While Millennial Home Ownership Contracts Student Debt Expands: The Young Struggle for Housing.

One thing you can bet on is the unexpected.  The big bet was that nearly a decade after the housing bubble peaked and then imploded, that young buyers would suddenly enter the real estate market in force.  Instead, many are living with parents or are part of the renting revolution.  Of course the housing cheerleaders continue to champion a bubble in real estate yet somehow scratch their heads at the political ramifications that are hitting our country.  Just like in politics, we are living in a massively divided real estate market.  The difference in real estate however is the group of people that can afford current home prices grows smaller and smaller.  Millennials, the next wave of supposed buyers never materialized.  What you had is low inventory, investors, artificially low interest rates, and foreign buying taking up the slack.  Even in California, we have 2.3 million young adults living at home with their parents.  The latest data shows that instead of taking on mortgage debt, Millennials are racking up large amounts of student debt.

Trading mortgage debt for student debt

There is now an estimated $1.4 trillion in student debt outstanding in the U.S.  This is the largest debt sector only trailing the mortgage debt segment of the economy.  But there is a big difference here since most of the mortgage debt is in the hands of Taco Tuesday baby boomers, most of the student debt that is out there is in the hands of Millennials.

We are living in the land of cognitive dissonance.  I’ve heard countless times baby boomers bemoaning high real estate prices since their offspring can’t afford to buy in their neighborhood.  Yet in the same rant, they are more than happy to talk about their Zillow Zestimate on their property and actually feel that it is “worth” more.  Some people are myopic and have a hard time understanding the random luck they have in purchasing their home when they did.  They want a time in history that never existed to come back so their children can live a life of leisure and job security.  But guess what?  The internet and the global economy has changed everything.  The world is incredibly hungry for the best app, the fastest laptop, the best movie, the lightest shoes, and the sleekest Smartphone.  In other words, this is a hyper competitive world and Millennials are first focused on their careers versus buying a crap shack.  This is easily seen by Millennial home ownership and total student debt:

studentloanshomeownership

This isn’t a bad bet in my opinion.  The vast majority of good paying jobs require a set of specific training or expertise.  I know many people that work in tech and their skill set is in high demand.  Engineers are doing well and this goes for many other fields like nursing, health care, accounting, and professions that require a tailored set of knowledge that feeds into this hyper competitive system.  Does this make for a “happy” workforce?  Probably not but here we are.  But the days of blue collar workers buying a “prime” property with one income are long gone.  And what is “prime” shifts as well.  The new environment favors those that can change and move with the waves of transformation – 30 year careers in one company seem old fashioned like staying in one place for 30 years with a fixed mortgage. It exists but is getting rarer.

So put yourself in the shoes of Millennials looking to buy a crap shack in many metro areas.  Going to college would seem almost mandatory to even having a chance at buying a place.  Because you are competing with investors, foreign money, and those that got in before prices inflated your income needs to be high, even with a sizable down payment.

Look at how many degrees were awarded in 2013-14 in various fields:

college-degrees-awarded

You had more than 353,000 degrees awarded in the “liberal arts and sciences, general studies, and humanities” while having 37,000 degrees in computer science and 31,000 in engineering related fields being awarded.  This isn’t to denigrate one degree over another but to buy a $700,000 crap shack you are going to need some serious earnings potential.  And what we see is that more degrees are being awarded in fields that pay less while student debt is increasing.  So yes, student debt is keeping Millennials from buying but also earnings potential.  As we’ve noted many Millennials now live at home because they can’t even afford higher rents, let alone purchase a home.

This isn’t a problem that is likely to go away.  Sure, people can make promises but you either have housing prices correct or incomes turning sharply higher.  People always want to believe in simple solutions but this market is complex and Black Swans are bound to happen.  Even in the tech happy Bay Area things are slightly changing.

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138 Responses to “While Millennial Home Ownership Contracts Student Debt Expands: The Young Struggle for Housing.”

  • Housing To Tank Q2 2017!

    • Housing to Tank Hard Soon!!

      • Our president elect is deep into real estate. Will he tank his own family business to make you great again?

      • alex in San Jose

        Hell, he’ll tank the whole *country* to make it great again!

      • @Denddandan

        Are you suggesting that Trump can prevent the next recession that he had been warning us about during his campaign? Or that he wouldn’t buy low like he suggested others to do prior to the last downturn?

      • What is going on right now is price-fixing at best… It’s just dinner party conversations on a large scale. Everyone thinks they got something special. Even if it is a corn field house built in the 90’s for $150,000. Everyone I talk to says housing is going UP UP UP, people don’t realize that in order to have a healthy market you have to have SALES. A few people start losing their jobs and they already spent their entire life savings on that house? You got issues again. Unemployment pays $1,900 (I believe) max in CA a month. Pretty pitiful.

      • Jim, 2016 is close to an end. Get that tank going already!

        Interest rates have jumped up significantly, so let’s see what that does to sales prices. (I’m not in the “it’s going to ‘tank’ crowd”, but I won’t be surprised to see a 10-20% drop in prices)

  • People will just have to do what they did generations ago: Buy or build a house with lots of small bedrooms and a few bathrooms, and have parents, kids, grandparents, all in there and all contributing how they can. The good news is that grandparents mean free child care. Handy uncle Andy who’s on Disability can still fix things around the place, and is out collecting cans and tending the (admittedly small) garden. The money the g’parents had earmarked for the old folks’ home goes to pay for the house.

    You’ll just have to have large numbers of people teaming up together.

    • I agree eventually this will happen, but not in the foreseeable future. What I see in CA is that if people don’t like living in close quarters they leave for Vegas. Someday Vegas will get to near-capacity and they will move to Lake Havasu City. On and on. I wish the US did a better job at controlling this unchecked growth because we will eventually lose our nature to a bunch of strip malls and suburbs.

    • Its amazing to me that some people think its reasonable for the average person to be forced to adjust (and its definitely a downwards adjustment in quality of life) to the adversities of a economy that favors the rich and the rigged housing market rather than improving things.

      “People will just have to do what they did generations ago: Buy or build a house with lots of small bedrooms and a few bathrooms, and have parents, kids, grandparents, all in there and all contributing how they can.”
      This doesn’t work because people don’t have the money for it. “Generational Homes” as they’re called are still too expensive when most of the household can only get min. wage jobs.

      “The good news is that grandparents mean free child care.”
      Nuh uh. Grandparents typically mean disabled, sick, and senile adults that need lots of care which cost lots of money and can’t effectively watch or take care of kids. Most people age very poorly and in particular these days, due to decades of bad diet and little exercise, which is a big part of why the avg. lifespan is dropping. Source: I work in the medical field and get to see people try to do this all the time only for it to end in misery. Especially if the senile grandparents are otherwise physically healthy. They’ll try to do things that they don’t have the mental capacity for anymore which either means they break something, injure themselves, or injure someone else when they take their frustration out on them. It can and usually does get really ugly.

      “You’ll just have to have large numbers of people teaming up together.”
      No. You’re going to see formerly middle class families slide into poverty and middle class neighborhoods degenerate into favelas and shantytowns. And its completely preventable too which makes the tragedy of such a thing all the more terrible.

    • Funny, posters on this site usually deride lower including Latinos for doing just that.

      • Most posters object to those who illegally convert garages, sheds and other spaces and rent them out–often to unrelated families. This usually results in limited street parking being taken up, increased congestion, and a lowering of property values.

        Multi-generation housing would not work if your mother-in-law is a shrill Hillary supporter who sounds just like her and your father-in-law is philandering lech like Bill.

      • Russian President Elect Trump is a much father in law. Right…

      • @samantha

        “Most posters object to those who illegally convert garages, sheds and other spaces and rent them out–often to unrelated families.”
        Why would you think it would be any different for a legal family who mostly only has min. wage jobs as income?

        Its a lack of money that forces people to do such things. No one WANTS to live like that. That people like yourself can’t grasp this and instead make a morality play out of being poor and doing desperate things for money is repugnant.

      • Janum: The Democrats’ newfound paranoia about Russian influence on American affairs was certainly nowhere to be found when Hillary Clinton was cheerfully selling them a huge chunk of America’s uranium stockpile, right after a Russian bank paid Bill Clinton $500,000 for a speech.

        tts: Minimum wage jobs used to be held mainly by students and people who wanted part time jobs until Democrats busted open the borders and flooded California with illegals. Minimum wage jobs were never meant to support entire families. Myself and many others had minimum wage jobs in high school and college which are now filled almost elusively by illegals.

        So how many illegals, refugees, and minimum wage persons have you taken into your home and supported with your own funds? We’re tired of repugnant leftists like you making a morality play out of anyone who wants to live in a nation where the immigration laws are enforced and who want to live in safe communities where zoning laws are enforced.

      • @Samantha
        November 27, 2016 at 1:38 pm

        “Hillary Clinton was cheerfully selling them a huge chunk of America’s uranium stockpile, right after a Russian bank paid Bill Clinton $500,000 for a speech.”
        This is a Infowars/Breitbart-esque conspiracy theory that has no proof to it.

