This was a great read that left me wanting more. Despite the fact that this is a longform article, I felt like it only briefly touched on so many big ideas! I want this, but book-length! If anyone...
Exemplary
This was a great read that left me wanting more. Despite the fact that this is a longform article, I felt like it only briefly touched on so many big ideas! I want this, but book-length! If anyone has any recommendations for books on housing or, more broadly, millennial experience, let me know.
Speaking as a home-owning millennial, this resonated a lot with me. I was a fledgling adult during the mortgage crisis of 2008, so one of the first lessons I learned was that stability was an illusion. Just as I was starting to stake a claim in the world as my own individual, living and working independently for the first time in my life, I watched the people who had come before me lose their homes, savings, investments, retirement, and careers en masse.
We then found out that it was primarily the result of unfettered Wall Street greed, and that they left everyday Americans holding the bag, which engendered a deep mistrust that I don't know that I'll ever shake. I feel like I'm always looking over my shoulder -- like I'm only ever one step ahead of ruin and like someone's always trying to scam me. In many ways they are, and sometimes the only path forward is to play along anyway. After all, I feel like the standard millennial experience is overworking in a job that you're both overqualified for and underpaid for. It's a career long con that we're powerless to stop: knowing that we're operating below our worth which is exactly what is helping other people get rich off of us.
My husband and I are a good example. We've been living the double-income-no-kids life for a long time, and will proceed to do so as we've decided against having children. Both of us have good jobs. Neither are very lucrative, but we're both salaried and make considerably more than minimum wage. We're frugal by nature and spent many years building up savings partially because we might want a house but mostly to try to help stave off that feeling of looking over our shoulders, worrying about an unexpected expense that could upend us.
Though we wanted to buy a house, we weren't planning on getting one as soon as we did. Instead, we were forced into it early. Rents in our area were skyrocketing, and when our apartment complex notified us that we'd be facing a 20% increase in our (already very high) monthly payment when we renewed our lease, we immediately began searching for a home.
I say this not for any purpose of self-flattery but merely to note how bad things are right now: despite both of us being gainfully employed, having great credit scores, being frugal by nature, and having a large amount in savings for the downpayment, we still had to buy at the top of our price range and ended up with a very modest house. Everything we looked at below this price was junk (in one of the open houses we went to there were literally no floors in some parts), and the few that weren't junk were on the market for mere seconds before being snatched up.
Theoretically, our "strong" financial situation should have opened doors for us, giving us our pick of the litter, but instead we were priced out of nearly everything available to us. The article cites the 500K mark as the divide that separates millennial and boomer buyers, but that feels completely extravagant to me. Our maximum was well below that.
Now, with all that said, we love the house we got. It's the perfect size, as we followed the adage "don't buy more home than you need," (which is, of course, much easier to do when you've already decided that kids aren't going to be in the picture). I genuinely love it, the sense of place it gives us, and the idea that it's ours and ours alone. In a lifetime of looking over my shoulder, it finally feels like I can relax a little bit. My money is finally going to me, not some millionaire landlord. It feels good to feel home.
Unfortunately, I also think the standard millennial experience is that such emotional attachments are secondary to economic forces. I'm only able to enjoy those feelings because I'm in a financial situation to do so. Most people don't get that luxury and instead live in the emotional realm of chronic stress and financial insecurity. They're still looking over their shoulders, which never allows for comfort. I bring up all of this stuff with me and my husband not to brag but merely to illustrate that it shouldn't be this difficult. If the financial lives we've lived are the minimum then so many people are downright screwed. I think about everyone out there who makes less than me and my husband, or who has comparable incomes but also plans on (or already has) children. I think about all the people paying rents and loan payments so high that they can't accrue any savings -- their finances reaching near equilibrium between income and outflow.
The sad reality of the current situation is that my husband and I should be on top of things but are instead merely keeping our heads above water. Even though our decision to have kids wasn't financially motivated, we've since discussed how even if we did want kids we literally wouldn't be able to afford them. If it's this tight for us, that means it's downright untenable for anyone less privileged or in more dire financial straits. We had the means to escape that should-be-criminal 20% rent hike at our apartment complex, but if we didn't we'd be stuck. Our current monthly mortgage payments, with taxes and insurance, are less than we would have been paying had we stayed renting. And here's the kicker: it wasn't even a very nice apartment! How many millennials are out there hustling for every meager dollar just so they can stay afloat in a crappy place to live and on some student loans that are failing to return on their investment?
I grew up with the message that a college degree was the path to success. It didn't matter what the degree was in, just that you had one. I feel like we were the generation that grew up with this message, only to get to college right as things shifted and suddenly the specific field mattered a lot. Seemingly overnight the messaging went from a chorus of "any degree will do" to "you idiot, why didn't you get a business degree?" All my life college was touted as an ideal; learning was its own reward; and an education would pay off because, well, that's just what education does! But then, when we went to college, it pivoted under our feet and suddenly became a strategic and risky investment that we were ill-equipped to manage. Pick the right field, otherwise you're a dunce who paid tens of thousands for a useless piece of paper! A mean-spirited message delivered far too late. Some of us were able to roll with that punch, but many of us were still reeling from the world shifting beneath our feet or not knowing what the message really meant in the first place. College worked for some of us, certainly, but there are plenty of us who instead learned a very expensive life lesson in disappointment. Those of us who didn't or couldn't go to college learned a similar but equally depressing lesson.
Is all of this just the navel gazing of a millennial who doesn't know how good he has it? Maybe? It's hard to know what a life is like when you haven't lived it. On the other hand, can we say the same for those casting stones at our generation? Maybe?
All I know is that my job, and the jobs of everyone else I know, have gotten compressed. Each year I am asked to do more and more. My job, theoretically, should have gotten easier over the years as I developed my skillset in it and learned my own workflow, but instead it's accelerating. I know it's not just me either, as, in our last union meeting, a teacher who's one year away from retirement ranted about how she's having to work harder than she ever has in her career. My aunt, who recently retired from teaching, asked me if I was "going to make it" in this job. She then shared that she felt bad for everyone in the field my age, and that if things were this bad when she started she never would have stayed in it. Even some boomers know things aren't ok.
