Home purchase is so much harder for young people than it was 20 years ago

Yes it would have been vastly easier, housing prices here have doubled easily in just the 27 years I've been alive. My parents bought a lake shore home when I was child and it was only 100k the same house would be easily 350k now.

The price of education also has gone up exponentially.

If I was born in the 60-70s and I still had the drive and work ethic this era has instilled in me hell I like to think I'd be a millionaire lol.

a reply to: CornishCeltGuy

" Lazy young people. Back in my day I put myself through college, had my own home, an automobile, and two kids by the time I was 20!!"

a reply to: CornishCeltGuy

I think it is harder to purchase. In the greater Vancouver area of B.C. prices have been rising incredibly these last twenty years. Studies are done regularly about salaries and housing costs and the math doesn't seem to work out. I think many living here were fortunate to buy a long time ago, and have rode the rise in the equity they built to be able to keep up with the cost of living.

People around here have become increasingly suspicious about the role companies like AirBnB play in the situation as well...

originally posted by: dffrntkndfnml
a reply to: CornishCeltGuy

I think it is harder to purchase. In the greater Vancouver area of B.C. prices have been rising incredibly these last twenty years. Studies are done regularly about salaries and housing costs and the math doesn't seem to work out. I think many living here were fortunate to buy a long time ago, and have rode the rise in the equity they built to be able to keep up with the cost of living.

People around here have become increasingly suspicious about the role companies like AirBnB play in the situation as well...

Vancouver has all the Chinese buying up property as an investment. Middle class Canadians who come back from the USA find that the salaries on offer are the same or less than a decade ago. They have to move into working class areas.

It used to be that first time couple would buy a fixer-upper home in London, do all the modernization, then move up. But all those homes have been modernized now. Once that happens, the prices rocket. They've tried doing deals where homeowners only buy the house and not the land; leaseholds, but those leases double every ten years.

My parents saved to buy a mortgage for £6000 on a salary of 2 and 6 shillings. Come the oil industry boom in the 80's, that flat was worth £80,000. Our downstair neighbor was a builder/joiner and he actually bought the flat and rights to the attic, then converted the attic into a penthouse extension. What was a creepy dusty attic now became an artists pad. The living room with a kitchenette was convered into a Hollywood kitchen and the master bedroom converted into a living room with mounted flatscreens. Double glazing and gas central heating added, so it becomes worth £300K+ because it is two blocks away from nightclubs and ten minutes from downtown.

Same with the ex-council house seven miles out, that Dad bought with that money. When we bought it, it had no heating, single glazing. First thing he did was to get double-glazing and central heating plus insulated carpets. Later owners converted the garage into an outhouse/dance studio and added an extra bedroom over the driveway. So that's worth £350K now.

a reply to: CornishCeltGuy

Yeah I am not exactly thrilled about.

Nothing special about these homes.

originally posted by: ManFromEurope
Question to those who buy houses, refurbish them and sell them "at a great profit" (quote from this thread):

Aren't you a part of the problem?

Because, yes, you put effort into the house, but you still make a "great profit" by selling it. Edit: Which means that the price of the house went over-proportional up!

Is this late-stage-capitalism or what?

Supply and demand. It's because all homes haven't been modernized to the same standard. Adding double glazing, wall insulation and gas central heating reduces energy bills. Window frames may be rotten and need replacing. Door frames might not be as strong as they should be for the area. Carpets may be worn out, frayed and a safety risk. Same with Victorian electric cabling. Maybe the old cooker doesn't conform to modern safety designs with the control panel above and behind the hobs (Look at a Tricity Tiara as an example). Adding a video intercom improves security for an apartment.

So naturally, the estate agents think that that all these new fittings add value to the house, especially since other homes may not have those. , so that bumps up the price.

Then there are other things you can't control; being in an area with cable TV/fibre-optic broadband. Being close to downtown, shops, a supermarket, train station, good schools, away from factories, train lines and motorway, having rooftop or biscuitbox view.

originally posted by: Athetos
If I was born in the 60-70s and I still had the drive and work ethic this era has instilled in me hell I like to think I'd be a millionaire lol.

a reply to: CornishCeltGuy

I just wish I'd invested in more property back in the 90's, if only I'd known how mad the prices were to rise in the following decades.

originally posted by: dffrntkndfnml
a reply to: CornishCeltGuy

I think many living here were fortunate to buy a long time ago, and have rode the rise in the equity they built to be able to keep up with the cost of living.

