Luckily you don't have to do anything to make that happen.
Housing is going to correct in a serious way, and soon.
Quantitative easing artificially keeping lending rates low screwed the housing market. That's in the process of correcting in a major way.
At the same time, the increasing rates are going to hit the stock market in a bad way, decreasing general liquidity for down payments.
The real headline is: "you can't keep high prices and increase mortgage rates amidst stagnant incomes."
A few other considerations:
Baby boomers are a huge population. The generations afterwards simply don't match their numbers. That generation is still primarily homeowners. As they age, that's no longer going to be the case, and the supply constrained market is going to reverse as houses get handed down or put on the market.
New developments and construction/renovation are targeting higher-end buyers, which makes affordable housing hard to find. But as everyone races to chase the higher end buyer, eventually there's going to be an over-supply and the market will tank. This was in part one of the contributing factors to the 2008 crash - new developments ended up as wastelands that eventually ended up as "affordable" housing because the buyers disappeared.
Personally, even though I'm open to buying a house at the moment, I'm staying the heck away from the market. I'm already seeing properties in my area sold a few months ago put back on the market initially for more, but then dropping the price below what they bought at.
We're approaching the cusp of the upward wave, and as rates increase, a lot of people that bought in the past two years are going to be stuck with whatever they bought into for a good while.
The sooner the Baby Boomer stop being consumers, the better, in regards to the rest of society. As a voting block and as a consumer group they've been large enough to completely reset the status quo.
I love my Baby Boomer parents, my aunts and uncles, and their friends -- but from a purely economic standpoint they've had their way for too long (extending to politics and societal-norms) and ultimately have hurt those of us in the later generations more than they've helped us.
That's tantamount to saying that life now is on balance worse than it was in the pre-boomer period. Personally I'm pretty happy the societal and technological advances of the last 50 years have happened. The idea of living in the 1950s doesn't particularly appeal.
Yes and No. The trick is that "as a whole" people change attitudes through life. In general, as you get more wealth, you become more conservative, as you get older, you generally end up with more wealth, so in general people become more conservative as they age.
The trick is that the baby boomers made a lot of progressive changes when they were younger, and we shouldn't take that away from them. However those changes were largely made since they benefitted the younger baby boomers.
As they get older, they are still influencing society in a way that largely benefits them over others, and sine they are wealthier, that tends to be in the direction of wealth creation.
Of course, every generation does this, the baby boomers just have an oversized representation, they have a better ability to "distort" the market/political landscape.
Of course this is all about generalisations, there are plenty of anecdotes that will refute parts of these stories, but anecdotes are not trends.
> Yes and No. The trick is that "as a whole" people change attitudes through life. In general, as you get more wealth, you become more conservative, as you get older, you generally end up with more wealth, so in general people become more conservative as they age.
You make it sound as being conservative is a bad thing. Alternatively, you could phrase it as, people become more conservative as they gain more responsibilities and experiences. Overall, I think it's a good thing, because it means that change happens slowly, which makes it easier to undo bad changes.
I feel the same way. There is a fair amount of stigma that boomers also look down on millennials. As a result, I think there is a bit of a dim view the opposite way: seeing a generation that has been able to take and control so much while resenting the one coming next.
I hope I’m not telling my child they are lazy, entitled, or other generally ignorant statements about their generation and the society I hand down her.
Older generations have always made those same complaints about younger generations since humans first evolved. We like to think that we'll act better than our parents, but in the end it's just human nature.
It’s unusual for one generational cohort to control so much for so long though, so a lot of what we’re seeing with Boomers is new.
Boomers are an unusually large cohort that arrived basically at once. They are a much larger group compared to their parents and children. That alone guarantees economic and political distortions, as it means that an unusually high percentage of the population would be in a very narrow range of ages.
They also lived unusually longer than their parents too, by about 20 years so far. Their parents had to share power with the Boomers because they started to die out, with the Boomers this hasn’t happened at all. This means they took the mantle of power in unusually large numbers, didn’t need to share with their children, and lived so long that they’ve stunted the political and economic growth of younger generations. That Boomers are still clogging up the lower rungs of power is literally stunting the growth of Gen X and Millenials, which will be a problem when that cohort is forced to take over due to mortality.