On the occasional afternoon, I treat myself to a coffee on my way home from work. Whenever I do so, I can see the workers behind the counter flat out hustling. It's not a calm, chill work environment but a timed pressure cooker. In fact, there's a publicly visible scoreboard up on the wall tracking their performance with customers down to the second. Furthermore, I know for a fact that modern data analysis has allowed management to always staff the bare minimum based on projected demand. Why have five employees work a Monday afternoon when that's the period of lowest sales? Cut it to two; save on wages. If there's an unexpected rush for them? Well, hope they can keep up! And they probably will -- they have to hit their numbers after all!
I also note that the people working behind the counter aren't young teenagers in a starter job -- they're people my age or older. People in their thirties and fourties, rapidly slinging overpriced coffee as quickly as humanly possible, doing hundreds if not thousands of dollars in sales in an hour and making a tiny fraction of that back as wages. It feels wrong all around. They're working harder and faster than I do, for longer stretches, and I frequently leave work completely burned out from the pace and demands of my job, which is why I'm treating myself to a coffee in the first place. I can't imagine how they feel, or what kind of rental they go home to, because lord knows they can't afford a house with how little they're getting paid.
If there is a standard millennial experience at all, I think it's the idea that, no matter who you are, you're working harder and faster than you used to but you're not seeing any return for it. Even if your income is going up, so are prices. Even though your work hours haven't expanded, your job expectations have. We're a generation who is experiencing an efficiency-based compression, the requisite benefits of which aren't returned to us. As such, we're seeing ourselves locked out of traditional forms of success and opportunity and instead stuck on a treadmill where we give too much and get too little, all while being asked to do even more and settle for even less. It's exhausting. For all of you out there in this situation, my heart goes out to you. I'm tired too.
Reading this has helped me understand just how utterly privileged and fortunate I am to have chosen software development as a career path, to have self-taught and avoided the college debt. All the...
Reading this has helped me understand just how utterly privileged and fortunate I am to have chosen software development as a career path, to have self-taught and avoided the college debt. All the friends I have around my age work so, so much. So much. The younger folks I know work so much they don't have any time for themselves. And you're right, they work so much just to scrape by. I don't know how they do it. I had a rather Bohemian online acquaintance 10 years ago who said something that has stuck so firmly in my head that I think of it every time I think fo how much my friends are working: work to live, don't live to work. Everyone I know who's not in some kind of tech job (and even some who are) are living to work. Hustle is absolutely the right word. Probably also why everyone I know my age is in therapy...
This is really well-written and I'm glad you shared this. It's a good reminder to me that the term millennial also includes people a decade older than me and that the recession completely screwed...
This is really well-written and I'm glad you shared this. It's a good reminder to me that the term millennial also includes people a decade older than me and that the recession completely screwed them over.
Edit: I want to add onto this with my own experience. Everyone says to go into STEM, but I did that and still spent a year and a half essentially unemployed because I refused to sell my life to companies who would treat me like shit and work me to the bone. Software isn't the holy grail it's sold as; programmers are a dime a dozen and the field is going to have fewer and fewer instant well-paying jobs as time goes on since so many people are going into the field. The root of the problem is that people have to do things like spend tens of thousands of dollars on college just to have a good shot at a better life, and that we all have to work as much as we do in the first place.
It'll be a bit of an over-generalization, but in my experience people and companies care very little about where you went to school for Computer Science, or even whether you have a formal...
It'll be a bit of an over-generalization, but in my experience people and companies care very little about where you went to school for Computer Science, or even whether you have a formal education in it at all. I'm sure it's different if you're trying to get a job in research or something similar, but for general development jobs I haven't seen it treated as much of a factor at all.
Exactly this. I don't have a degree (at all, in any field) and I've not had it be a problem with finding work. I even landed an interview at Google without a degree. They don't care if you have...
Exactly this. I don't have a degree (at all, in any field) and I've not had it be a problem with finding work. I even landed an interview at Google without a degree. They don't care if you have the piece of paper so long as you can do the work (in Google's case I couldn't, but that has nothing to do with the degree). These days I am very comfortable and I still don't have a degree, and no one has approached me about the requirement (or even the prospect) of getting one to maintain my current position or advance. I've considered getting a computer science degree more recently because the work I'm doing is squarely within the bounds of traditional computer science (assemblers, compilers, binary and program analysis), but no one has said "you need a CS degree to keep your job".
That's completely fair, half of my comment was venting too. Don't feel bad at all, I have a degree from a respected university and it still took me 60+ job applications to get where I'm at. I...
That's completely fair, half of my comment was venting too. Don't feel bad at all, I have a degree from a respected university and it still took me 60+ job applications to get where I'm at. I think everything's kinda fucked regardless of what people who are doing well will tell you.
I see where you are coming from and agree with a lot of it. College was way too pushed on us throughout middle school and high school. Everyone was telling us to pick out a career before having...
I see where you are coming from and agree with a lot of it. College was way too pushed on us throughout middle school and high school. Everyone was telling us to pick out a career before having any experience with it. Then for the undecided, we were told to go to college anyway and take a bunch of general courses and figure it out as you go, still getting no experience while racking up some debt.
I consider myself fortunate to have skipped going to college right out of high-school, I went and got work experience as a construction laborer, retail job, commercial insulator, several restaurant positions including management and was able to witness a bunch of other working class people in their trades before deciding that I wanted a job that was going to be somewhat physical, fairly technical and will likely always be in demand in the future. The college aspect of being an electrician was also limited to 2 years and mostly garnered me for my first promotion in the career so it was well spent IMO.
What pushed me into home ownership was a combination of privacy, lifestyle and accruing equity versus throwing money away on rent and never being able to play my guitars, music or theater system at the levels I desire. I went into home ownership with no money down and my bank even negotiated the price down $1500 for me so that I would just make the cut and be approved for the mortgage. Other houses that I checked out that were cheaper than this place were terrible investments and a lot of fixer uppers which I knew I wasn't going to have the money to throw at as soon as it was going to be needed. It took me a little over a year and renting out a room to find the money to shingle and fix the whole roof (~$2000) that had a few leaks. So I'm still just barely getting by until my student loan or car loan is paid off.
The one thing I don't agree with is the idea of being trapped here. I'm fairly certain I could sell at anytime for a profit. The problem is I can't afford to move anywhere more desirable (closer to a city with a music scene) and still be breaking even, let alone profitable on a single income with a house.