That's exactly the situation my generation and those older than me are in, lucky timing to be born is all.

originally posted by: Luuke123
" Lazy young people. Back in my day I put myself through college, had my own home, an automobile, and two kids by the time I was 20!!"

Lol I hope you were joking with that statement?!
It's much harder these days, certainly in the UK. My biggest worry is that I'll end up passing on next to nothing to my son if I need long term live-in care when I get old.
Well I say worry, but I'm notworried really because before I get to the stage I need someone to wipe my ass I'll top myself with a heroin overdose or hosepipe from car exhaust. My son knows this full well and we discuss it casually now. No way am I wasting his inheritance on paying the state for my long term care with a charge on my property.

Buying a home is harder for young people because of student loans and other expenses like fancy cars. The other issue is that too many young people want to live in urban areas which are just naturally more expensive. You absolutely can buy a house further out relatively cheap, but if you want to be in a big city with a Starbucks on every corner, it is going to be expensive.

I work in mortgages. Everyone should not be a homeowner. There is nothing wrong with renting. Buying and maintaining a home is a long term financial commitment and it shouldn't be taken lightly. Many young people are not settled in their careers or family planning, so having the ability to easily relocate and move for career is far more important that owning a home imho.

Once you are settled both family and career wise, then it makes sense to start thinking of owning a home.

The other thing is if you aren't making above average wages, owning a home could be a financial anchor. While it is true that a lot of wealth is generated from owning a home, the upkeep of homeownership ain't no joke. Someone making a less than average salary might find themselves a broken furnace away from foreclosure if they can't save up for a rainy day.

In the US, any rental under about $800/month will be barely habitable in a bad area. For comfortable rental living, rent runs about 900 - 1200 dollars and up for a two or three bedroom in a three story building with paper thin walls were you can hear other tenants using the toilet.

Most rental agencies require salaries of three times the monthly rent. For houses, 41% debt to income ratio.

As for buying a home, most three bedroom houses in a low crime area are 200k+. There are good buys in decent areas but very hard to find because they are quickly snatched up.

Houses are build very cheaply as possible these days. There is high profit to be gained when home buying is usually a very emotional experience for most home buyers.

originally posted by: Edumakated
Buying a home is harder for young people because of student loans and other expenses like fancy cars.

The other thing is if you aren't making above average wages, owning a home could be a financial anchor.

Do you not think it is, as I observed, that property prices have increased at a vastly higher rate than wages over the last 20 years?
I was on average wages in 1996, but the same job has a salary which could not buy the house I bought comfortably back then.
I can only speak for the UK but student loans are a minor distraction here because that same job today paying back the government for the student loan would be £24 a month. Earning less than £21,000 and you don't even have to pay anything.
Don't listen to the bleating about student loans in the UK, the repayments are less then one Starbucks a week lol
See here if you're interested... UK student loan repayments schedule

originally posted by: CornishCeltGuy

originally posted by: Edumakated
Buying a home is harder for young people because of student loans and other expenses like fancy cars.

The other thing is if you aren't making above average wages, owning a home could be a financial anchor.

Do you not think it is, as I observed, that property prices have increased at a vastly higher rate than wages over the last 20 years?
I was on average wages in 1996, but the same job has a salary which could not buy the house I bought comfortably back then.
I can only speak for the UK but student loans are a minor distraction here because that same job today paying back the government for the student loan would be £24 a month. Earning less than £21,000 and you don't even have to pay anything.
Don't listen to the bleating about student loans in the UK, the repayments are less then one Starbucks a week lol
See here if you're interested... UK student loan repayments schedule

I can't comment on student loans in the UK, but student loans in the US are often bigger than mortgages! I have literally seen people making $50k a year with $300,000 in student loans! The sad thing is they are also in careers and jobs with no real salary upside... meaning they'd be luck to make say $75k 20 years later.