        “until Democrats busted open the borders and flooded California with illegals”
        Nope. This is a relatively new phenomenon due to the economy not really recovering after the Great Recession. The number of illegals actually went DOWN over the last few years, not up. Also Obama has deported more illegals than any President ever. And the illegals weren’t taking jobs that natives would take anyways.

        “Minimum wage jobs were never meant to support entire families. Myself and many others had minimum wage jobs in high school and college which are now filled almost elusively by illegals.”
        And yet you used to be able to pull it off if need be. Barely, but you could. And what you and others in your age group used to be able to do doesn’t matter because times and the economy have changed. You deal with the economy as it is not as it was. And most min. wage jobs aren’t held by illegals. They’re typically doing farm jobs that pay less than min. wage.

        “So how many illegals, refugees, and minimum wage persons have you taken into your home and supported with your own funds?”
        Technically all of them since I pay taxes which I have no issue with in of itself. Sure I’d like to not have my tax dollars fund crap like the F35 and most wars but by large I recognize that taxes are the price of having a modern functional society and economy.

        “We’re tired of repugnant leftists like you making a morality play out of anyone who wants to live in a nation where the immigration laws are enforced and who want to live in safe communities where zoning laws are enforced.”
        Immigration laws are already enforced, litterally more so than ever going by deportations, and nothing you’re talking about all addresses my previous post in the least.

        Why do you feel it is OK for you to crap on poor people trying to get by as best as they can? Especially when they have little or no options to improve themselves? My pointing out how that is obviously BS isn’t leftist or repugnant in the least. Its common sense.

  • son of a landlord

    This Pasadena crapbox sells for $695,000: http://www.zillow.com/homedetails/1730-E-Orange-Grove-Blvd-Pasadena-CA-91104/20876208_zpid/

    What I found most remarkable is that the seller didn’t even bother to paint over the gang tags.

    Yeah, I know the entire house is crap. More tear down than fixer upper. But gang tags indicate that the whole neighborhood is crap. A smart seller would have painted over the gang tags.

    • Hotel California

      Why bother if the buyer isn’t going to be an end-user?

    • I don’t disagree that the owner should have painted over those tags. But that neighborhood is far from crap. It’s a gorgeous Pasadena neighborhood, not gang territory. The sad reality of modern life is, if you leave a house in disrepair, the gang-bangers will find it.

    • $700K for a crackhouse in Pasadena…..and people say housing is unaffordable.

    • “Chiraq Coons 300” wow those gang bangers really traveled a long way, maybe its their vacation crack house?

      Either way I laughed so hard at this, great find!

  • With rising interest rates, when do you think will be a good time to buy? Do you think the RE bubble and the inflated stock market will crash at the same time?

    How long to stay on the sidelines?

    • The Analyzer.. Just some advice, I have been a player in RE since 22 years old a long time in other words, think about it, what goes down must go up. Rates at 4% and fund ate at near 05 was why? a major depression not recession in 2008, generally these are 10 year cycles. With a push from this new administration coming in to be pro business in 2017, look at the best property you can afford “NOW” at 4% to 4.5% , still many 2005- 2006 sellers want out and want to deal even at losses. They figure when C/D bank rates climb to 5%, their cash we will add up for them and they will get equity lost thru investing in C/D’s a safe haven for most. I believe the stock market will take a hit, and real estate and saving money will return. Just my thoughts don’t guarantee anything, but in my life have won way more than have lost just by watching the graphs and cycle of life with up and down periods. take care

      • If traditional investments like CDs offer near 5% I would bet that all these single family rentals and the REITs and management companies behind them will fall. Why tie your money up in SFR when every city has multifamily housing going up like crazy and you are holding something that requires maintenance costs? Rents are already falling anyway.

      • Thanks for the comments Robert…

        I know this administration will be business friendly, but will also be foreign investment unfriendly. Could Trump have a tax on foreign RE purchases, like in Vancouver? Maybe not that high of a rate, but something reasonable?

        RE in SoCal is still ridiculously overpriced, especially when considering I am paying reasonable rent for the place we live in (in a good area). Want to buy, but my gut is telling me to stay out a little longer.

        Gut tells me that by 2017 Q2 – Q3 it will be clear where RE will go. I rather pay 6% interest than overpay for anything half way reasonable.

        I am not a seasoned RE professional. This will be my first purchase and don’t want to be hosed and underwater for 7 years.

        What do you guys think?

      • Trump just licensed his name to one of the largest developers in India:
        http://www.trump.com/real-estate-portfolio/india/trump-towers-pune/
        Do you seriously think he will turn away foreign investors, especially his BFF Putin?

        Interest rates will probably go up a token .25% in December but no other developed country on the planet is raising rates.

        Then there’s uncertainty – Hillary’s camp is joining the recount investigation – Russian hack of our voting system. Long shot even though it’s likely true:
        http://www.cnn.com/2016/11/26/politics/clinton-campaign-recount/index.html

      • Janum,

        You get a truer news from National Enquirer than from CNN; the same CNN who put Hilary at 95% win. The same CNN who brainwashes people without critical thinking to believe that Putin would have anything to do with US elections. The Clinton National Network would better look in the mirror before doing finger pointing. The whole Communist Network News sounds like Pravada during Brejnev years. They lost all credibility and they are sinking in ratings like Hilary did.

      • Janum forgot to mention that Bill and Hillary have quite the history of selling out the US in their pay for play schemes.

        A 2010 program headed by then-Secretary of State Hillary Clinton to help Moscow develop a “Russian Silicon Valley” may instead have drawn some of America’s biggest tech companies into “industrial espionage” – even advancing the country’s military and spying operations. Of the 28 US, European and Russian companies that participated in program, 17 of them were Clinton Foundation donors or sponsored speeches by former President Bill Clinton.

        http://nypost.com/2016/07/31/report-raises-questions-about-clinton-cash-from-russians-during-reset/

        Back in 1999 while he was still president, Bill Clinton approved the sale of sensitive U.S. missile technology to China following donations from a key missile manufacturer to his campaign, in a move prescient of the Clinton Foundation’s “pay-to-play” activities.

        http://dailycaller.com/2016/09/02/flashback-bill-clinton-collected-donations-then-us-missile-tech-shipped-to-china/

    • As history has proven, nobody can predict the future. Everybody was wrong regarding rates, the housing market, stock market, etc.

      If you plan on buying, ask yourself a few simple questions.
      1. Can you “comfortably” afford the payment?
      2. Are you close to rental parity?
      3. Do you plan on owning the home for the long term?

      If you can say yes to all the above, go out and start looking at properties. Guessing, hoping, praying for the big crash is a bad plan of attack. Ask the people who have been sitting on the sidelines the last 5 years how that worked out regarding market timing. Don’t overthink this…

      • Patience is a virtue my friend. Everyone wants now now now. If you are a multi millionaire then by all means it won’t matter in the grand scheme but in LA the top 25% make over $98,300 salary (according to Business Insider). You cannot comfortably buy a home at that salary. Everyone acts like they make so much money here but when you look into it… they really don’t (compared to other cities with much lower COL).

        Even if you are married and you both make $100,000 a year, your housing budget is $600,000 unless you REALLY want to push it and go for a 30 year mortgage.

      • Plenty called the housing bubble and stock market booms. They just usually get ignored or denigrated as perpetually negative bears.

      • You gotta love this stuff.

        “nobody can predict the future”

        “Do you plan on owning the home for the long term?”

      • LB expecting perpetual ZIRP, bailouts, and investor mania to permanently levitate real estate prices.

    • Nothing goes up to infinity. There is no such thing as a plateau; prices sometimes go up and sometimes down. Government can not eliminate the market price variations. All the government can do through interference is to increase the amplitude of price variations. By postponing the inevitable, all they can do is to make the collapse more spectacular.

      The real estate market is local. Sometimes it is very local, down to zip code.

    • March 23rd 2017 is when you want to buy. Ok wait. July 9th 2018. Sorry, anytime during 2010

  • the U.S. does not graduate that many engineers as other degrees. What is interesting is that I have worked with many people that have “Engineer” in their job title and do not have an engineering degree. I know more engineers or technology workers who do not have an engineering degree than engineers that actually have an engineering degree. I have an engineering degree but 5 out of 6 of my previous managers did not.

    So I am not so sure an engineering degree is all that important anymore.

    • Two of my managers did have some college but no degree. One had a journalism major. One Had a Latin degree. Funny but all of these were at Cisco.

      I have a friend who is the Director of IT at a healthvcare company and she has a lawyer degree. Another friend is a VP of IT and has a business degree. Anyway most of my current and former colleagues at technology companies do not have a technical degree.

    • @ ru82 – I graduated from Cal State LA (aka: Low Rider Tech 🙂 with a degree in Mechanical Engineering in 1987. Most of my classmates had jobs BEFORE graduating from college, half of them in aerospace. In any case, I laughed when I read your post and agree with you – when I graduated, a title with the word ‘engineer’ in it meant you were an academically trained engineer !!!