First, I'm on the older edge of the millennial definition at 35 (born 1984); that'll provide some context. I grew up in Levittown (the one in Pennsylvania, not the one in NY). It was such a...
First, I'm on the older edge of the millennial definition at 35 (born 1984); that'll provide some context.
In the late 1940s, he sided with William Levitt (and other private manufacturers) in their fight against public housing projects. Levitt was promoting his cookie-cutter housing communities, which McCarthy believed were more in line with America’s capitalist economic structure and ideals.
I grew up in Levittown (the one in Pennsylvania, not the one in NY). It was such a whitewashed, racist (a few paragraphs down in the History section) town, and absolutely cookie-cutter. All the houses looked the same, all the developments were shaped the same, all the streets were named the same way. That it was designed to promote capitalism is yet another reason, I suppose, why I could not stand living there and had to escape. Capitalism has never sat well with me, particularly not the libertarian kind of capitalism Republicans in the US espouse.
The government was more likely to help people refinance their homes or purchase homes in areas they deemed secure, which prevented generations of African Americans (who lived disproportionately in “risky,” i.e., low-income, areas) from being able to lift themselves out of poverty.
But like the idea of homeownership in general, the concept of owning a suburban home was fed to Americans by people in power.
It may have just been my weird perceptions or my weird family, but I remember that there was this subtle social aspersion cast on anyone living in an apartment in the suburbs, like you were some socially awkward / creepy person who didn't have your life together because you had to rent instead of own have a mortgage. My uncle on my father's side rented for a while as a bachelor and I remember my mother (who, among many other things, was rather socially conservative) speaking ill of him for it (and for being a bachelor at all, but I digress).
I saw a lot of this growing up, too (late 1980s to early-mid 1990s). The black kids who went to my school lived in housing projects. That said, the school was almost entirely white, as one would expect for a school in a town that had a race riot when a black family moved in.
Big houses required big appliances and used lots of carbon, creating a “hydrocarbon middle-class family” that was buoyed by three industries: coal, steel, and automaking.
Wow, this speaks to me. Pennsylvania is one of the states that relies the most on coal, and my father worked as a tool and die maker (he made the things that made the things that you use every day), and one of the largest industries his employer worked with was automotive (the other big one was aerospace... yeah...). Pittsburgh made the steel and it was shipped across the state (and elsewhere, of course) on heavy freight trains. And, of course, everyone had a car. It was a status symbol to have two.
As the old adage goes, a crucial part of purchasing real estate is recognizing the significance of “location, location, location,” and from the 1950s onward, that location was almost always the suburbs.
It didn't help that the nearest big city for the PA Levittown was Philadelphia, which at the time had such a terrible (and well-earned) reputation for violent crime. When I told my parents that I wanted to move into the city in 2009 or so, my mother was horrified and utterly convinced that I wouldn't be safe. Not sure if directly related, but certainly oddly coincidental.
a mortgage wasn’t something that trapped you in place, but something that freed you from having to pay rent.
This sounds like utter nonsense to anyone who actually thinks about it. A mortgage can be just as much as rent, or more, and you're going to be paying it for a long, long time. You can't move, you don't have the freedom of changing your mind, you have to fix and pay for everything, etc. Thus was the nature of the nonsensical rhetoric I grew up with.
A house in the suburbs is no longer quite so covetable. One reason is the climate crisis, which has led many potential homeowners to reconsider the effects of suburban sprawl, carbon dependency, and other industries that fueled those postwar suburbs.
For me, like many other adults my age, the idea of owning a house is both a dream and a nightmare.
I can't imagine the idea of owning, of being stuck somewhere. Home ownership has the distinct property of trying to stop things changing. But that's not how the world works. You can't just spend a ridiculous amount of money and stop the world changing around you. That's what home ownerdship promises, but it can never deliver.
“My childhood home was an anchor for my family; we gathered for meals, played sports in the backyard with neighborhood kids, planted and harvested vegetables from the gardens, and my mother died there,” she says. “I always knew I wanted to have a home like the one where I was raised, and I’m privileged enough that I have access to homeownership.”
I had a rather traumatic childhood, so I don't really identify with wanting to relive my childhood by having a house. You're not just fiscally privileged, Shimkin. You're emotionally privileged, too.
she wants to grow plants and have big dinners and fill a space with love.
How ironic, then, that the house is emblematic of the isolating influence of suburbia.
sometimes he worries about overspending at a restaurant because there’s always the possibility he could come home to a problem that needs $10,000 in repairs
Meanwhile, as a renter, I have insurance to cover this kind of thing if the landlord won't fix it for free. Buying makes sense how, exactly?
“I’m an American who didn’t grow up in America,” he explains. “I’m not certain that I want to, or can, live in a country where health care and keeping kids in cages are both up for debate and every loud noise makes people look around for escape routes.”
Quoted without further comment.
“No wonder all those shows like Big Little Lies and Weeds take place in the literal suburban hell that begins with homeownership,” he concludes.
Suburban hell indeed. I hated living in the suburbs. Hated everything about it.
Reality was tenuous. Fighting was commonplace, as were slammed doors and locked doors. I’ve never held any illusions about what happens behind the white picket fence.
This mirrors my own experience. I absolutely hold no illusions about what happens behind the fence, either, because I've seen it and it was ugly.
I’m afraid that a more expensive house in a more convenient area would put me into debt should the market experience another massive failure.
Am I the only one who sees a mortgage as a kind of debt?
I’m afraid that I could become trapped in one place, unable to sell, unable to move, haunting my own home and dreaming of mobility.
But that's the entire point of owning a house, no? To stay in one place?
It sounds like your experience of your family's home ownership soured you pretty strongly on the idea, and from what you say I can't blame you on that. I'm a similar age to you, and am fortunate...
It sounds like your experience of your family's home ownership soured you pretty strongly on the idea, and from what you say I can't blame you on that. I'm a similar age to you, and am fortunate enough to work in a field that means buying a place isn't impossible, so I figured the counter example might be interesting.
Everything you say at the top about suburbs, lawns, snobbery, and exclusion makes absolute sense to me - I certainly wouldn't choose to live in that environment, I value being right in the thick of the city very highly, and in order to make that possible my flat is small enough that it brushes against the upper end of "tiny home".
