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, $60,000 less debit from their student loans, and hope for the future.
It's pretty smart for young adults to live somewhat near family because they can get a lot of help and support that way, but the fact that they can't even afford to leave their parent's home is a very bad sign for our economy. When kids move out they pay for a ton of new things like furniture, cars, silverware, irons, vacuum cleaners, towels, streaming services etc. When they're at home there's no need at all to buy a lot of things because their parents already have them.
In other words, all other things being equal, someone today is being asked to sacrifice twice as much with respect to housing.
If the goal is to get young people into houses, that line needs to go down substantially. That's much easier said than done when many people's wealth depends on that line being high.
1. https://www.longtermtrends.net/home-price-median-annual-inco...
That is the case in countries with both access to cheap food and free education: i've heard that Berkeley used to cost 100$/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.
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.
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.
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.
What's your interpretation?
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).
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.
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.
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.
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.
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...
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.
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.
https://fred.stlouisfed.org/series/LNS11300060
That seems like very little change.
More importantly, why is that a reasonable expectation?
We're not "not starting families", like its a choice. It's not economically feasible.
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
https://www.pewresearch.org/ft_18-01-12_sharedliving_feature...
> 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.
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.
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.
1. https://bostonagentmagazine.com/2018/07/11/young-adults-choo...
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.
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.