    • alex in San Jose

      RU82 – A hell of a lot of people who get engineering degrees can’t get a job in engineering, or if they do, they find they make less than they can selling cars, and frankly car salesmen know how to party so which would *you* do? Also, if you have a real interest in or passion for something in high tech, a degree is almost immaterial because you’re *going* to learn it. And, if you are a contractor, consultant, self-employed etc., you can call yourself “engineer” all you want and if you know Ohm’s Law and which end of a soldering iron to pick it up by, you’re well ahead of the Indian Wonders ™ flooding the US and people will happily go along with your self-description.

      • I have engineering degrees and work as an engineer. I agree there are a lot of people calling themselves “engineer” when they don’t have the degree and a lot of them don’t understand the basic principles, but are the “talkers” of the world and can talk their way until one day they can’t.

        According to the graph, it would seem that less engineers graduating would mean less engineers competing for the same jobs => higher wages. But, it’s not the case anymore. Maybe a few decades ago it was great to be an engineer…high pay…respected like doctor/lawyer. But now, there are too many H1B engineers coming in and lowering wages. Example: Few years ago, I (a girl) was making $45 an hour (as a contractor) and my Indian coworker (a guy older than me) doing the same job was making $35. Maybe he didn’t negotiate, but it’s pretty common for foreigners to take less pay for the same job. This brings down all of our wages.

        Over the years, I have had to work hard to change jobs to increase my salary every few years, because yearly raise of 3-4% does not cover higher cost of living (gas, food, etc.). They call it “inflation” but the government doesn’t include a lot of normal daily costs as part of that “inflation” calculation.

        Engineering salaries aren’t that great anymore, especially considering cost of school and tougher job.

  • Every generation, the story replays. Those with a good head on their shoulder buys in a good area. This involves some courage to take on large payments with a small down. They find a good wife and have a family. 20 years after the purchase, they are set for life.

    Others decide it is smarter to rent because prices are too high. They waste their money on cars and partying. They jump from bar girl to bar girl. 20 years later, they are living in one of those giant apartment complexes. They are broke and bitter and blame the system.

    Millenials have choices. Life is what you make of it.

    • Why does this post sound so much like “real estate is to key to wealth” propaganda? It sure doesn’t mention of a higher chance of the following for owners:

      Defaulting when buying too high.
      Taking out Helocs for vacations and cars.
      Compromising lifestyle when house payments and associated costs are too high.

    • Agreed! Though you have to have a job to pay that mortgage for 30 years without interruption

    • LMAO…. Also, 10+ years later divorced and living with roommates at late 40s or in 50s because wife took the house… and making child support payments.

    • jt = Jim Taylor?

    • @jt: What a crock of shit.

      The economic and social conditions of today aren’t the same as previous generations at all and its becoming generally accepted in the main stream that no longer can new generations expect their lives to better than their predecessors which was the norm since at least post WWII.

      As others point out job stability is a thing of the past and that alone makes buying a house a very risky proposition.

      It also negatively effects family stability too. Stress over money can and will break up a good couple and it certainly effects their ability to raise their kids if at least 1 parent can’t stay home and raise the kids or they can’t make enough to afford good daycare. Which almost no one can do anymore.

      Having a ‘good head on your shoulders’, whatever that is supposed to mean exactly, doesn’t matter too much anymore if you have to work for a living.

      • No doubt tts expects NWO globalists like Hillary and her oppressive big government policies to save his whiny deluded self?

      • @Samantha

        You’re mixing up your sites. You’re supposed to post the ridiculous alt-right conspiracy crap on Infowars or Breitbart not here.

      • @Samantha: TTS actually blames it all on Benghazi- George Soros and his jackbooted UN thugs told me so in an ISIS training camp across from the Texas border. Then, when Hillary and Obama take all our guns away, we’ll at least have universal Shariah law inducing the Fed to keep our interest rates down.

  • Millennials like many others also have to deal with banks/ mortgage companies, they continue to make buying a home a experience that turns them off even if in the end they can qualify. Renting seems appealing to them at this juncture, they want to take a deep breath and proceed with caution after what they knew of the sub-prime disaster and their parents fear of losing it all.
    Trust factor goes two ways, banks don’t trust buyers to repay, Millennials don’t trust the process and game playing of RE agents and applying for a mortgage they may never get.

  • Like Jim Taylor says, if mortgage rates stay north of 4% housing will tank hard SOON !

    • zigzag ..Sorry Zag, most homes purchases are dictated by economy, the norm was never 3% to 4%, as the job outlook improves and rates move to normal 5% to 6% nothing happens. Major correction in tanking of housing is a pipe dream. Dodd Frank going away, savings and loans reappear and savings rate increases and a wiliness to loan money again. Corp taxes going down, hiring going up.

      America a very big country with investors added to the mix, millions of buyers are always available, the only way a major correction happens is a catastrophic event ( like 8.0 CA QUAKE) , the dollar is not the worlds currency, trade dries up completely, rates ramp to double digit , world war , who cares than, we all get destroyed?

      • I don’t know what’s more business friendly than record cheap and easy credit for investors and corporate bailouts for the majority of the Bush, jr., and Obama administrations. Corporations bought up their own stocks or increased dividends instead of investing in their infrastructure and hiring. Thus, consumer demand and GDP growth were weak. Very doubtful that government jobs and deregulation are going to create an enduring recovery to offset and a decade of record malinvestment (bubble asset values) and runaway debt.

        Considering real estate and Wall Street are closely intertwined, it’s hard to see how one takes a hit while the other benefits.

      • Prices weren’t this high when rates were 5-6% either, even if you adjust for inflation.

        You’re making lots of assumptions without rhyme or reason. A .5% increase results in a $200/mo increase in payments on your average SoCal 4bd. Are you seriously telling me that if rates go to 4.5 to 5% that the prices won’t adjust at all? Do you realize that’s nearly a $600/mo increase in payments, where are people going to scrounge for that additional $600/mo? Wages are stagnant and unlikely to budge up as quickly as the expected rate increases.

        If these rates go up, prices will adjust down. It’s all about monthly payment/take home pay.

      • “job outlook improves and rates move to normal 5% to 6% nothing happens.”
        There is no reason to expect the job outlook to improve at all. If anything it’ll go down since Repubs and Trump want to cut worker wages and working conditions and protections.

        “Major correction in tanking of housing is a pipe dream.”
        We had major corrects a few years ago. They can and do happen. It just always takes longer than anyone reasonable expects.

        “Dodd Frank going away, savings and loans reappear and savings rate increases and a wiliness to loan money again. Corp taxes going down, hiring going up.”
        Dodd Frank going away will just allow more Bubblesque fraud, banks/S&L’s can’t make good loans to people who have no money (remember nearly all job growth has been min. wage jobs since the recession ‘ended’ and if Trump/Repubs get their way wages will go down further), and Corps will just pocket any additional profits from reduced taxes.

        Corps do not hire people out of the goodness of their hearts and their hiring practices aren’t much effected by taxes either. They only hire more people when they’re forced to either because of regulations or because of market conditions such as a boom in demand. Corps have been quite content to hire less people, increase work load, and reduce compensation for these last few years despite the GDP growing. Profits are at or near pre-bubble highs for many of them because of this.

        “America a very big country with investors added to the mix, millions of buyers are always available”
        America is slowly devolving into a 3rd world country as the average wage earner can’t afford his/her’s parent’s standard of living while the rich get richer. This is why foreigners are the buyers right now in many areas. They have money. The locals don’t.

      • Robert, read tts’ response to your vapid post. yes, only an 8 quake will dent the housing market. LOL!

      • TTS: “Repubs and Trump want to cut worker wages” – citation needed.

      • @Jeff

        While his actual public comments on the subject flip flop back and forth every other month or 2: https://www.washingtonpost.com/news/fact-checker/wp/2016/08/03/a-guide-to-all-of-donald-trumps-flip-flops-on-the-minimum-wage/

        the few actual policy details that seem to be actually trickling down and making it through to Congress all point to him cutting wages one way or another. Currently they’re looking at cutting overtime further on top of rolling back Obama’s policies of trying to expand overtime for certain workers.

        http://www.wsj.com/video/trump-presidency-could-mean-cuts-to-overtime-pay-rule/737AA8BD-5CBE-484A-8921-CFCAED24EDB9.html

    • Now were talking! 🙂

  • Snowfakes are stupid, look how they burn down their own town in Porkland.
    as Nassim Taleb put its, the “Intellectual-Yet-Idiot” class. It is the elimination of these so-called “experts”, most of whom have PhDs or other letters next to their name to cover their insecurity, and who drown every possible medium with their endless, hollow, and constantly wrong chatter, desperate to create a self-congratulatory echo chamber in which their errors are diluted with the errors of their “expert” peers, that will be the biggest challenge for the world as it seeks to break away from the legacy of a fake “expert class” which has brought the entire world to its knees, and has unleashed the biggest political tsunami in modern history.

    One thing is certain: the “experts” won’t go quietly as the “amateurs” try to retake what is rightfully theirs.