Yes, home values have increased while for some people wages have stagnated. Mortgages rates have fallen dramatically over the past 20 years and the lower cost of borrowing has resulted in price inflation since you can borrow more money cheaper. In addition, there has also been a resurgence in demand to live in certain areas which also has caused price inflation as well. In many big cities, you are barely middle class making $100k because there are so many highly compensated people vying to live in a limited area. This pushes prices up and makes it unaffordable for those with more meager salaries.

However, if you move further out to exurbs, you can still buy relatively cheap properties. Someone making say $35k can buy a $100k house. The issue is that you have to live far out which may not be convenient or desirable for that person.

originally posted by: CornishCeltGuy
I bought my first house in 1996. I was earning £16,000 per year at the time and was able to borrow up to 3 times my salary with a 5% deposit to lay down. Being sensible, I quickly saved up £1,800 for a deposit and borrowed £34,200 to secure a 3 story 3 bedroomed house with front and back gardens. Mortgage payments were easily payable on my own salary, so with my wife working full time we lived like a king and queen.

A house in 1996 was only 34,000? 3 times also seems low, I would think 25% of your pay towards a house is more realistic.

Now fast forward to this year, that same house is on the market again at an asking price of £230,000. Curious, I checked the current pay grade of the job I was working back in 1996, and it is a measly £23,000 per year.
Using the same 3 times salary mortgage calculation it means a loan of £69,000 is the most someone at that pay grade could possibly obtain.

I have heard that the rise in cost has much to do with realtors slowly pushing prices to get fatter paychecks on a sale. If we leave out the crazy areas like most of CA £180,000 is on the low side of what we would see as a cheap house. £280,000 would get you a rather nice house in most areas.

What a change 20 years can make. My own 20 year old 'child' is earning £22,500 per year at the moment and can only dream of buying property. It'll probably only happen whenever I or my Mother dies and he'll get his inheritance as a jump start.

I guess the question to ask is the job your kid is in is it a career position? Is 22,500 considered a middle income? In America housing is basically available to middle and upper middle income brackets. We deal more in "family" incomes that once it reaches about £70,000 there are many areas where housing is in a range to buy, but this could typically mean two paychecks.

originally posted by: Edumakated
Buying a home is harder for young people because of student loans and other expenses like fancy cars. The other issue is that too many young people want to live in urban areas which are just naturally more expensive. You absolutely can buy a house further out relatively cheap, but if you want to be in a big city with a Starbucks on every corner, it is going to be expensive.

I work in mortgages. Everyone should not be a homeowner. There is nothing wrong with renting. Buying and maintaining a home is a long term financial commitment and it shouldn't be taken lightly. Many young people are not settled in their careers or family planning, so having the ability to easily relocate and move for career is far more important that owning a home imho.

Once you are settled both family and career wise, then it makes sense to start thinking of owning a home.

The other thing is if you aren't making above average wages, owning a home could be a financial anchor. While it is true that a lot of wealth is generated from owning a home, the upkeep of homeownership ain't no joke. Someone making a less than average salary might find themselves a broken furnace away from foreclosure if they can't save up for a rainy day.

Living in urban areas close to a supermarket, Metro line or bus route means that you don't need a car. But once you are away from those, you need a car. Employers want someone they know is going to get to work on time at 9am or earlier each day. The want the social life of being able to walk down to a pub or restaurant. Which is what everyone was able to do when we all lived in small villages and towns.

They are "naturally more expensive" because everyone wants that location for the convenience and there aren't enough of that type of property.

The catch is that there are cheap properties, but there aren't any local jobs. Or there are jobs, but the salaries don't cover the cost of living.

Its because kids are lazy

a reply to: CornishCeltGuy

The whole thing of living anywhere is a flaming scam perpetrated by the Crown. The royals own this place since the normans took out the Saxons and colonised it. French law prevails and those royals tax us to this day a thousand years later for the right to be born here and exist. Screw them. Just to exist on a piece of this land you are taxed, to earn that tax you are taxed. Taxed on corps taxed=s before that. Taxed on everything.
Then they came up with the home ownership crap. What a load of crock, get a mortgage (noose) and sign off your life to the banks and 25 years unending slavery to pay for a pile of crappy bricks that dissolve quicker than they did ONE HUNDRED GOD DAMNED YEARS AGO!
They used to give homes pretty much away in society now they are elevated to some sort of dream for EXACTLY the same thing. Home ownership or rental are both cona rtist tricks to fleece one of their savings. Screw the government screw the landlords................. Buy a mobile home and be free of tyranny

originally posted by: stormcell

originally posted by: Edumakated
Buying a home is harder for young people because of student loans and other expenses like fancy cars. The other issue is that too many young people want to live in urban areas which are just naturally more expensive. You absolutely can buy a house further out relatively cheap, but if you want to be in a big city with a Starbucks on every corner, it is going to be expensive.