This sounds like utter nonsense to anyone who actually thinks about it. A mortgage can be just as much as rent, or more, and you're going to be paying it for a long, long time. You can't move, you don't have the freedom of changing your mind, you have to fix and pay for everything, etc. Thus was the nature of the nonsensical rhetoric I grew up with.
It can indeed be as much as rent, but it can also be much less. My monthly payments dropped by almost 35%, and as a country-wide average that number sits at about 20%. If you can manage maintenance costs within that margin then you're likely (albeit not guaranteed) to come out on top from a financial standpoint.
If you do want to move, you have more options: sell and buy elsewhere if you're planning on staying there for 5+ years, sell to cash in your equity if you'd rather straightforward rental, or rent your own place out while living in another rental if you want to keep the flexibility while continuing to build equity (i.e. if you believe that the housing market in your area will keep pace with or exceed inflation).
All of this is predicated on being in a fast moving, liquid, relatively high-cost rental market (relatively central in a popular city, basically) - it's not a universal upside, but it's a situation that shows the downsides aren't universal either.
I can't imagine the idea of owning, of being stuck somewhere. Home ownership has the distinct property of trying to stop things changing. But that's not how the world works. You can't just spend a ridiculous amount of money and stop the world changing around you. That's what home ownerdship promises, but it can never deliver.
I can definitely see both sides of this. You're right, my own home ownership is in some ways absolutely a way of grasping for stability. You're right that in at least some ways this is doomed to failure. But it has without doubt brought me more certainty and security.
Rent could and did easily shift 10-20% or more every year. Sometimes contracts don't get renewed at all. Mortgages, on the other hand, are stable for years or decades; short of a catastrophic change of income, I don't have to worry about being forced to move on someone else's terms. And if that catastrophic change did happen, it'd be just as much of a problem if I were renting - except now at least I could also potentially sell to get back the equity.
Meanwhile, as a renter, I have insurance to cover this kind of thing if the landlord won't fix it for free. Buying makes sense how, exactly?
Owners can and should be insured too! For more general maintenance, depending on your housing market, that $10k expense may well be covered just from the cash savings over renting for 2-3 years. Assuming you aren't buying a new roof every 18 months, the excess is then money in your pocket. Of course, you might be in a market where the excess doesn't cover maintenance - I'm not trying to push a specifically pro-home-ownership argument, but I think it's worth realising that it can be a sound decision for some (many?) people.
Am I the only one who sees a mortgage as a kind of debt?
I mean, it obviously is in the literal sense, but it's just as reasonable to see it as contractually fixing your rent at a certain level for the next however many years. Assuming that your starting point is a little less than your current rent and that rent increases at or beyond inflation, you're likely to be better off in this situation.
Obviously debt can be daunting, and it's certainly a responsibility, but so is rent - not many people can just choose to stop paying rent, so it's trading one expense for another rather than taking on a whole new obligation.
But that's the entire point of owning a house, no? To stay in one place?
Or to make the decision on when to stay or go on one's own terms, rather than the landlord's. It's a personal decision, and one that can vary widely based on circumstances, but I don't think it's a clear cut one in either direction.
So I rent an apartment in the Bay Area and own a house in Oregon. The thing is, my rent goes up every year. My mortgage costs me the same amount for 30 years. I already pay more than twice as much...
This sounds like utter nonsense to anyone who actually thinks about it. A mortgage can be just as much as rent, or more, and you're going to be paying it for a long, long time. You can't move, you don't have the freedom of changing your mind, you have to fix and pay for everything, etc. Thus was the nature of the nonsensical rhetoric I grew up with.
So I rent an apartment in the Bay Area and own a house in Oregon. The thing is, my rent goes up every year. My mortgage costs me the same amount for 30 years. I already pay more than twice as much for my apartment given the location difference, but unless something changes in the Bay Area, it wouldn't be surprising to me if I'm paying 3-4x as much in rent by the time I retire and get to leave.
On the one hand, I really like my house and I really doubt I'll want to sell it ever. On the other hand, of course you can move. Maybe not at the drop of the hat, but then you usually have to sign at least a 1 year lease when renting too.
I can't imagine the idea of owning, of being stuck somewhere. Home ownership has the distinct property of trying to stop things changing. But that's not how the world works. You can't just spend a ridiculous amount of money and stop the world changing around you. That's what home ownerdship promises, but it can never deliver.
It's funny that as a result of living in such a housing-constrained environment I'm bitter in almost the opposite ways that you seem to be. Homeowners in the bay area seem to have very successfully frozen time, and it didn't even cost most of them a "ridiculous amount of money".
Conversely, buildings are slowly being bought and torn down around me. Eventually my building will be on the chopping block and I'll be forced out whether I want to or not. When that happens, I'll have to move to another old building because I literally can't afford an apartment in a new building that rent for double my current rent, nor will I ever be able to afford to buy one of the luxury town homes that inevitably replace old apartment buildings around here. If I could have started my career 10 years earlier, I would have been able to afford a single family house in the bay area and would have been able to secure my ability to stay here in a career that I really enjoy without having to near-constantly worry about whether I'm going to be able to afford rent 2-3 years in the future.
I dreamed of owning a house when I was younger. Now the idea of having so much value tied up in a thing that might burn or flood or just be in a place where it's not feasible to live anymore seems...
I dreamed of owning a house when I was younger. Now the idea of having so much value tied up in a thing that might burn or flood or just be in a place where it's not feasible to live anymore seems ludicrous.
Well, it's have the value tied up in an asset (home ownership), or you pay rent and you just lose money. Granted, it can be more economical for an individual to rent than to buy if renting is...
Well, it's have the value tied up in an asset (home ownership), or you pay rent and you just lose money. Granted, it can be more economical for an individual to rent than to buy if renting is literally cheaper and you know you can make up for the equity you are losing by investing the savings renting gets you, but home ownership is a much better "deal", generally speaking.
Economically speaking in ideal market, rent should be equal to (mortgage interest) + (maintenance) + (other fees). So rent is not really wasted in general sense. In many countries goverments do...
Economically speaking in ideal market, rent should be equal to (mortgage interest) + (maintenance) + (other fees). So rent is not really wasted in general sense. In many countries goverments do support homeowning in various ways, which can make ownership cheaper. But that is very time and place specific, not a general rule.