    • I feel that many of our generation have failed to raise the “snowflakes” properly – at least many of my contemporaries have not raised children with a sense of discipline, delayed gratification and all those other attributes we see as pretty important to success. Many college professors are aiding and abetting this infantile outlook.
      We are now reaping this ill wind with our future workers, managers and leaders poorly equipped to make complex decisions, particularly if the choices are hard and don’t have an immediate payoff.
      Many Millenials aren’t able to buy a house because of student debt and poor job prospects but also a difficulty in sacrificing immediate wants to save the money and cover the monthly nut. So we end up looking like a household from South America or Asia with the 3 generations living together symbiotically.
      Many cities are gravitating to a 2 class society with the wealthy and the working class with not much of a Middle Class left.
      I hope we figure out what to do about this. It’s not fun living with a generation given to throwing tantrums when they have a point or don’t get their way.

      • Let’s see what happens if we get rid of Prop 13 and cut pensions and entitlements. The Boomers have been kicking the can down the road for decades at the cost of the younger generations.

        There seems to be an idea that people in their 20s/30s sit around and drink lattes all day, but I see a different reality. I spend many of my days working in a coffee shop elbow to elbow with graphic designers, programmers, people in advertising, etc. who all make a nice living often working multiple jobs. I just don’t think the older generations understand what it’s like to not feel the security of entitlements and long term careers in one city, and the younger generations are hustlers and entrepreneurs because of the lack of jobs and security. With rapid home price increases and no promise of staying in one place very long, buying a home is a scary prospect for younger people.

        I mean, I’m a guy in my 30s with long hair, tattoos, a beard and I sit around on my laptop in a t-shirt and jeans at coffee shops many days while playing in bands at night…but I run a company in TV and make hundreds of thousands of dollars a year. Hard workers just don’t look like they used to.

        The problem isn’t the young “snowflakes” in the cities sipping lattes. It’s that we’ve let down the younger generations in the middle of the country by gutting the working class, and I’m not sure how we’ll ever get those jobs back.

      • Those manufacturing jobs will come back when it makes financial sense for companies to do so. Either Americans agree to work for about $2/hr or we get a Prez that believes in tariffs and trade restrictions.

        Or – we’re the first place on the planet that invents and innovates enough to figure out how to build the better mousetrap (robotics). I personally think that robotics are going to make the rich/poor divide worse, as it’s the owners that will own/profit from robots, not the workers.

        IMO we’ll see a little manufacturing come back, but not enough to return us to the “post WW2” economy of decades past.

  • can't remember my username

    I’m a battered wife who is preparing to take my two young kids and leave. I have a big chunk of cash in the bank that i can use to re-home us. I am on the fence between renting and buying. I work in O.C., and need to find something as close as possible to work. O.C. is pricey of course, but so is everywhere else.
    Right now, it seems that prices are peaking and in some places are even higher than in 2005. I’m stretching to afford something in this market. So, my concern is…do I buy now in anticipation of prices going even higher? Or do I rent for a while in anticipation of the eventual “tanking” of the market?
    The reason why I don’t feel extremely confident about a tanking market is because there is still so much foreign money coming in and buying up real estate. A coworker just sold her home in OC and a Taiwanese family paid cash for it. I don’t know what to do.

    • Leave town, you come on over to family friendly Kerrville , in the hill country. We will give you a Texas big welcome and our women folk will support you. Southern California is a very cold place to be when you are alone.

    • Sorry about your situation Username- I’m sure you’ll pull out of it, and sounds it like you are at least financially secure. Is there a massive pressure to buy RIGHT NOW as opposed to renting a decent place within a reasonable commute to work & school?

      I can only say that here in the Bay Area, prices have shot up stratospherically and are now starting to plateau- there’s only so many Techie/Foreign millionaires who can afford these insane prices. Where prices will go from here, who’s to say? But they can’t go up any higher. Having lived through the last two Boom and Busts here (2000 & 2008), the sense of Deja Vu is creepy…

    • For now a condo [purchased or rented] in a max security building would be practical and could be found near your job. Keep a low profile and only an OCPD police station for drop offs for visitation.

      You sound as though you are in a critical period where things could be most volatile. Your and your kids safety would be a primary factor in your choice. It might be practical to rent so that being able to leave quickly would have more value than being bound to a place with a mortgage.

      Pardon my 2c. I hope the best for you and your kids. Just stay safe first.

    • The whole leaving with the kids thing is a pretty significant amount of change as it is aside from having concern about the housing market. Why not rent for the interim in order to work through that change and then reassess a purchase later? What’s the hurry? Your story is exposing the fear of missing out and being priced out forever memes.

    • can't remember my username

      Thanks everyone for your feedback.
      I’m committed to my job so pretty sure of where we will be long term. Also, with two kids I plan on picking an area with good schools and staying put. Its not fair to keep moving them around. Rent is higher than the cost to buy, of course that’s not including all of those other costs that go beyond the mortgage payment.
      I’m not a rich woman so yes, I’m concerned about getting priced out if everything keeps going up. I just don’t see how that can logically happen though right?
      I’m leaning toward renting for a while. It’s just hard to imagine paying such ridiculously high rent. Also, a local OC Realtor contacted me about an inquiry and gave me the speech about how I better buy NOW before prices soar next spring. So I’m feeling a little confused about it all.

  • We can all thank “the greediest generation”. Low taxes combined with low interest rates on mortgages have decimated this nation. The jobs are gone and never coming back. It’s amazing listening to my parents whine about how they think 25% taxes on $500,000 is “fair”…and they think my generation is a bunch of special snowflakes…right. They constantly complain about how “back in their day” interest rates were 10%. I would gladly take 15% interest rates if I could get my foot in the housing door. What we are seeing is economic generational warfare. Millennials are debt slaves to Baby Boomers and Gen X’ers. It will all end when/if the pensions fail.

    • Agreed — looking forward to watching it all hit the fan when the “special snowflakes” can’t prop up the Boomers pensions and then drastic measures have to be taken. Kicking the can down the road has been the American go-to for several decades and it may finally catch up.

      • Pensions are unnecessary if the boomer owns the house. He can always rent it out and downsize to a mobile home park in Santa Maria and live nicely from the rent money.

    • Don, leave the failed state. Come on over to Texas, a land of opportunity and bargain priced housing.

      • If I got the right job offer I just might. My wife and I have pretty much given up on owning a house in So Cal. We are more focused now on saving up for early retirement in Costa Rica as she was born and raised there.

      • Big Tex..Now that Trump is in the saddle places like red state Texas will do very well for the next 4 years, also Arizona who took it under the chin with Obama also will benefit very much. stay safe

    • Jed – You are correct. Most Boomers can down size…but will they? Most Boomers/Gen Xer’s I know are extremely entitled and not willing to make compromises. This mentality is what has gotten us to where we are today. One big game of kick the can. Also, I grew up in Salinas which is a lot like Santa Maria. Most of these out of the way farming towns are more expensive then you would think and gang infested, with high per capita crime. The greediest generation needs the pensions/HELOC’s to support their inflated lifestyles.

      • “Gen Xers are extremely entitled” – first time I’ve ever heard that. Guess we just opened a new front in the class divide war.

        All that I can say is that the only true war is the oligarchs/0.1%ers versus everybody else.

      • Don, Boomers never re-trench. If they ever sell it will be for something bigger.

        And they never get old. Haven’t they told you that yet ?

        I’m one of that generation and was always appalled at the gluttony, debt and mindless spending of my demographic cohort.

        A rejection of Boomer “values” has served me well as I have been in zero debt of any kind, mortgage, car or credit for the past six years.

        Frugality and delayed gratification paid off. So old fashioned and definitely not “on trend” but I’ll suffer through it.

      • Dweezilsfv – my employer is a prototypical Boomer (born in 1946 I believe) and everything you said …. he’s making close to $200k a year and is constantly panicked over money, the family has a “fleet” of cars, electric bill in the $400’s a month, water bill in the $200’s, of course yardwork is hired in, they’ve got the time-share, take their vacations, etc.

        They’re only staying afloat now (and just about to come out from under the “shadow” of their last bankruptcy) because the wife inherited some money and the side-business the guy has with me selling stuff on Ebay. No savings other than that, no job security, no job benefits.

        The concept of moving to a smaller place or buying a non-new car is utterly foreign to them. The concept of maybe *not* going out to dinner at $50-$100 a person “to let off some stress” is utterly foreign …. It does not sound like enough money to matter to them, but Oh it does …. when I overhear them mentioning having only $100 in one bank account and transferring $500 over from another … yeah a few less expensive dinners and you’d have that much more “float”, add it up over the months and years and it adds up.

        I’ve mentioned to them how, on my little income, it would still be easy for me to “rationalize” all kinds of little expenses like a gym membership for workouts and showers every day, a smart phone, a storage unit, all at about $50 a month and there would go any chance at any savings.

        The only thing that gets them to “gear down” is when they’re “spanked” down and that’s not fun.

