Affordability discussion (split from Iran thread)

[Vol8188]

“Back in the 1990s, nearly 70% of the total wealth belonged to working-age households. Since then, the share of wealth has steadily shifted. Now, roughly 65% is with those 60 and up.

Due to older Americans having had more time to watch their assets grow and to experience compounding returns, it’s likely the wealth has become more concentrated to those generations.

This could suggest owning assets like real estate or securities for the long-term results in greater value. In comparison, younger generations haven’t had nearly as much time to watch their assets grow.

The cost of living should also be factored in.

Take housing as an example. As of Q1 2025, the average sales price of homes sold in the U.S. was $514,200, per the Federal Reserve Bank of St. Louis. Back in Q1 1964, that number was $19,600. That same $19,600 house would only cost $205,357 when adjusted for inflation.“

https://finance.yahoo.com/news/much-wealth-boomers-generational-gap-095704268.html

Someone else (Duck I think) pointed out something important which is private pensions are far less common now and instead people have 401ks that are represented in their “wealth”. While pensions would not have been included in the number

 

[StarRaider]

Dude I grew up the son of a small dairy farmer, that's practically Bill Gates money there.

wait yer dad who had a dairy farm named his kid hog? not as cool as a jimmy carter pic smeared with grizzly blood & carried on a cross country harley ride but not too shabby

 

[ATCVolinmn]

When in our history has the next generations quality of life been worse than their parents/grandparents?

Now, I do think what qualities an individual values can lead to someone considering that it's worse but overall our quality of life has never diminished.

The great depression? Not for all but definitely for some.....

 

[Ritzwatch]

Take housing as an example. As of Q1 2025, the average sales price of homes sold in the U.S. was $514,200, per the Federal Reserve Bank of St. Louis. Back in Q1 1964, that number was $19,600. That same $19,600 house would only cost $205,357 when adjusted for inflation.“

The inflation number is interesting, but misleading. I don’t know what a better metric is, but you can’t build a 1400 sf 3BR 2Ba house on a nice lot for less than $205k now.

So, inflation probably isn’t the best measure.

The point does remain, however, housing costs are out of control, especially for young buyers.

 

[Carl Pickens]

Fair enough, I do disagree though. I think if anything it will continue to get progressively worse. Its not like any good news is coming down the pipe.

Hog will probably disagree, and I respect his opinion, but the older generation is completely blind to this. Or they don't care, not sure which.

Its going to create a lot of apathetic people who completely disengage from society (already happening) and it will also probably cause some radicalization as well. Kids were sold a false reality.

I see your point and I’ll add to it. A lot of the young men of today are marshmallow soft, lazy and unmotivated. This will contribute to it as well.

 

[MOOOOONEY]

"They just want too much."

"They just don't work as hard."

"They just need to do what we did."

"They simply don't want what we wanted."

Have they ever asked why these things are the way they are?

Could it be the fact that younger generations have more opportunities to spend their disposable incomes?

1. Gaming
2. High speed internet
3. Cellular services and data plans
4. Door Dash
5. Streaming Services

 

[OHvol40]

The inflation number is interesting, but misleading. I don’t know what a better metric is, but you can’t build a 1400 sf 3BR 2Ba house on a nice lot for less than $205k now.

So, inflation probably isn’t the best measure.

The point does remain, however, housing costs are out of control, especially for young buyers.

I’m trying to understand why it’s misleading. They are saying average housing prices in the mid 60s, if adjusted for inflation now, would average $200k… as opposed to the current average price of a home is north of half a million. So homes used to be much more affordable, even when adjusted for inflation.

Maybe I’m misunderstanding.

 

[Ritzwatch]

I’m trying to understand why it’s misleading. They are saying average housing prices in the mid 60s, if adjusted for inflation now, would average $200k… as opposed to the current average price of a home is north of half a million. So homes used to be much more affordable, even when adjusted for inflation.

Maybe I’m misunderstanding.

I think what I am trying to say is that the cost of a lot and a build has increased at a rate higher than the inflation adjustment, so I expect the price to have exceeded the inflation adjusted amount as well.