I work in mortgages. Everyone should not be a homeowner. There is nothing wrong with renting. Buying and maintaining a home is a long term financial commitment and it shouldn't be taken lightly. Many young people are not settled in their careers or family planning, so having the ability to easily relocate and move for career is far more important that owning a home imho.

Once you are settled both family and career wise, then it makes sense to start thinking of owning a home.

The other thing is if you aren't making above average wages, owning a home could be a financial anchor. While it is true that a lot of wealth is generated from owning a home, the upkeep of homeownership ain't no joke. Someone making a less than average salary might find themselves a broken furnace away from foreclosure if they can't save up for a rainy day.

Living in urban areas close to a supermarket, Metro line or bus route means that you don't need a car. But once you are away from those, you need a car. Employers want someone they know is going to get to work on time at 9am or earlier each day. The want the social life of being able to walk down to a pub or restaurant. Which is what everyone was able to do when we all lived in small villages and towns.

They are "naturally more expensive" because everyone wants that location for the convenience and there aren't enough of that type of property.

The catch is that there are cheap properties, but there aren't any local jobs. Or there are jobs, but the salaries don't cover the cost of living.

In many areas, there is a sweet spot though. I just find too many people want to live a lifestyle or neighborhood before they can actually afford it. When I bought my first condo we paid about $315,000 for it here in Chicago. We purposely bought in a neighborhood that was a little further out and not quite as popular. The same condo in the hot neighborhood at the time would have easily been $500,000 or more. My commute was maybe 10 minutes longer on subway.

We all have to make sacrifices. Not everyone can afford to live in the same areas. No one is guaranteed they get the ability to walk to work or have restaurants/coffee shops. Either you can afford to live in an area with those things or you can't. What is ironic though is that a lot of popular neighborhoods in big cities typically start off as refuges for people priced out of other establish neighborhoods. Today's neighborhood for starving artists/bike messengers is tomorrow's hot neighborhood for $1 million condos.

a reply to: Edumakated

There has always been the issue of property’s having more value in certain exclusive areas. In England there is a huge difference just between the north and south parts of the country. We also have these gated communities popping up here too with their own private security.

I wonder how long it will be before we get genuine slums in the UK around these exclusive gated communities like we see in the third world?

While there are some parallels with the US and U.K. property markets it’s different here due to the population density on our relatively small island. London might as well be another country in economic terms with the disparity of the cost of living there as opposed to other places.

What’s really driven house prices up so much here over the last 20 years is people investing in property for capital gains. People who own more than one home and multiple homes. AKA the buy to let people. There are also holiday home owners too but that’s a separate issue.

What’s happened in much of this country is a landlord will buy a property and rent it out to say a single parent for example. That parent can’t afford to pay the rent bring up a child and pay the bills etc.. so the government steps in and pays the surplus costs the single parent can’t afford. Thus the landlord can’t go wrong because they get paid indirectly by the government covering the cost of their mortgage. So lots of people start doing this and that in turn drives up house prices across the market.
That’s a big part of the problem. Also people just investing in property because it offers the best returns as opposed to other investments. It’s a whole industry of itself in this country.

a reply to: Xtrozero

Yep, that £230,000 house today was £36,000 when I bought it. The banks would lend me up to 3 times my salary but I didn't go to the limit and borrowed 95% of it's price (£34,200) purchasing the 5% with my own £1800 cash.
The 'kind of job' thought is why I compared it with my situation back then and now if I was in the same position today.
The same local government roll has a salary of £23,000 now, and a mortgage 3X that will buy you a shoebox these days.

The change has been property prices rising faster than wages, massively so.
To put it another way, in 1996 the same house was 2.25X the salary of the wages for the same job today.
Now the house is 10X the annual salary of that exact same job, just 22 years later.
I re-assert, it is harder for young people today.