  • Analyzer
    Increasing interest rates are temporary reaction to the Trump election. I believe that should prove to be temporary and that 2017 will finally make Jim Taylors tank theory valid for both housing and the stock market.

    If you believe that we are closer to the peak of prices rather than the valley it might be prudent to wait on the side lines until next fall. Don’t get in a hurry.

    • The interest rates will go up for a number of reasons, and housing prices will go down. Always has and always will be. Your pay check can only afford so much in monthly house payments, as the proportion of the payment of interest goes up, the proportion of the payment for the cost of the house goes down. If you have a house, now is the time to sell.

      • IRA, I enjoy your posts.

        Ultimately, IMO there will be a return to thrift. The tiny house movement is a result of the trend. Right now the psychology in SM and RE and particularly the MFD sector in SoCal is like the dot.com bubble in the SM that eventually imploded. What people forget is that its always something – it is not something you can predict and it might be something that you think you know and are wrong about. Read your money or your life by joe dominquez or cashing in on the american dream, how to retire at 35 by terhortz – paul terhortz and his wife Vickie are are still alive. These are not magic wands, but will make people think about the philosophy of money and other issues.

        People need to move away from the generational wars, rayciss/immigrant issues on both sides, etc. The country is being looted and asset stripped. Read The Shock Doctrine… the template was perfected in EM countries. Eventually, it comes down to an argument for privatization (prison system on leading edge & shocking increase in prison population) and austerity where the populous suffers while the oligarchs thrive. If one gets away from the trivial race baiting and other sideshows, you can see what is really happening. It is a slide away from freedom toward a neo-feudalism; people lease a car, rent housing, rent furnishing or buy on installments. For ever boomer who looks prosperous, there are many more that have had to live off their retirement savings b/c the yields are low and they have had to re-enter the workforce or suffer from age discrimination. get past the blaming.

        I have been self employed for almost my whole adult life. You can blame me for being greedy or having started my biz at the perfect time (whenever that is), but I was raised dirt poor by a single mom with no support (back when welfare had a negative stigma, not something to be “gamed”) & no one is gonna take food out of my mouth. I still work 7 days a week and under-promise and over-deliver. Learn to think independently; the herd is almost always wrong. IMO we are at a point in the cycle where people feel they are missing out on once-in-a-generation gains; again the same psychology that probably drove almost every bubble.

        Move away from the victim mentality, like the lady who prefaced her post with battered wife description. Not relevant to house hunting. We are all victims of something and you chose the guy.

      • can't remember my username

        QQQball

        You’re incredibly rude. Perhaps you should move away from being such a douche.

  • The tragedy here in my opinion is when the market tanked (because of Wall Street excesses) then Wall Street jumped in with hedge funds and bought all cash at the bottom, so the millenials couldn’t compete and get in to the market until it went back up. Talk about a rigged system.

    • This is my biggest concern. With Wall Street, the Fed and now the president so heavily invested in real estate, I’m worried that it’s going to be propped up for years to come.

      We’ve been on the sidelines for a while, and I’m looking at this summer as the time for us to buy. If the market is still high, but we can afford it, so be it.

      • Highly doubtful that Trump, or anyone else, could prevent the economic headwinds that he himself warned us about throughout his campaign. If he was smart, he would position himself to weather the storm beforehand. That’s basically what one of his rich donors, Paulson, did during the last downturn.

      • To the extent that the Trump is strategic and realizes a reset is in order, it would probably be in his best interest that housing suffer very early, quickly, and hard. That would lay the foundation for his administration and the Republicans to more easily get away with the ownership society 2.0

  • “You had more than 353,000 degrees awarded in the “liberal arts and sciences, general studies, and humanities” while having 37,000 degrees in computer science and 31,000 in engineering related fields being awarded.”

    So the younger generation is accumulating mountains of student debt while largely pursuing degrees in fields which are not exactly pertinent to the current job market. So you go into debt getting a liberal arts degree, after which you are unemployed and live with your parents while you spend your days complaining on social media and playing Pokemon Go and your nights protesting the issue of the week and drinking overpriced craft beer.

    • alex in San Jose

      Truthie – OK firstly, that sounds like they’re counting a wide swathe of degrees on one hand and then two relatively narrow fields, CS and engineering, on the other. Where is chemistry, biology, mathematics, as well as business administration, accounting, things like that?

      As an example, law doesn’t sound like a good bet unless you have family money anyway but you should see what paralegals make!

      Take my case: I studied electronics because to me it’s Meh, OK, the parts are colorful, and it’s supposed to be where there’s a lot of money. This last turns out to be utterly untrue (also, the parts are a lot less colorful these days). If I’d done what everyone else thought I’d go into, art, I’d have made better money from the outset (job in college working for a veterinarian for $4 an hour, then student intern at a tech company for $5 an hour, vs. working in an art supply store for $4-$5 an hour PLUS art commissions) then on to a juicy career in commercial art (even drawing bananas for the supermarket would have been higher paying than the electronics tech job I had) and paid off my loans faster and more easily.

      The kids who don’t buckle down and learn to draw, which is to say, most of them, that’s who doesn’t make it with an art degree.

      That too many kids are going into college at all is obvious. But in our system, you either go to college or you’re a loser. And the carrot on the teevee points a stubby finger and you and snarls: LOSER LOSER!

      • The STEM job market is over saturated with graduates and has been for years. “Everyone go get a STEM degree” will not work.

        Its also an incredibly difficult thing for most people to get a STEM degree. And even if you have the brains for it the unemployment rates in some STEM job markets have been higher than McWage jobs for years. Biochem for instance is a terrible degree to target since many of those jobs are being outsourced right now to China as a cost savings measure by Pharma Corps.

      • alex in San Jose

        STEM has been “the good thing to go into” since WWII, and it ebbs and flows, but it’s always been the “safe” choice. What makes it difficult is you’re not gonna make it in STEM if:

        You’re so damn poor that you’ve got to work while you’re in college. Fine for English lit., not do-able for STEM.

        You’re so damn poor that the schools you went to didn’t prepare you for STEM.

        You were simply not doing trig and simple calculus by the time you were 14 or 15. Yes, there are kids in some places who do this. Most kids in the US do not, and if you’re poor, well, you can get out of high school without really even understanding algebra, especially going through schools for the lower class that don’t *want* you to understand algebra, or especially things like compound interest.

      • alex in San Jose

        Also, STEM pays well but so do a lot of other non-STEM things. Mainly jobs people don’t even think about, I mean, being a high school P.E. teacher pays as well or better than a STEM job and has gobs better security and benefits.

        An enormous percentage of STEM jobs are very low-paying too. It’s no secret that, say, retail jobs pay badly. But somehow there’s this feeling that if you learn a lot of techie stuff, you’ll make more money than the guy in a shoe store or at Radio Shack, and you would be wrong.

        So it pretty much reverts back to my old rule: “Do what you like and assume you’ll get paid shit, and if you get paid a bit better than shit, it’s a nice surprise”.

      • @alex in San Jose

        “STEM has been “the good thing to go into” since WWII, and it ebbs and flows”
        The future will not be like the past post WWII period at all thanks to outsourcing which is still going on in a big way for moderate to high end paying specialist skilled labor like STEM jobs.

        “You’re so damn poor that you’ve got to work while you’re in college.”
        WTH are you talking about? Virtually everybody but the rich has to or should be working while going to college for ANY degree much less a STEM degree.

        “You’re so damn poor that the schools you went to didn’t prepare you for STEM.”
        WTH are you talking about?! Poverty has nothing to do with your school not preparing you for a STEM degree. Poverty does have an effect on the child his/herself through stress and socio-economic effects that are hard to quantify but that is a whole other set of issues altogether.

        Schools do plenty of AP courses, the problem is do you have the brains for them? Most don’t. You need to be the sort of person who can pull in high B’s or A’s all the time to do well in those classes and that just isn’t reasonable to expect of most people at all.

        “You were simply not doing trig and simple calculus by the time you were 14 or 15.”
        This doesn’t matter much to the issue at hand though: most people won’t be able to do the math very well no matter how early you start. They will not be able to get a STEM degree because they don’t have the brains for it.

        Even if they did have the brains it wouldn’t matter. There aren’t enough STEM jobs to go around now. Drastically increasing the number of STEM grads and degree holders won’t magically create more STEM jobs. At ‘best’ you’ll just end up creating huge amounts of STEM grads who will be desperate to get jobs in their field before their degrees and knowledge go stale from years of disuse and wages will get depressed.

        “Also, STEM pays well but so do a lot of other non-STEM things. Mainly jobs people don’t even think about, I mean, being a high school P.E. teacher pays as well or better than a STEM job and has gobs better security and benefits.”
        Man you don’t know anything.

        Lots of STEM jobs don’t pay so well at all.

        Median is $76K pre tax right now which is like middle class-ish but you graduate with so much debt you’re broke for like a decade paying it off. Even if you’ve got a master’s in the field now which used to be a big deal but now its just another thing to check off on a resume. And ‘be a PE teacher’ are you kidding me?! Like everyone looking for a job can just be a PE teacher and that is what will be the basis of our economy going forward?!