These calculations need to be made when one makes the decisions for themselves, but it's doesn't really mean anything to say that rent is automatically lost money.
Even in the most ideal market I'd add an extra item there to account for the monetary value of flexibility (for the tenant) and the associated risk (for the landlord) which is also bundled into...
Economically speaking in ideal market, rent should be equl to (mortgage interest) + (maintenance) + (other fees).
Even in the most ideal market I'd add an extra item there to account for the monetary value of flexibility (for the tenant) and the associated risk (for the landlord) which is also bundled into the rent. This exists and is priced regardless of whether the tenant actually values that flexibility, which tends to be detrimental to renters who want to stay in one place for the long term.
Significant barriers to entry in the form of deposit requirements also prevent perfect competition in the market. I understand why those barriers exist, but that doesn't change the fact that they significantly limit the number of people for whom ownership is an option, and thus allow rents to be increased for that captive market.
It's about more than just the economics, though. Sure, from a strictly numerical perspective, home ownership may make more sense in certain circumstances. But I know that I wouldn't be happy...
It's about more than just the economics, though. Sure, from a strictly numerical perspective, home ownership may make more sense in certain circumstances. But I know that I wouldn't be happy owning. You can tell me how it's going to be more economical all you like, but I'm not going to be happy owning. Too much work (as Levitt said). I'm happy to be a socialist renter with the flexibility to move when I need to. And, speaking from the perspective of needing to again (just to a different building, not out of the city), I'm so, so happy I'm renting and not paying a mortgage right now.
Economics can be thought of partly as “the study of utility”. When you talk about whether or not a choice is “economical”, it often just means “is this the choice that would make me the...
Economics can be thought of partly as “the study of utility”. When you talk about whether or not a choice is “economical”, it often just means “is this the choice that would make me the happiest?”. The true cost of something encompasses a lot more than just its market value. I just personally never want to rent because rent seekers tank the economy and I don’t want to support them by renting property. Housing co-ops are cool, though.
Speaking as a syncretic act and rule utilitarian, I can absolutely see your perspective there. I know that I'm happiest renting, so I rent. But can you expand a bit about what you mean by please?
Speaking as a syncretic act and rule utilitarian, I can absolutely see your perspective there. I know that I'm happiest renting, so I rent.
Well, I never said you should trust it to appreciate, or that you should trust in the liquidity of it, just that it's literally an asset you wouldn't have otherwise. Even if you could only get 10%...
Well, I never said you should trust it to appreciate, or that you should trust in the liquidity of it, just that it's literally an asset you wouldn't have otherwise. Even if you could only get 10% of what you paid for the house back, that's still a lot more than the $0 you'd get back when you give up your rental. Don't forget, all landlords are bastards.
Thats the thing though. I have two pups and I actually don't enjoy living in apartments. Right now, I live in a duplex and I'm looking to rent a house with a backyard. Thankfully I live in an area...
Thats the thing though. I have two pups and I actually don't enjoy living in apartments. Right now, I live in a duplex and I'm looking to rent a house with a backyard. Thankfully I live in an area where the rent is somewhat reasonable. Still, as a kid I thought I would be able to own my own home.
This was a great read that left me wanting more. Despite the fact that this is a longform article, I felt like it only briefly touched on so many big ideas! I want this, but book-length! If anyone has any recommendations for books on housing or, more broadly, millennial experience, let me know.
Speaking as a home-owning millennial, this resonated a lot with me. I was a fledgling adult during the mortgage crisis of 2008, so one of the first lessons I learned was that stability was an illusion. Just as I was starting to stake a claim in the world as my own individual, living and working independently for the first time in my life, I watched the people who had come before me lose their homes, savings, investments, retirement, and careers en masse.
We then found out that it was primarily the result of unfettered Wall Street greed, and that they left everyday Americans holding the bag, which engendered a deep mistrust that I don't know that I'll ever shake. I feel like I'm always looking over my shoulder -- like I'm only ever one step ahead of ruin and like someone's always trying to scam me. In many ways they are, and sometimes the only path forward is to play along anyway. After all, I feel like the standard millennial experience is overworking in a job that you're both overqualified for and underpaid for. It's a career long con that we're powerless to stop: knowing that we're operating below our worth which is exactly what is helping other people get rich off of us.
My husband and I are a good example. We've been living the double-income-no-kids life for a long time, and will proceed to do so as we've decided against having children. Both of us have good jobs. Neither are very lucrative, but we're both salaried and make considerably more than minimum wage. We're frugal by nature and spent many years building up savings partially because we might want a house but mostly to try to help stave off that feeling of looking over our shoulders, worrying about an unexpected expense that could upend us.
Though we wanted to buy a house, we weren't planning on getting one as soon as we did. Instead, we were forced into it early. Rents in our area were skyrocketing, and when our apartment complex notified us that we'd be facing a 20% increase in our (already very high) monthly payment when we renewed our lease, we immediately began searching for a home.
I say this not for any purpose of self-flattery but merely to note how bad things are right now: despite both of us being gainfully employed, having great credit scores, being frugal by nature, and having a large amount in savings for the downpayment, we still had to buy at the top of our price range and ended up with a very modest house. Everything we looked at below this price was junk (in one of the open houses we went to there were literally no floors in some parts), and the few that weren't junk were on the market for mere seconds before being snatched up.
Theoretically, our "strong" financial situation should have opened doors for us, giving us our pick of the litter, but instead we were priced out of nearly everything available to us. The article cites the 500K mark as the divide that separates millennial and boomer buyers, but that feels completely extravagant to me. Our maximum was well below that.
Now, with all that said, we love the house we got. It's the perfect size, as we followed the adage "don't buy more home than you need," (which is, of course, much easier to do when you've already decided that kids aren't going to be in the picture). I genuinely love it, the sense of place it gives us, and the idea that it's ours and ours alone. In a lifetime of looking over my shoulder, it finally feels like I can relax a little bit. My money is finally going to me, not some millionaire landlord. It feels good to feel home.
