortunately the dwelling was only a few years old and didn't need a ton of work other than some cleaning up and having to add faucets and appliances. It was also after the last big market crash. Mid 5 figures, ~1000 Square feet with 2 bedrooms and 2 full baths. A lot of that was luck in timing based on where I was in life when that happened. Oh yea and it was an area with relatively low crime. I feel fortunate in that respect, a lot of young people now have little hope except if they can work remotely and be in the middle of nowhere.

 

[shrubberyvaluation]

Yup, choosing the wrong curriculum at wrong school can really bite one in the buttocks. Borrowing to pay for it another bad move. I guess financial illiteracy is really a thing.

I mean how financially literate are most teenagers? I think its more crazy loaning them 6 figures. Even some majors that might of been good in the past might be worse with AI improving, so I feel differently with someone in a STEM field struggling compared to someone in some obscure major.

 

[Surf Cat]

Mid 5 figures

That's amazing..... that's a bathroom remodel here now LOL

 

[Bobby Bucks]

I bought my first property at 24 years old as a foreclosure by myself, fortunately the dwelling was only a few years old and didn't need a ton of work other than some cleaning up and having to add faucets and appliances. It was also after the last big market crash. Mid 5 figures, ~1000 Square feet with 2 bedrooms and 2 full baths. A lot of that was luck in timing based on where I was in life when that happened. Oh yea and it was an area with relatively low crime. I feel fortunate in that respect, a lot of young people now have little hope except if they can work remotely and be in the middle of nowhere.

Some I talk to and who I am doing refis for are living farther from their place of work than they would like.

Yup, choosing the wrong curriculum at wrong school can really bite one in the buttocks. Borrowing to pay for it another bad move. I guess financial illiteracy is really a thing.

Very true, if one goes to an elite private school they had better choose an elite field for their degree. PhDs in classical studies aren't exactly in high demand.

 

[cashcatz]

The ones I talk to haven’t given up all hope and I try to give them pointers. I suggest buying a property jointly or even with 3 owners. Buy a duplex, live in one side, etc. If they’re the type who hate the system I avoid them. The biggest difference I notice with the current generation is the amount of student debt. A lot of my classmates had student debt, but it was manageable in those days and a modest amount, these days student debt seems staggering in some instances.

Student debt issue will resolve itself as soon as it's legal to declare bankruptcy on it. And tuitions will come down, down, down - especially for the fake degrees.

 

[cashcatz]

I bought my first property at 24 years old as a foreclosure by myself,

Same story with several of us, it seems. I was able to snag a foreclosure for $84k in Georgia in 2007 at age 21 while they were still handing out loans to anyone with a pulse and a forged bank account statement (kidding about that one). I thought I got a good deal but neighbor bought theirs a year later I tink for $40k something. That was all pure luck.

 

[DTB]

I mean how financially literate are most teenagers? I think its more crazy loaning them 6 figures.

Parents are supposed to parent.

a lot of young people now have little hope except if they can work remotely and be in the middle of nowhere.

I always wished I could have made Chicago money while living at the downstate lake house, just a pipe dream until now.

 

[Gobears81]

Not many apartments available for less than $1,000/MO in areas where the median house is $415,000.

So, if they rented 2 apartments at $1,000@...why couldn't they afford $2,000 month to own a house?

Assuming that they have a 20% downpayment (a big if), current 30-year interest rates suggest a mortgage payment of $2,050/ month.

Certainly not as bad in other states, but assuming the effective RE tax rate is 2.5% of MV, that would be an annual RE tax payment of $10,375.

Add $3,200/ year for insurance, that suggests PITI of $3,180 per month, which doesn't include maintenance costs that they don't have to worry about as renters. If I were single, I'd rent, but the LLs know that the math is in their favor, so now even RV parks or mobile home parks charge over $500/ month just for you to sit your trailer on the site.

The problem is QE and the homebuyer credits - those only pushed forward demand and created below-market mortgage rates for years. Why would anyone give up their 3% mortgage to pay a much higher interest rate on a home that costs so much more than just five years ago? Now, the gvmt is out of bullets because the deficit spending keeps inflation high. More are entering the potential homebuyer category than selling (who are often dying or going to assisted living), so the math doesn't currently work for a home price decline.

 

[cashcatz]

who are often dying or going to assisted living

Yep, and a large percentage of a elderly persons net worth goes right into assisted living (often leaving little for their kids which they might have used for a downpayment or helping keep their own kids out of college debt). I used to appraise senior housing, the costs are just mind blowing - a lot of people don't take this into mind as they age and plan.

 

[J Grant]

Assuming that they have a 20% downpayment (a big if), current 30-year interest rates suggest a mortgage payment of $2,050/ month.

Certainly not as bad in other states, but assuming the effective RE tax rate is 2.5% of MV, that would be an annual RE tax payment of $10,375.

Add $3,200/ year for insurance, that suggests PITI of $3,180 per month, which doesn't include maintenance costs that they don't have to worry about as renters. If I were single, I'd rent, but the LLs know that the math is in their favor, so now even RV parks or mobile home parks charge over $500/ month just for you to sit your trailer on the site.

The problem is QE and the homebuyer credits - those only pushed forward demand and created below-market mortgage rates for years. Why would anyone give up their 3% mortgage to pay a much higher interest rate on a home that costs so much more than just five years ago? Now, the gvmt is out of bullets because the deficit spending keeps inflation high. More are entering the potential homebuyer category than selling (who are often dying or going to assisted living), so the math doesn't currently work for a home price decline.

I do see a decline, or softening of prices in some areas; however, the vastly higher RE taxes and HOA fees, and insurance, wipe out any modest price decrease - the prices would have to decrease massively on the more attainable/affordable end of housing, which would mean a large loss of equity for the owner/sellers.

The fact that several people financed purchases or refinanced existing mortgages at the very low rates in the boom means they are reluctant to sell, tightening supply; however, there are also not a plethora of buyers due to lack of job stability or bad employment prospects for the younger or prime age earners. In addition, homes were purchased by investors and rented out-

The very high end of the market is not affected since they are in a different income bracket and often buy all cash (though they might refinance later for liquidity)