        You’re out of touch with reality. You have no clue how bad the job market is at all.

        “So it pretty much reverts back to my old rule: “Do what you like and assume you’ll get paid shit, and if you get paid a bit better than shit, it’s a nice surprise”.”
        I thought you were advocating for STEM degrees/jobs because English degrees are dumb and stupid dude. Keep it consistent.

      • I’m a STEM veteran of 23 years, if you are competent and enjoy the work you will be solidly middle class – but that will likely require moving around a bit from time to time. Competence from my standpoint is top 10-15% of your high school, going to a tier 1 college (top 50) and getting a gpa > 3.0. Wildcard nowadays is how much you pay for that college degree. Hopefully there is a good public option in your state.

        But those who build and maintain society will (or should) be middle class. Over the last 20 years we’ve become a nation of useless affirmative action paper pushers that manufacture BS rather than real products. The effort to get that engineering degree doesnt look like its worth it when you can be a brainless bureaucrat for the government for a similar salary. Hopefully we will shed much of that dead weight, and I’m seeing it already on the government side – useless boomers retiring and their positions being closed out rather than finding replacements. Fact is they were largely worthless.

  • Look. Here is the deal. Interest rates are going to gradually go up, starting from November 8. This will pressure housing price growth, but no real correction will occur until the next recession, when buyers are forced to sell at lower prices.

    Next recession will likely be around Q2 2017, barring some additional government stimulus from Trump.

  • I’d love to hear others thoughts but when I see a condo in Santa Monica that sold for 750k five years ago sell for 1.1 mil and the property sat for 60 days with two price reductions and the buyers agent works for the listing agents brokerage something isn’t kosher. I think a lot of 5/1 arms are due to reset with a high rate so all these “investors” are trying to unload their properties and aren’t finding takers so they are pulling out bogus fed sponsored equity to be able to keep making the mortgage pmts until they are able to find a sucker to finally unload. I think the game is coming to an end because there don’t seem to be any new suckers capable of qualifying. The whole housing game is about to find the Ponzi scheme unravel as rates go up and no new buyers come to the table. I also think a lot of real estate companies buy local unsold inventory to keep prices artificially inflated. I would love to know what people much smarter than me think about all this.

    • Numerous people here saying that home prices & rents are falling, but I don’t see it. I look at listing every day in LA, IE, & SD and all I see is extremely low inventory and anything halfway decent that’s priced within the realm of reality going pending quick. Of course I see the over-priced and junk properties sitting. But that’s nothing new. The price decreases seem to be coming to the properties which were way over-priced to begin with. Again, nothing new. I’d like to see some concrete evidence of a decline in the housing or rental market, instead of rhetoric.

      • It’s not difficult to find concrete evidence of falling rents. It’s just that people behind the curve aren’t doing the necessary work to discover that it has already been occurring for a while. They’re waiting for the media to tell them using unreliable and long trailing metrics.

      • Please Hotel Cali. show me these falling rents. Because I own rentals in IE, SD, & LA and I seem to be having no problem finding renters, and my places aren’t cheap. In fact I have waiting lists. Please don’t point at move-in specials as a sign of falling rents, because that is not proof. I want to see rentals stacking up vacant and homes selling for less than they did last year or even 6 moths ago and inventory increasing before I agree the sky is falling. Until then it’s business as usual.

    • Mo says: “I also think a lot of real estate companies buy local unsold inventory to keep prices artificially inflated. I would love to know what people much smarter than me think about all this.”

      I agree that prices are super inflated but RE agents or companies do not have anything to do with it, the same way they did not have anything to do with collapsing prices in 2009. The root of the problem is the FED not RE agents or companies.

  • Hello,

    When do you guys intend to cover the spike in mortgage rates?
    We were hoping to buy during the November/December slowdown but are now taken aback by the spike in the mortgage rates (nearly .6% here in SoCal). That’s almost $250/mo.

    We make decent money and were looking at places that would be about $3,350 with everything and that was still stretching it a bit (35% of take home pay) but now that same house is nearly $3,600. Doesn’t feel like a very good idea…If one of us were to lose our job that payment would be 81% of our take home pay…

    How does one even feel comfortable buying a house in SoCal?

    • Asitl,

      I recommend you read this article. Very thought provoking stuff:
      http://www.zerohedge.com/news/2016-10-23/losses-hurt-more-gains

      My wife and I are in the same situation as you guys. I would rather play it safe and take less of a gain then go risky and potentially take a huge loss. Buying a house shouldn’t be as speculative as it is today…

      • Good lord…. if I could give you one piece of advice and only one…..

        DO NOT read Zero Hedge for anything more than entertainment purposes.

        Using Zero Hedge to make financial decisions will be your ruin.

      • Reading the perpetual sky is falling things will cloud your vision. There were plenty of buying opportunities in the recent years. It’s almost exactly 5 years ago that the housing market bottomed out (Fall of 2011). There were smoking deals to be had, but people were fearful of catching a falling knife even when most properties could be had below rental parity. 2011 will go down in history as one of the best times to buy socal RE ever!

      • I checked it out and it’s simply a repost by PeakProsperity, not anything written by ZeroHedge.

        The OP is right, it is thought provoking. Do you have an actual rebuttal rather than ad hominem?

    • The spike in rates is the euphoria of the moment. Wait till next winter. In my opinion, by then, the markets will reflect again the reality.

      Right now, the prices do not reflect the real economy and the interest rates do not reflect the real economy. You will be hit twice.

      I think that Trump wants to do changes, but he is not god and he has everything stacked against him. He does not have the will or the support to do real change – like eliminating the FED. Since the FED is greater than Trump, it is just a matter of time till the economy will reflect a richer 0.01% and a poorer 99%. The inequality will continue because it is cause by the FED and the FED is still there.

      • The irony seems to be that simple population growth will continue to drive a steady demand for housing, but, all the productivity and technological improvements constantly reduce the numbers of warm bodies actually needed to produce any given widgets, and will continue to de-skill tasks/jobs, severely impacting incomes and wages, which in turn means fewer and fewer people can actually afford housing! The point I keep coming back to … someone buys that $700k crap shack, but will there be anyone left with the means to buy that $700k crap shack from that owner who now wants $900k or a $1 million????

      • @JNS
        I agree on what you say. The whole existence of why we are in this is because population growth. if the human population decided to take a breather for a few years or decade what impact would that have on the economy?
        Nurses/doctors probably would contract from lack of new baby Joe 6-packs.
        Schools would not be expanding and teachers would likely be laid off.
        Home ownership would stall or contract.
        Apartments would probably have more vacancies.
        Jobs would shrink from lack of new business opportunities.
        ….Snowball effect.

      • JNS and Homerun,

        I agree with what you say about population increasing and displacement due to technology.

        Then, can someone enlighten me, why do the liberals/democrats encourage more and more immigration, legal and illegal? If the economy can no longer produce living wage jobs, wouldn’t that mean an extra burden on the taxpayers from the middle class??? What is the purpose of this massive uncontrolled immigration (open borders) and all the support from MSM?

        Who is going to provide “LIVING” wages to these millions? Do we need so many unskilled uneducated immigrants???? The liberals/immigrants complain about low wages and then they support more competition for low wages in a race to the bottom.

        The liberals/democrats who support EPA/Sierra Club/abortions/rent controls want less population and they support open borders and at the same time a magnet for the poor of the world (safety net). It doesn’t make any sense. All these policies supported by the democrats they conflict one with another. They are completely illogical.

      • @Flyover

        “I agree with what you say about population increasing and displacement due to technology.

        Then, can someone enlighten me, why do the liberals/democrats encourage more and more immigration, legal and illegal? If the economy can no longer produce living wage jobs, wouldn’t that mean an extra burden on the taxpayers from the middle class??? What is the purpose of this massive uncontrolled immigration (open borders) and all the support from MSM?”

        In my opinion, if immigration is the machine that keeps the economy going then open borders are necessary because if the farms and other low wage jobs that are not ready for automation and cannot be filled by more educated folks then this is the reality that we must deal with. Until that day comes where we have a world like IRobot or Surrogate then we do what we must to survive.

        “Who is going to provide “LIVING” wages to these millions? Do we need so many unskilled uneducated immigrants???? The liberals/immigrants complain about low wages and then they support more competition for low wages in a race to the bottom.”

        If we have a living wage that would be nice bump for the current low age workers, but for how long? However, it their incomes go up so do everyone else’s eventually? This would eventually have a ripple effect on every factor of society. Even rent rates would likely go up as well. I can’t see how the low wage worker will benefit. All this would do is make current landlords a lot richer and potentially the cost of owning home a lot more expensive.

        “The liberals/democrats who support EPA/Sierra Club/abortions/rent controls want less population and they support open borders and at the same time a magnet for the poor of the world (safety net). It doesn’t make any sense. All these policies supported by the democrats they conflict one with another. They are completely illogical.”