Unfortunately, I also think the standard millennial experience is that such emotional attachments are secondary to economic forces. I'm only able to enjoy those feelings because I'm in a financial situation to do so. Most people don't get that luxury and instead live in the emotional realm of chronic stress and financial insecurity. They're still looking over their shoulders, which never allows for comfort. I bring up all of this stuff with me and my husband not to brag but merely to illustrate that it shouldn't be this difficult. If the financial lives we've lived are the minimum then so many people are downright screwed. I think about everyone out there who makes less than me and my husband, or who has comparable incomes but also plans on (or already has) children. I think about all the people paying rents and loan payments so high that they can't accrue any savings -- their finances reaching near equilibrium between income and outflow.
The sad reality of the current situation is that my husband and I should be on top of things but are instead merely keeping our heads above water. Even though our decision to have kids wasn't financially motivated, we've since discussed how even if we did want kids we literally wouldn't be able to afford them. If it's this tight for us, that means it's downright untenable for anyone less privileged or in more dire financial straits. We had the means to escape that should-be-criminal 20% rent hike at our apartment complex, but if we didn't we'd be stuck. Our current monthly mortgage payments, with taxes and insurance, are less than we would have been paying had we stayed renting. And here's the kicker: it wasn't even a very nice apartment! How many millennials are out there hustling for every meager dollar just so they can stay afloat in a crappy place to live and on some student loans that are failing to return on their investment?
I grew up with the message that a college degree was the path to success. It didn't matter what the degree was in, just that you had one. I feel like we were the generation that grew up with this message, only to get to college right as things shifted and suddenly the specific field mattered a lot. Seemingly overnight the messaging went from a chorus of "any degree will do" to "you idiot, why didn't you get a business degree?" All my life college was touted as an ideal; learning was its own reward; and an education would pay off because, well, that's just what education does! But then, when we went to college, it pivoted under our feet and suddenly became a strategic and risky investment that we were ill-equipped to manage. Pick the right field, otherwise you're a dunce who paid tens of thousands for a useless piece of paper! A mean-spirited message delivered far too late. Some of us were able to roll with that punch, but many of us were still reeling from the world shifting beneath our feet or not knowing what the message really meant in the first place. College worked for some of us, certainly, but there are plenty of us who instead learned a very expensive life lesson in disappointment. Those of us who didn't or couldn't go to college learned a similar but equally depressing lesson.
Is all of this just the navel gazing of a millennial who doesn't know how good he has it? Maybe? It's hard to know what a life is like when you haven't lived it. On the other hand, can we say the same for those casting stones at our generation? Maybe?
All I know is that my job, and the jobs of everyone else I know, have gotten compressed. Each year I am asked to do more and more. My job, theoretically, should have gotten easier over the years as I developed my skillset in it and learned my own workflow, but instead it's accelerating. I know it's not just me either, as, in our last union meeting, a teacher who's one year away from retirement ranted about how she's having to work harder than she ever has in her career. My aunt, who recently retired from teaching, asked me if I was "going to make it" in this job. She then shared that she felt bad for everyone in the field my age, and that if things were this bad when she started she never would have stayed in it. Even some boomers know things aren't ok.
On the occasional afternoon, I treat myself to a coffee on my way home from work. Whenever I do so, I can see the workers behind the counter flat out hustling. It's not a calm, chill work environment but a timed pressure cooker. In fact, there's a publicly visible scoreboard up on the wall tracking their performance with customers down to the second. Furthermore, I know for a fact that modern data analysis has allowed management to always staff the bare minimum based on projected demand. Why have five employees work a Monday afternoon when that's the period of lowest sales? Cut it to two; save on wages. If there's an unexpected rush for them? Well, hope they can keep up! And they probably will -- they have to hit their numbers after all!
I also note that the people working behind the counter aren't young teenagers in a starter job -- they're people my age or older. People in their thirties and fourties, rapidly slinging overpriced coffee as quickly as humanly possible, doing hundreds if not thousands of dollars in sales in an hour and making a tiny fraction of that back as wages. It feels wrong all around. They're working harder and faster than I do, for longer stretches, and I frequently leave work completely burned out from the pace and demands of my job, which is why I'm treating myself to a coffee in the first place. I can't imagine how they feel, or what kind of rental they go home to, because lord knows they can't afford a house with how little they're getting paid.
If there is a standard millennial experience at all, I think it's the idea that, no matter who you are, you're working harder and faster than you used to but you're not seeing any return for it. Even if your income is going up, so are prices. Even though your work hours haven't expanded, your job expectations have. We're a generation who is experiencing an efficiency-based compression, the requisite benefits of which aren't returned to us. As such, we're seeing ourselves locked out of traditional forms of success and opportunity and instead stuck on a treadmill where we give too much and get too little, all while being asked to do even more and settle for even less. It's exhausting. For all of you out there in this situation, my heart goes out to you. I'm tired too.
Reading this has helped me understand just how utterly privileged and fortunate I am to have chosen software development as a career path, to have self-taught and avoided the college debt. All the friends I have around my age work so, so much. So much. The younger folks I know work so much they don't have any time for themselves. And you're right, they work so much just to scrape by. I don't know how they do it. I had a rather Bohemian online acquaintance 10 years ago who said something that has stuck so firmly in my head that I think of it every time I think fo how much my friends are working: work to live, don't live to work. Everyone I know who's not in some kind of tech job (and even some who are) are living to work. Hustle is absolutely the right word. Probably also why everyone I know my age is in therapy...
This is really well-written and I'm glad you shared this. It's a good reminder to me that the term millennial also includes people a decade older than me and that the recession completely screwed them over.
Edit: I want to add onto this with my own experience. Everyone says to go into STEM, but I did that and still spent a year and a half essentially unemployed because I refused to sell my life to companies who would treat me like shit and work me to the bone. Software isn't the holy grail it's sold as; programmers are a dime a dozen and the field is going to have fewer and fewer instant well-paying jobs as time goes on since so many people are going into the field. The root of the problem is that people have to do things like spend tens of thousands of dollars on college just to have a good shot at a better life, and that we all have to work as much as we do in the first place.
It'll be a bit of an over-generalization, but in my experience people and companies care very little about where you went to school for Computer Science, or even whether you have a formal education in it at all. I'm sure it's different if you're trying to get a job in research or something similar, but for general development jobs I haven't seen it treated as much of a factor at all.