I assume the builder in the 60’s made money, so I suspect the average cost to build was less than $19k.

Right now, it costs more than $205k to buy a lot and build a 1400 sf house. If construction costs have exceeded inflation, I don’t think using inflation adjusted sales figures mean a lot as a expected price point.

None of which is to suggest that I do not think prices are not crazy high, because I do.

 

[OHvol40]

I think what I am trying to say is that the cost of a lot and a build has increased at a rate higher than the inflation adjustment, so I expect the price to have exceeded the inflation adjusted amount as well.

I assume the builder in the 60’s made money, so I suspect the average cost to build was less than $19k.

Right now, it costs more than $205k to buy a lot and build a 1400 sf house. If construction costs have exceeded inflation, I don’t think using inflation adjusted sales figures mean a lot as a expected price point.

None of which is to suggest that I do not think prices are not crazy high, because I do.

Got ya. Maybe so, I don’t know enough about it honestly so I’m relying on other sources. Regardless, the reason our younger generations aren’t buying homes is pretty clear. They are being priced out of the middle class on every front, not just housing.

 

[UT_Dutchman]

State will basically pay for your trade school with TN Promise

Or your first 2 years at a community College.

 

[Ttucke11]

I see your point and I’ll add to it. A lot of the young men of today are marshmallow soft, lazy and unmotivated. This will contribute to it as well.

It seems like that's probably true as a majority.

But looking at it from their perspective, I'm not sure I would be any different. ***** too expensive, never going to afford a house, have to compete with a ton of foreigners and AI for jobs (and women, other generations didn't), the women are full of liberal brain rot and hate being women, politics has weaved its nasty head into everything including sports, inflation is astronomical, if you're young and white you're blamed for everyone's problems but you received none of the benefits, etc.

 

[hog88]

The great depression? Not for all but definitely for some.....

Fair

 

[85SugarVol]

“Back in the 1990s, nearly 70% of the total wealth belonged to working-age households. Since then, the share of wealth has steadily shifted. Now, roughly 65% is with those 60 and up.

Due to older Americans having had more time to watch their assets grow and to experience compounding returns, it’s likely the wealth has become more concentrated to those generations.

This could suggest owning assets like real estate or securities for the long-term results in greater value. In comparison, younger generations haven’t had nearly as much time to watch their assets grow.

The cost of living should also be factored in.

Take housing as an example. As of Q1 2025, the average sales price of homes sold in the U.S. was $514,200, per the Federal Reserve Bank of St. Louis. Back in Q1 1964, that number was $19,600. That same $19,600 house would only cost $205,357 when adjusted for inflation.“

https://finance.yahoo.com/news/much-wealth-boomers-generational-gap-095704268.html

That’s apples to oranges though, right?

Back in the 90’s, the retired generations were all on pensions - they didn’t have fat 401k & IRA balances in their name.

Now, the size of the Boomer generation combined with their retirement accounts has flipped the numbers.

 

[MurphyVol]

I’m trying to understand why it’s misleading. They are saying average housing prices in the mid 60s, if adjusted for inflation now, would average $200k… as opposed to the current average price of a home is north of half a million. So homes used to be much more affordable, even when adjusted for inflation.

Maybe I’m misunderstanding.

Land scarcity/pricing is worse today. Zoning rules have increased

Labor and materials have exploded

We've had long periods of moderate to very low interest rates.

allowing people to buy a home with 3.5% down or even 0% down has made financing easier but has expanded the market and has been detrimental to pricing. Once you needed 20%-30% down with little to no exceptions

Real estate became an investment asset

Houses in 60s were often built with shag carpet, inferior shingles, linoleum, no garages.....then HGTV came along and now everyone wants to live in a strangely chic farmhouse.

Regulations grew with enhanced permitting, inspections, and Lord knows you can't just dig a hole and stick your septic tank in it. Some tanks require pumps, drip systems, etc.

after 1971, we went off the Gold standard and our currency became FIAT. Money supply expanded, mortgage credit exploded.