        I think there a too many non-profit and for profit think tanks that have their hands in the cookie jar spewing whatever is important to anyone to keep themselves employed. At some point these entities will need to be challenged for what they are selling us and if it can be confirmed on what impact it truly is having on the economy/society and world.

      • Flyover – there is a simple answer to your question about why libs/Dems (old-school Repubs too) want immigration. First – ask yourself “who do Dems and Repubs answer to?” The answer is those that fund their campaigns – 0.1%ers. These are the business owners. What do they want? Cheap wages and more customers.

        On a more cynical note – they also want a populace that isn’t prone to rebellion and uprising. A population that is non-homogeneous (i.e. warring amongst itself), satiated by TV and welfare, and low-IQ isn’t even going to notice who is really pulling the strings.

    • I would bet that we will see 5% mortgage rates in 2017. The feds plan was to raise interest rates to 2% slowly, but with Trump many think that the timeline has been sped up. As 10-year bond yields increase at record pace, it’s safe to assume that we will be seeing higher mortgage rates sooner rather than later. You would think rising rates would cause home prices to decline, but historically there has been little if any correlation between rising rates and housing prices. The only certainty is that borrowing money today is more expensive than it was just a few weeks ago.

      • Maybe in the past, when lending standards weren’t so strict, or median income to median price multiples weren’t so high, but people are buying things based off of monthly payment size right now, and the average home price and average auto price have shot up with the low interest rates.

        The new car average transaction price is almost $34K now! I mean, I make 3x-4x median income, and I’ve never paid that much for a car. This is all quite dubious.

  • son of a landlord

    Here’s an opportunity to buy a VACANT LOT for nearly $26 million: https://www.redfin.com/CA/Los-Angeles/420-Amapola-Ln-90077/home/6827111

    Yeah, I know it’s in Holmby Hills. I know it’s one of the richest zips codes in the U.S. Lot size is 1.37 acres and lot is “mostly flat.” Enough room for a mansion, guest house, pool, tennis court.

    Even so, does this make sense to anyone? Would this be a fair market price for an empty lot, even in Holmby Hills?

  • I was having a discussion in a bar with someone from Chicago and I called him a “house humping cheerleader” he laughed. Thank you for the wonderful terminology!

    I will try to use “Taco tuesday baby boomer” more often.

    As far as student debt, I was lucky. I lived at home most of my college career. Saved me a ton of money and two years out of college my debt is down to $16.5 K. No plans on paying it off fast. Send your kids to Wisconsin for college, it is cheap and they will have tons of fun.

  • alex in San Jose

    Manbearpig – It took me a long time to realize that if you are white, and Californian, it is not really desired at all that you go to college and become an engineer or any other kind of professional. Go to Baylands Park in Sunnyvale up here and ask the nerds flying their R/C planes, engineers all, where they’re from and they’re almost all from Wisconsin or Minnesota or someplace where as much as discrimination against smart white boys may be desired, it’s been hard to implement since the population there is so overwhelmingly white.

    If you are a white California parent w/o large financial reserves, it would actually be really smart to send your kids to one of these places to go to college.

    Meanwhile in Israel if you’re a citizen college is FREE up to age 26 or so, and if you’re smart you can get somewhere. They have tech companies! Tech companies that hire! It’s amazing. It really makes me want to move there and pay taxes there; it’s too late for myself but not too late for someone coming after me…

    • son of a landlord

      Alex: Meanwhile in Israel if you’re a citizen college is FREE up to age 26 or so,

      Israel can afford free college and universal healthcare because their military and economy are so heavily subsidized by the U.S. If the U.S. withdrew its subsidies, Israel would have to divert money from its free colleges and healthcare to pay for its military.

      IOW, American taxpayers subsidize Israel’s socialist economy — colleges, healthcare and all.

      • We also subsidize the socialist economies of Europe, Canada, Australia, New Zealand, Japan, etc. Pull the funds and many will change rapidly.

      • alex in San Jose

        son of a landlord – I used to believe that too because I’ve been immersed in the general anti-Israel sentiment that’s been around for decades and has become much more shrill with the advent of the WWW.

        In truth, Israel pays its own way just fine.

        The people running the place are not idiots. They don’t trust *any* Christian nation nor should they.

        I used to believe that Jews ought to just all come here to the US, it’s safe, protected by oceans etc and look at how friendly to Jews the US has been, since before the US was a country but certainly in the last 100 or so years.

        Well, Poland was friendly to Jews too. Jews lived there peacefully for 700 YEARS.

        Then that changed. In Germany, Jews who’d fought bravely for Germany in WWI went to the camps right along with everyone else….

        So do you really think Israel is going to bank their whole existence on the US?

        For some reason I got fascinated by things like this and started really looking into history. Trust me, Israel does not fall for the whole “USA/West/Europe/NATO/Christians are your friend” trope.

        And college is free because that’s what a first-world country does.

    • Alex claims that if you are a white California parent w/o large financial reserves, it would actually be really smart to send your kids to college in the Midwest in states like Minnesota or Wisconsin?

      The racial animosity that is often directed towards white students at Midwest colleges and universities is no different than what occurs anywhere else. Universities and colleges have become leftist indoctrination camps.

      For example, in an Introduction to Mass Communications class at Minneapolis Community and Technical College, a black English professor incessantly invoked white privilege and oppression during class time even though the class ostensibly has little to do with race. Several white students announced that they had had enough with the professor’s incessant racial screed. They interrupted her during a lecture and asked, “Why do we have to talk about this in every class?” She invited them to file a racial harassment complaint with the college if they were so offended.

      http://www.startribune.com/racism-talk-has-mctc-prof-under-fire/234527611/

      • alex in San Jose

        Samantha – Discrimination against whites is being enacted at the National level, true. But it’s hugely different when the school is over 90% white. And the case you bring up is some podunk jr. college – yeah, sh!tbirds like that find niches in places like that – I hope his class is not required for anything.

        My perspective is from Hawaii where whites who are not retirees or military are a few per cent of the actual working populace, and where they are close to zero per cent of school instructors, administrators, etc. If you’re of the nonwhite majority there, your Senior project can be something laughable, in fact it can be simply copying someone’s weekend “build-it” project out of a popular electronics magazine and it’ll be accepted. Something like that would get you laughed at by your white instructor at your 90%+ white college in a part of the US where cheese is one of the four food groups. And companies who need to get things done will hire students from there (they hire H1B’s to be chair-fillers).

        California is nearly as bad. Different occupations tend to be “by race” and every job has hundreds, even thousands, of applicants. The college situation isn’t as bad as it is in Hawaii but it’s not that much better.

        Mostly, here, you have to know someone. That’s how you get hired. It’s all social networking and schmoozing.

        In a nice safe stable society where you won’t get rocks thrown at you when walking down the street and grades are awarded by performance not by race, college can make a lot of sense. If your parents let you stay at home while you go, it can work out very well. But for most of us in the real world, I think college is a huge scam. Much better to learn how to sell used cars or well, just about anything, then like Rodney Dangerfield, go to college later if it makes you feel good, but don’t conflate going to college and making any kind of a living.

  • I’d love to hear others thoughts but when I see a condo in Santa Monica that sold for 750k five years ago sell for 1.1 mil and the property sat for 60 days with two price reductions and the buyers agent works for the listing agents brokerage something isn’t kosher. I think a lot of 5/1 arms are due to reset with a high rate so all these “investors” are trying to unload their properties and aren’t finding takers so they are pulling out bogus fed sponsored equity to be able to keep making the mortgage pmts until they are able to find a sucker to finally unload. I think the game is coming to an end because there don’t seem to be any new suckers capable of qualifying. The whole housing game is about to find the Ponzi scheme unravel as rates go up and no new buyers come to the table. I also think a lot of real estate companies buy local unsold inventory to keep prices artificially inflated. I would love to know what people much smarter than me think about all this.

    • No local real estate offices buy unsold inventory. I have extensive experience as a commercial and residential broker until becoming a full time RE investor a decade ago. That is an odd conspiracy theory equivalent in hairbrained logic to saying 911 was an inside job. I am not trying to insult you at all, I am just attacking that ridiculous notion itself. RE brokerages are only interested in making money and doing whatever it takes to close escrows, the last thing the broker on record is doing is trying to single handedly prop up the real estate market by purchasing properties. Most of them don’t have the money to anyway. If you’re selling real estate you haven’t been successful enough as a principal, otherwise you’d quit. That may sound harsh but it’s true. I used sales as a means to getting on the other end of the phone and as soon as I was a principal I was out. That is how it goes. If you’ve been schlepping real estate for 10-20 years you aren’t doing things right.

      That being said, some of the worst purchases I’ve ever seen are from real estate ‘professionals.’ In fact during the last downturn in 05/06 where I was living, I was one of maybe 20 high volume commercial real estate brokers in my office that actually saw the sh^&storm brewing, most were totally oblivious to it despite obvious warning signs everywhere. Not dumb people just lacking insight that even people on this thread with less real estate experience have.