Under normal circumstances no generation is ever in the majority, and the mortality of their parents and themselves ensures that they cycle into and out of power smoothly. This gives every generation the ability to transfer social and economic power smoothly, as well as maintaining a good worker to retiree ratio. The Boomers however have basically upset that balance by existing in a tight cohort and living unusually long.
So yes, parents shitting on “kids these days” is as old as humanity, but what we’re seeing with Boomers is actually quite new.
Don't forget their most important advantage: they grew up and came of age during the post-WWII boom period, and therefore enjoyed unprecedented rates of wealth and standard of living increases.
You know, in direct contrast to Millennials, whom they enjoy criticizing so much.
> Millenials have also enjoyed a decade of economic boom 2008-2018
Both the expansion after the 2001 recession and the one after the Great Recession were strong in aggregate terms but unimpressive unless you were in a narrow slice at the top when you look at distribution; this is very different from the post-WWII expansion (even the 1980s and 1990s expansions were better distributionally than the later ones, though worse than earlier ones.)
The expansion that centered
the Boomer experience and provides the experiential basis for the belief that effort is sufficient for success was different than anything Millennials (and even, to a lesser extent, Gen X) experienced.
And quite a few of them have had their economic outlook badly damaged by the crash preceding 2008. Millenials who graduated before 2008 still have a lower salary on average than the younger members of their cohort.
In inflation adjusted terms, Millenials are far poorer than their parents for their phase in life on average. The latest number I can find is 20% less earnings than their parents at a comparable age.
Now Forbes argues that that’s because Millenials are extremely educated, their parents were working 4-8 longer than they were in their late 20s, giving Boomers more time to earn wealth.
While that’s certainly part of it, I don’t think it explains it all. The social contract around who gets the spoils of a growing economy seem to have shifted significantly since the 1980s. That an uneducated factory worker Boomer earned more in inflation adjusted money than a colleges educated Millenial indicates that something is up.
Life expectancy in 1946 was 64.4 for men and 69.4 for women for an average of 66.9. Now it’s an averages 78.6, 12 years longer.
And US life expectancy has dropped 1.5 years recently due to opioid deaths. Drop that from the equation and you’re looking at nice even 80.
I’m sure there’s a lot of legitimate quibbling to be done over my numbers. Obviously 20 wasnt the right number, but also obviously the general point stands: Boomers have lived a lot longer than anyone expected them to. If they lived as long as their parents had on average, we would be running out of them already.
As an aside. The above numbers really explain why social security and other pensions are in so much trouble. The greatest generation expected to receive only a few years of benefits on average, 1.4 for men and 4.4 for women. A tiny proportion of a worker’s lifetime wages would be required to cover these costs, better still since multiple workers would exist per retiree. Boomers on the other hand are legally entitled to a solid decade or more worth of benefits, an increase of an order of magnitude in time, not to mention increasing health costs. This combined with the unusually high ratio of retirees to workers, again caused by the unusual size of the Boomers, is a recipe for disaster.
An excellent point. This data was much harder to find, but I finally got it.
You are correct in that infant mortality rates have had a huge impact on life expectancy as a whole. An infant in 1900-1902 could expect 49.24 years, while one born in 2003 can expect 77.4.
But non-infant life expectancy has risen pretty dramatically too. A 20 year old in 1900-1902 could expect to live another 42.79 years, while a 20 year old in 2003 could expect another 58.4 years.
This trend continues the further up the age bracket you go. A 30 year old in 1939 could expect another 39.67 years, while that's up to 48.9 by 2003, a solid gain of 9 years.
Of course, Boomers are not 20 in 2003, they were 20 somewhere between 1966 and 1984. So the gap between the Boomers and their parents is a bit smaller than that (although the gap between Millenials and the Greatest Generation is huge). By my very rough estimate, the gap between the Boomers and their parents life expectancy hovers around 4-7 years, depending on how large the age gap between the Boomer and their parent. The gap appears to get the biggest around middle age, presumably because of improvements to medicine and reductions in Tobacco usage.