Exactly this. I don't have a degree (at all, in any field) and I've not had it be a problem with finding work. I even landed an interview at Google without a degree. They don't care if you have the piece of paper so long as you can do the work (in Google's case I couldn't, but that has nothing to do with the degree). These days I am very comfortable and I still don't have a degree, and no one has approached me about the requirement (or even the prospect) of getting one to maintain my current position or advance. I've considered getting a computer science degree more recently because the work I'm doing is squarely within the bounds of traditional computer science (assemblers, compilers, binary and program analysis), but no one has said "you need a CS degree to keep your job".
That's completely fair, half of my comment was venting too. Don't feel bad at all, I have a degree from a respected university and it still took me 60+ job applications to get where I'm at. I think everything's kinda fucked regardless of what people who are doing well will tell you.
I see where you are coming from and agree with a lot of it. College was way too pushed on us throughout middle school and high school. Everyone was telling us to pick out a career before having any experience with it. Then for the undecided, we were told to go to college anyway and take a bunch of general courses and figure it out as you go, still getting no experience while racking up some debt.
I consider myself fortunate to have skipped going to college right out of high-school, I went and got work experience as a construction laborer, retail job, commercial insulator, several restaurant positions including management and was able to witness a bunch of other working class people in their trades before deciding that I wanted a job that was going to be somewhat physical, fairly technical and will likely always be in demand in the future. The college aspect of being an electrician was also limited to 2 years and mostly garnered me for my first promotion in the career so it was well spent IMO.
What pushed me into home ownership was a combination of privacy, lifestyle and accruing equity versus throwing money away on rent and never being able to play my guitars, music or theater system at the levels I desire. I went into home ownership with no money down and my bank even negotiated the price down $1500 for me so that I would just make the cut and be approved for the mortgage. Other houses that I checked out that were cheaper than this place were terrible investments and a lot of fixer uppers which I knew I wasn't going to have the money to throw at as soon as it was going to be needed. It took me a little over a year and renting out a room to find the money to shingle and fix the whole roof (~$2000) that had a few leaks. So I'm still just barely getting by until my student loan or car loan is paid off.
The one thing I don't agree with is the idea of being trapped here. I'm fairly certain I could sell at anytime for a profit. The problem is I can't afford to move anywhere more desirable (closer to a city with a music scene) and still be breaking even, let alone profitable on a single income with a house.
I feel like your comment would be a great article in its own right. You’re good with words.
First, I'm on the older edge of the millennial definition at 35 (born 1984); that'll provide some context.
I grew up in Levittown (the one in Pennsylvania, not the one in NY). It was such a whitewashed, racist (a few paragraphs down in the History section) town, and absolutely cookie-cutter. All the houses looked the same, all the developments were shaped the same, all the streets were named the same way. That it was designed to promote capitalism is yet another reason, I suppose, why I could not stand living there and had to escape. Capitalism has never sat well with me, particularly not the libertarian kind of capitalism Republicans in the US espouse.
It may have just been my weird perceptions or my weird family, but I remember that there was this subtle social aspersion cast on anyone living in an apartment in the suburbs, like you were some socially awkward / creepy person who didn't have your life together because you had to rent instead of
ownhave a mortgage. My uncle on my father's side rented for a while as a bachelor and I remember my mother (who, among many other things, was rather socially conservative) speaking ill of him for it (and for being a bachelor at all, but I digress).I saw a lot of this growing up, too (late 1980s to early-mid 1990s). The black kids who went to my school lived in housing projects. That said, the school was almost entirely white, as one would expect for a school in a town that had a race riot when a black family moved in.
Wow, this speaks to me. Pennsylvania is one of the states that relies the most on coal, and my father worked as a tool and die maker (he made the things that made the things that you use every day), and one of the largest industries his employer worked with was automotive (the other big one was aerospace... yeah...). Pittsburgh made the steel and it was shipped across the state (and elsewhere, of course) on heavy freight trains. And, of course, everyone had a car. It was a status symbol to have two.
It didn't help that the nearest big city for the PA Levittown was Philadelphia, which at the time had such a terrible (and well-earned) reputation for violent crime. When I told my parents that I wanted to move into the city in 2009 or so, my mother was horrified and utterly convinced that I wouldn't be safe. Not sure if directly related, but certainly oddly coincidental.
This sounds like utter nonsense to anyone who actually thinks about it. A mortgage can be just as much as rent, or more, and you're going to be paying it for a long, long time. You can't move, you don't have the freedom of changing your mind, you have to fix and pay for everything, etc. Thus was the nature of the nonsensical rhetoric I grew up with.
Not to mention the enormous waste of irrigation that is watering lawns. Did you know that lawn grass is the most irrigated crop in the US?
I can't imagine the idea of owning, of being stuck somewhere. Home ownership has the distinct property of trying to stop things changing. But that's not how the world works. You can't just spend a ridiculous amount of money and stop the world changing around you. That's what home ownerdship promises, but it can never deliver.
I had a rather traumatic childhood, so I don't really identify with wanting to relive my childhood by having a house. You're not just fiscally privileged, Shimkin. You're emotionally privileged, too.
How ironic, then, that the house is emblematic of the isolating influence of suburbia.
Meanwhile, as a renter, I have insurance to cover this kind of thing if the landlord won't fix it for free. Buying makes sense how, exactly?
Quoted without further comment.
Suburban hell indeed. I hated living in the suburbs. Hated everything about it.
This mirrors my own experience. I absolutely hold no illusions about what happens behind the fence, either, because I've seen it and it was ugly.
Am I the only one who sees a mortgage as a kind of debt?
But that's the entire point of owning a house, no? To stay in one place?
It sounds like your experience of your family's home ownership soured you pretty strongly on the idea, and from what you say I can't blame you on that. I'm a similar age to you, and am fortunate enough to work in a field that means buying a place isn't impossible, so I figured the counter example might be interesting.
Everything you say at the top about suburbs, lawns, snobbery, and exclusion makes absolute sense to me - I certainly wouldn't choose to live in that environment, I value being right in the thick of the city very highly, and in order to make that possible my flat is small enough that it brushes against the upper end of "tiny home".
It can indeed be as much as rent, but it can also be much less. My monthly payments dropped by almost 35%, and as a country-wide average that number sits at about 20%. If you can manage maintenance costs within that margin then you're likely (albeit not guaranteed) to come out on top from a financial standpoint.