Once you either saved up a huge chunk, or you just rented until you died or inherited the home you grew up in. Can't have it both ways, easier mortgages and low rates drive up prices. The very thing young/low-income people asked for (a lower barrier to enter into a mortgage) is a big reason why affordability has gotten worse. Bring back 30% down payments and 12% mortgage rates and prices will get back in line quickly.

 

[OHvol40]

That’s apples to oranges though, right?

Back in the 90’s, the retired generations were all on pensions - they didn’t have fat 401k & IRA balances in their name.

Now, the size of the Boomer generation combined with their retirement accounts has flipped the numbers.

I don’t think it’s as much apples and oranges as much as it is cause and effect. Regardless, the fact remains that the boomers are generally thriving while the working class is becoming the working poor due to rising prices and stagnant wages.

 

[85SugarVol]

Got ya. Maybe so, I don’t know enough about it honestly so I’m relying on other sources. Regardless, the reason our younger generations aren’t buying homes is pretty clear. They are being priced out of the middle class on every front, not just housing.

Part of it as well (if we are to believe the younger generations when they tell us) is that they value things differently than prior generations.

[which is true for every succeeding generation]

Young people today place great value on experiences. They are much more likely to spend money on travel, events, etc - and derive great satisfaction from that. Some aren’t interested in having children and owning property, they prefer what they perceive as greater freedom. Which is their prerogative.

 

[85SugarVol]

I don’t think it’s as much apples and oranges as much as it is cause and effect. Regardless, the fact remains that the boomers are generally thriving while the working class is becoming the working poor due to rising prices and stagnant wages.

Not sure I’m following you, but whether it’s cause and effect or not, the rise of individual retirement accounts has completely skewed the comparison.

 

[OHvol40]

Land scarcity/pricing is worse today. Zoning rules have increased

Labor and materials have exploded

We've had long periods of moderate to very low interest rates.

allowing people to buy a home with 3.5% down or even 0% down has made financing easier but has expanded the market and has been detrimental to pricing. Once you needed 20%-30% down with little to no exceptions

Real estate became an investment asset

Houses in 60s were often built with shag carpet, inferior shingles, linoleum, no garages.....then HGTV came along and now everyone wants to live in a strangely chic farmhouse.

Regulations grew with enhanced permitting, inspections, and Lord knows you can't just dig a hole and stick your septic tank in it. Some tanks require pumps, drip systems, etc.

after 1971, we went off the Gold standard and our currency became FIAT. Money supply expanded, mortgage credit exploded.

Once you either saved up a huge chunk, or you just rented until you died or inherited the home you grew up in. Can't have it both ways, easier mortgages and low rates drive up prices. The very thing young/low-income people asked for (a lower barrier to enter into a mortgage) is a big reason why affordability has gotten worse. Bring back 30% down payments and 12% mortgage rates and prices will get back in line quickly.

I can pretty much agree with you on everything. It’s maybe a bit more nuanced than that when considering more external factors (price of higher edu, predatory lending, irresponsible sub prime lending, etc), it’s just gotten out of hand. I was very lucky to get into my first home in 2017 with my family of 4. Very soon after that rates went up and housing prices shot up. I have many friends who missed that boat, and now can’t climb out of the gutter (professionals, contributors to society, mind you) with their wages stagnant, or even cut. It’s tough to watch.

 

[85SugarVol]

Houses in 60s were often built with shag carpet, inferior shingles, linoleum, no garages.....then HGTV came along and now everyone wants to live in a strangely chic farmhouse.

One of the prevailing themes in one of the surveys someone linked earlier was -

I’ll never be able to afford a house “that I want” so why bother saving.

 

[OHvol40]

Part of it as well (if we are to believe the younger generations when they tell us) is that they value things differently than prior generations.

[which is true for every succeeding generation]

Young people today place great value on experiences. They are much more likely to spend money on travel, events, etc - and derive great satisfaction from that. Some aren’t interested in having children and owning property, they prefer what they perceive as greater freedom. Which is their prerogative.