I tried to list out the data points I'm looking at, but it just didn't work in sentence form. Instead look at the raw data at [0]. Table 11 is my source, but I was just looking at all races and genders. Presumably one would see different results once you start breaking it down by demographics.
Not at all—morally and with a humanistic-bent—I don’t cheer for the deaths of my loved ones or their peers. But like taxes, death is inevitable.
Economically, I’ll consider it from a Machiavellian perspective:
The sooner limited, choice, resources are freed up for the younger generations the better. The Old were useful because they spawned, and raised, the young. As replacements, knowingly.
I barely got out of the last downturn. I did a very un-HN thing and went and got a 2 year MBA on top of my engr degree. I made my last mortgage payment from across the country and less than 12 months later the housing crash started.
Now, I see the market at a peak again and I'm not going _anywhere near_ this thing. I also contemplate whether I will ever afford a family sized place in a nice location. I am not sure but I wonder if I may have missed the boat on this.
I don't see a social adjustment to housing happening in my lifetime so at this point I'm just hoping that a major downturn happens during a time I'm not having a startup fail but instead on a rise from time off consulting or a successful company.
I wouldn't give up what I've done to have worked corporate for the past decade, but I'm also completely beholden to macro trends in housing with timing that feels completely like luck to me.
Unless if you are quite old, you will live to see the adjustment.
Houses at this point are owned by Boomers, some Gen Xers, and the richest subset of Millenials.
But this is quite an unstable situation. Everyone needs somewhere to live, but vanishingly small parts of the population need two places. As the Boomers either die or move to retirement homes they will need to liquidate their real estate in massive numbers, largely all at once thanks to the tight clustering of the Boomers.
There’s simply no way that this glut of housing will be absorbed by the richest groups of Millenials without sudden and deep price shocks, especially since Boomers appear to prefer suburban homes that the childless Millenials don’t typically want.
What’s interesting to me is what will happen politically. Boomer house owners have been very adept at using local politics to prop up their property values, the only notable failure was 2008. What kind of bailout will they ask for when their home is worth 1/5 what they expected?
While I don't disagree with a lot of your argument, according to some preliminary research it seems like there's about as many millennials as boomers. Like 77 million boomers, 65 million gen x, 75 million gen y.
The count is less important than the buying power.
Millennials, as a group, have significantly less buying power than their Baby Boomer peers at the same point in their lives.
One source, but eye-opening if you can believe/trust the underlying data:
"Only a third of millennials own their own home, compared with almost two-thirds of baby boomers at the same age. It will take a millennial on average 19 years to save for a deposit, compared[0] with three years in the 1980s. A third of millennials will, it is predicted, have a lifetime of renting with less space, poorer conditions, longer commutes and more insecurity than the baby boomers experienced."[1]
I'm a boomer myself, but I absolutely hope that this can be turned around. Higher voter participation from your generation could do much to reverse some of the really bad stuff that my generation has done.
Housing is going to correct in a serious way, and soon.
Quantitative easing artificially keeping lending rates low screwed the housing market. That's in the process of correcting in a major way.
At the same time, the increasing rates are going to hit the stock market in a bad way, decreasing general liquidity for down payments.
The real headline is: "you can't keep high prices and increase mortgage rates amidst stagnant incomes."
A few other considerations:
Baby boomers are a huge population. The generations afterwards simply don't match their numbers. That generation is still primarily homeowners. As they age, that's no longer going to be the case, and the supply constrained market is going to reverse as houses get handed down or put on the market.
New developments and construction/renovation are targeting higher-end buyers, which makes affordable housing hard to find. But as everyone races to chase the higher end buyer, eventually there's going to be an over-supply and the market will tank. This was in part one of the contributing factors to the 2008 crash - new developments ended up as wastelands that eventually ended up as "affordable" housing because the buyers disappeared.
Personally, even though I'm open to buying a house at the moment, I'm staying the heck away from the market. I'm already seeing properties in my area sold a few months ago put back on the market initially for more, but then dropping the price below what they bought at.
We're approaching the cusp of the upward wave, and as rates increase, a lot of people that bought in the past two years are going to be stuck with whatever they bought into for a good while.