If you do want to move, you have more options: sell and buy elsewhere if you're planning on staying there for 5+ years, sell to cash in your equity if you'd rather straightforward rental, or rent your own place out while living in another rental if you want to keep the flexibility while continuing to build equity (i.e. if you believe that the housing market in your area will keep pace with or exceed inflation).
All of this is predicated on being in a fast moving, liquid, relatively high-cost rental market (relatively central in a popular city, basically) - it's not a universal upside, but it's a situation that shows the downsides aren't universal either.
I can definitely see both sides of this. You're right, my own home ownership is in some ways absolutely a way of grasping for stability. You're right that in at least some ways this is doomed to failure. But it has without doubt brought me more certainty and security.
Rent could and did easily shift 10-20% or more every year. Sometimes contracts don't get renewed at all. Mortgages, on the other hand, are stable for years or decades; short of a catastrophic change of income, I don't have to worry about being forced to move on someone else's terms. And if that catastrophic change did happen, it'd be just as much of a problem if I were renting - except now at least I could also potentially sell to get back the equity.
Owners can and should be insured too! For more general maintenance, depending on your housing market, that $10k expense may well be covered just from the cash savings over renting for 2-3 years. Assuming you aren't buying a new roof every 18 months, the excess is then money in your pocket. Of course, you might be in a market where the excess doesn't cover maintenance - I'm not trying to push a specifically pro-home-ownership argument, but I think it's worth realising that it can be a sound decision for some (many?) people.
I mean, it obviously is in the literal sense, but it's just as reasonable to see it as contractually fixing your rent at a certain level for the next however many years. Assuming that your starting point is a little less than your current rent and that rent increases at or beyond inflation, you're likely to be better off in this situation.
Obviously debt can be daunting, and it's certainly a responsibility, but so is rent - not many people can just choose to stop paying rent, so it's trading one expense for another rather than taking on a whole new obligation.
Or to make the decision on when to stay or go on one's own terms, rather than the landlord's. It's a personal decision, and one that can vary widely based on circumstances, but I don't think it's a clear cut one in either direction.
So I rent an apartment in the Bay Area and own a house in Oregon. The thing is, my rent goes up every year. My mortgage costs me the same amount for 30 years. I already pay more than twice as much for my apartment given the location difference, but unless something changes in the Bay Area, it wouldn't be surprising to me if I'm paying 3-4x as much in rent by the time I retire and get to leave.
On the one hand, I really like my house and I really doubt I'll want to sell it ever. On the other hand, of course you can move. Maybe not at the drop of the hat, but then you usually have to sign at least a 1 year lease when renting too.
It's funny that as a result of living in such a housing-constrained environment I'm bitter in almost the opposite ways that you seem to be. Homeowners in the bay area seem to have very successfully frozen time, and it didn't even cost most of them a "ridiculous amount of money".
Conversely, buildings are slowly being bought and torn down around me. Eventually my building will be on the chopping block and I'll be forced out whether I want to or not. When that happens, I'll have to move to another old building because I literally can't afford an apartment in a new building that rent for double my current rent, nor will I ever be able to afford to buy one of the luxury town homes that inevitably replace old apartment buildings around here. If I could have started my career 10 years earlier, I would have been able to afford a single family house in the bay area and would have been able to secure my ability to stay here in a career that I really enjoy without having to near-constantly worry about whether I'm going to be able to afford rent 2-3 years in the future.
I dreamed of owning a house when I was younger. Now the idea of having so much value tied up in a thing that might burn or flood or just be in a place where it's not feasible to live anymore seems ludicrous.
Well, it's have the value tied up in an asset (home ownership), or you pay rent and you just lose money. Granted, it can be more economical for an individual to rent than to buy if renting is literally cheaper and you know you can make up for the equity you are losing by investing the savings renting gets you, but home ownership is a much better "deal", generally speaking.
Economically speaking in ideal market, rent should be equal to (mortgage interest) + (maintenance) + (other fees). So rent is not really wasted in general sense. In many countries goverments do support homeowning in various ways, which can make ownership cheaper. But that is very time and place specific, not a general rule.
These calculations need to be made when one makes the decisions for themselves, but it's doesn't really mean anything to say that rent is automatically lost money.
Even in the most ideal market I'd add an extra item there to account for the monetary value of flexibility (for the tenant) and the associated risk (for the landlord) which is also bundled into the rent. This exists and is priced regardless of whether the tenant actually values that flexibility, which tends to be detrimental to renters who want to stay in one place for the long term.
Significant barriers to entry in the form of deposit requirements also prevent perfect competition in the market. I understand why those barriers exist, but that doesn't change the fact that they significantly limit the number of people for whom ownership is an option, and thus allow rents to be increased for that captive market.
It's about more than just the economics, though. Sure, from a strictly numerical perspective, home ownership may make more sense in certain circumstances. But I know that I wouldn't be happy owning. You can tell me how it's going to be more economical all you like, but I'm not going to be happy owning. Too much work (as Levitt said). I'm happy to be a socialist renter with the flexibility to move when I need to. And, speaking from the perspective of needing to again (just to a different building, not out of the city), I'm so, so happy I'm renting and not paying a mortgage right now.
Economics can be thought of partly as “the study of utility”. When you talk about whether or not a choice is “economical”, it often just means “is this the choice that would make me the happiest?”. The true cost of something encompasses a lot more than just its market value. I just personally never want to rent because rent seekers tank the economy and I don’t want to support them by renting property. Housing co-ops are cool, though.
Speaking as a syncretic act and rule utilitarian, I can absolutely see your perspective there. I know that I'm happiest renting, so I rent.
But can you expand a bit about what you mean by
please?
Yeah, why should I trust that asset to appreciate? Why should I trust in the liquidity of it?
Well, I never said you should trust it to appreciate, or that you should trust in the liquidity of it, just that it's literally an asset you wouldn't have otherwise. Even if you could only get 10% of what you paid for the house back, that's still a lot more than the $0 you'd get back when you give up your rental. Don't forget, all landlords are bastards.
Well, that just made me want to live in a van by the river even more. Hell, even the thought of buying a house terrifies me still...
Thats the thing though. I have two pups and I actually don't enjoy living in apartments. Right now, I live in a duplex and I'm looking to rent a house with a backyard. Thankfully I live in an area where the rent is somewhat reasonable. Still, as a kid I thought I would be able to own my own home.