Meh, young people have been doing their own version of that since the 60s. The difference is that from the 50s until about 2000, maybe 2005, young people could pull their ish together in their late 20s, fall into a job that provides enough income to build a house and purchase cars and land and whatever, there was disposable income. Now these kids can’t get out on their own because the job market is fairly stagnant as well as wages, but prices are way up. Don’t get me started on higher education, where upward mobility used to mean working a side job to pay for tuition. That is no longer even close to an option now.

 

[Berry4Heisman14]

Could it be the fact that younger generations have more opportunities to spend their disposable incomes?

1. Gaming
2. High speed internet
3. Cellular services and data plans
4. Door Dash
5. Streaming Services

Those things exist, but they aren’t why younger generations are struggling financially. Gaming, Netflix, and phones might add up to $100 to $200 a month, but the real difference between generations is the cost of major necessities. Housing, college tuition, healthcare, and childcare have increased far faster than wages. For example, homes used to cost around 2 to 3× the median income decades ago, and now in many places they’re 5 to 7× income. That’s a structural economic shift, not just people ordering DoorDash or paying for streaming services. Small luxuries didn’t suddenly make life unaffordable massive increases in essential costs did

 

[85SugarVol]

Meh, young people have been doing their own version of that since the 60s. The difference is that from the 50s until about 2000, maybe 2005, young people could pull their ish together in their late 20s, fall into a job that provides enough income to build a house and purchase cars and land and whatever, there was disposable income. Now these kids can’t get out on their own because the job market is fairly stagnant as well as wages, but prices are way up. Don’t get me started on higher education, where upward mobility used to mean working a side job to pay for tuition. That is no longer even close to an option now.

They’ve told us time and again they don’t want that in their 20’s. They are delaying everything, many of them by choice.

Young people in the 70’s bemoaned the state of affairs, lack of opportunities, and changing landscape compared to prior generations.

Young people in the 90’s experienced the rapid change associated with the dawn of the internet age.

Young people today are dealing with challenges unique to their generation.

My money’s on the pattern continuing to repeat.

 

[newarkvol]

I've been reading this guy's work on and off for the last several years-- I have some issues with his methodology, data integrity, and the deterministic nature of his conclusions, but still an interesting read:

"Peter Turchin, a founder of
cliodynamics, predicts rising instability in the U.S. during the 2020s driven by three key factors: popular immiseration (stagnating wages, low quality of life), elite overproduction (too many elites competing for limited positions), and state weakness. Turchin argue that these factors, driven by a "wealth pump" that transfers money to the elite, create a high-risk environment for social unrest and political violence."

The Science behind My Forecast for 2020

Quite a number of people, here and on Twitter, asked me about how I came up with my forecast for 2020. Here’s the story. By the early 2000s I had already delved into structural-demographic th…

peterturchin.com

 

[jvol1]

Money from easing wasn't distr8buted equally throughout society. It was given to banks who loaned it to investors. The investors bought financial assets which went up greatly in value. As a part of diversifying their wealth, investors turned to real estate with the money they'd made in the markets. It caused real estate values to advance more rapidly than wages. Generally the ability of people who've participated in the markets to maintain their standard of living by selling stocks etc which have appreciated greatly has sustained our economy though the resulting inflation has left the people who don't own sticks etc behind. Trumps trade war hasn't helped either. Under these conditions, a wealth tax would be the best way to restore some order to our economy.

 

[FortSanders]

Those things exist, but they aren’t why younger generations are struggling financially. Gaming, Netflix, and phones might add up to $100 to $200 a month, but the real difference between generations is the cost of major necessities. Housing, college tuition, healthcare, and childcare have increased far faster than wages. For example, homes used to cost around 2 to 3× the median income decades ago, and now in many places they’re 5 to 7× income. That’s a structural economic shift, not just people ordering DoorDash or paying for streaming services. Small luxuries didn’t suddenly make life unaffordable massive increases in essential costs did

Housing prices spiked when Joe Biden pumped 4 trillion dollars into the economy. Houses in my neighborhood doubled in 18 months. In addition, Biden let in 10M illegals which created a spike in demand for housing.