      Skepticism in real estate is critical to your success. Overly optimistic buyers get smoked. Keep up your cynicism! Seriously. And never trust a realtor. Ever. (former agent here saying this)

      • Yes but aren’t most brokerage firms owned by larger corporate entities Coldwell, prudential, ellliman, etc. btw 911 was an inside job. No way all those planes were hijacked at the same time and all those Saudi nationals who were on FBI watch list were able to go about there business without our govt knowing exactly what was going on. You know the us govt knew the Japanese were planning on attacking Pearl Harbor don’t you? You know the us govt knew the subprime mortgage bubble was going to pop don’t you? You know the us govt knew there was no winning the Vietnam war don’t you? I could go on but you get my point. Don’t be naive! Your govt doesn’t care about you it cares about economic growth to pay off past debt with new debt so the whole financial system doesn’t implode. Why do you think we allow all this illegal immigration. It’s because we aren’t having as many children so need bodies to create new debt.

      • Btw why do you think all social media and email and basically the internet is free. It’s not because the govt wants its citizens to have access, the govt wants its citizens to divulge information about themselves for tracking and cataloging. Why do we have a drug enforcement agency that doesn’t even stop 1% of the drugs that come into this country. It’s about creating jobs not stopping the illegal drug trade. Why do we a military we don’t use. This US military could end any global conflict in a matter af days with the satellites and drones we have but then what would all the millions of soldiers around the globe do for work? What does NASA do that is useful the the average citizen, basically nothing. NASA is purely for tracking the movements of enemies of the govt. Why does the wealthiest country history has every know have half its citizens living below the poverty level? Because if average people had their share of the wealth of this country they would show up work and then the govt wouldn’t have control of its citizens. This county has enough wealth and weapons that not one of the 300 million people in this country ever has to do another productive day of work ever again. You know we pay farmers not to grow, and oil companies not to pump, and prevent the release of cures for disease from being distributed to the general public right?

      • Thank you for showing us all you wear a tin foil hat so I didn’t waste any more time answering your real estate question.

    • I think someone forgot to takes their meds.

  • @junior_kai

    “if you are competent and enjoy the work you will be solidly middle class”
    Nope. Outsourcing is still in full effect and won’t be going away under Trump.

    When you got into your first STEM job probably in the mid-ish 90’s you could probably reliably start off at $50-60K and end up in the low six figures after 10-20yr. And that is in 90’s dollars. Today you’re frequently start at $30-40K and maybe end up $70-90K after 10-20yr on the job. And that is in 2010’s dollars which are worth much much less.

    That trend isn’t going to go away.

    “but that will likely require moving around a bit from time to time.”
    And there goes your social + financial stability needed to settle down and buy a house and start a family. That is a preeeettty big deal man and certainly was not the norm 20yr+ ago for any blue collar job much less a STEM job.

    “Competence from my standpoint is top 10-15% of your high school, going to a tier 1 college (top 50) and getting a gpa > 3.0.”
    In other words not many. Kind’ve like I’ve been saying for a while now. Sure you’ll be better off than most if you can thread that needle but its no solution for the common man/woman and you won’t be nearly as well off as your parents were if they’d had the same job 40-70yr ago. That is a real bad thing if you care at all about the future of society in general since things are supposed to be getting better, not worse.

    “But those who build and maintain society will (or should) be middle class.”
    Actually they should be upper class. Middle class should be the blue collar + semi-skilled labor. Which is how it used to be up until Reagan’s time as President.

    “Over the last 20 years we’ve become a nation of useless affirmative action paper pushers that manufacture BS rather than real products.”
    The US is only 2nd to China in terms of global manufacturing output. They only passed back in late 2009: http://www.apriso.com/blog/wp-content/uploads/2012/05/top_10_manufacturing_countries.png

    So the idea that nothing is made anymore in the US is a myth. The cheap crap you get at Walmart or Target is all made in China. We still produce tons of stuff though. Its just done through automation. And affirmative action is all about helping disadvantaged people who still suffer from racism, both on a personal level and a institutional level, to improve themselves. How is that a detriment to the economy at all?

    “The effort to get that engineering degree doesnt look like its worth it when you can be a brainless bureaucrat for the government for a similar salary.”
    The number of govt. workers has gone down under Obama, not up: http://1.bp.blogspot.com/-_yjsInp-DWs/UE-YJnsJonI/AAAAAAAAB40/ENIwv5AWKY0/s1600/fedemployees2.jpg

    Also the govt. still typically pays significantly less than you can get vs the private market.

    “Hopefully we will shed much of that dead weight, and I’m seeing it already on the government side – useless boomers retiring and their positions being closed out rather than finding replacements. Fact is they were largely worthless.”
    Tell yourself whatever it takes to help you sleep at night I guess.

    • tts, youre obviously too stupid and bitter to understand a reality other than the sad one you find yourself in. Are you neighbors with Alex perchance? Waste of my time pointing out all the flaws in your attempt at thinking, but suffice to say you are correct in that this country does in fact manufacture a lot of high quality products. This is in spite of all the useless paper pushers and whiny parasites *ahem* that resent the hard work people put in and the success they derive from their efforts.

      • apolitical scientist

        As one who has ridden the road to success advocated by junior_kai (successful STEM career, financially independent, now comfortably retired) I must say I find his lack of sympathy for those less successful than he is rather distasteful. Why is it that so many of those who have “made it” carp so incessantly about the takers – or “parasites” as j_k so charitably terms them – who haven’t ridden the gravy train to the stars as we have. Can’t we provide more opportunities for success among all classes without demonizing those who fail to measure up?

      • Apolitical Science, I don’t understand it, either. Being from an entire family of STEM people, I too started junior_kai’s rode to success, but I actually quit college, played in rock bands for years…and then started a business in TV and now make more money than I likely would have with my STEM degree.

        Everyone’s road is different, and anyone with success should recognize that it’s a combination of both hard work and fortunate events. It’s important not to loose sight of empathy for those who’ve yet to experience the fortunate events.

      • alex in San Jose

        There are schools in the US where AP classes are unknown. Hell there are schools where WWII isn’t taught, TONS of things are not taught. Why do you think The History Channel is so popular? For tons of us that stuff is pure candy, forbidden knowledge.

        There’s “tracking” where students are tracked into whether they’re bound for college or bound to feed into the welfare/prison complex. Whites in public schools in Hawaii were *not* funneled into the college track, they were supposed to go the other way. I had the minimum-required few minutes with a (nonwhite of course) “advisor” and I told her I wanted to be a commercial artist, and she was astonished – someone like me was not supposed to aspire to something like that. She gasped out that it was very “ambitious”, to mean “too ambitious”.

        All a person can do is get the f*ck out of a place like that. It took a lot of work but I did.

        The other trap is the thinking that going to college is a good thing if you’re not already comfortable in the first place. College is great if you’re high up enough that you’ll never be poor anyway. If you’re actually poor, going to college is a huge negative. Much better to learn how to sell, hustle, etc.

      • @alex in San Jose

        “There are schools in the US where AP classes are unknown. Hell there are schools”
        Most of the schools like that are in extremely poor areas that are minority-majority though. Even in states with really crappy school systems like Idaho or Virginia AP courses are usually available.

        Many of the schools that teach their kids hardly anything useful at all are the extreme religious ones. They will actually show movies for history class in some of them and most of learning is little more than religious indoctrination.

        “Why do you think The History Channel is so popular? For tons of us that stuff is pure candy, forbidden knowledge.”
        LOL have you watched that channel at all in the last few years? It used to be good years ago. Now its all crap reality shows and ridiculous ALIEN CONSPIRACY crap all the time.

        “There’s “tracking” where students are tracked into whether they’re bound for college or bound to feed into the welfare/prison complex. Whites in public schools in Hawaii were *not* funneled into the college track”
        Citation please. Your say so isn’t enough. And if you want to play dueling anecdotes as a child I went to 2 different schools, because my family moved alot, where I was one of the few white people and most kids were either hispanic or black in 2 different states and there was nothing like this going on at all.

        “she was astonished – someone like me was not supposed to aspire to something like that. She gasped out that it was very “ambitious”, to mean “too ambitious”.”
        I strongly suspect you’re reinterpreting things in your mind here.

  • @junior_kai

    “tts, youre obviously too stupid and bitter to understand a reality other than the sad one you find yourself in.,,,,,,,,,,,,, Waste of my time pointing out all the flaws in your attempt at thinking”
    How often in your line of work was the guy lobbing insults on his way out the door successful at convincing anyone that he was in the right about anything? How about in your life ever? Because I’ve never seen that work out for someone.

    “This is in spite of all the useless paper pushers and whiny parasites *ahem* that resent the hard work people put in and the success they derive from their efforts.”
    Manufacturing out put has been going up for years while factory employment has been declining on down to hardly anything anymore. Hard work has less and less to do with manufacturing and the financial success of that sector than ever before thanks to automation.

    • Sassy Millennial

      Yikes. You could benefit from a liberal arts degree or two.

      I would have loved to grow up in a time when grammar that was poor for a 7th grader could get you the kind of money that could afford a house! hahaha

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