Economics

[Legacy]

Tax Equity and the Growth in Nonpayers (Tax Foundation, 2012)

Key Findings

- In 2010, 41 percent of all tax returns filed had no income tax liability. This represents over 58 million income tax filers.
- Nonpayers have grown substantially over the last two decades. In 1990, only about 21 percent of returns had no tax liability, about half of what it is today.
- The expansion of tax credits is the primary driver of the increased number of nonpayers. The budgetary cost of tax credits reached $224 billion in 2010.
- Though most nonpayers of the income tax are generally low income, the number of nonpayers in middle income categories has grown. The median income of nonpayers has increased by 40% over the last 9 years.
- The threshold at which a typical married couple with two children will likely be a nonpayer is now $47,000.

Misconceptions and Realities About Who Pays Taxes (Center of Budget
And Policy Priorities) 2012

Close to half of U.S. households currently do not owe federal income tax. The Urban Institute-Brookings Tax Policy Center estimates that 46 percent of households will owe no federal income tax for 2011. A widely cited figure is a Joint Committee on Taxation estimate that 51 percent of households paid no federal income tax in 2009. (The TPC figure for 2009 also is 51 percent.)

Federal Individual Income Tax Returns with Zero or Negative Tax Liability, 1916 - 2010 (Tax Foundation)

 

[zelezo vlk]

https://www.washingtonpost.com/opin...a4bf5aad4fa_story.html?utm_term=.8bbe8c64998e

I'm not the only one who read this article, am I?

Sent from my SAMSUNG-SM-G900A using Tapatalk

 

[woolybug25]

https://www.washingtonpost.com/opin...a4bf5aad4fa_story.html?utm_term=.8bbe8c64998e

I'm not the only one who read this article, am I?

Sent from my SAMSUNG-SM-G900A using Tapatalk

I actually really like this trend. I would much rather have young professionals saving their money, focusing on career and contributing back to the family unit that sacrificed for them their entire life. I see it a positive metric that shows improvement in family values and community building.

If you look back in history, multi generational households were the norm. These were times where family values had a much higher importance to society. It's a good thing that millennials would rather help contribute to their families instead of falling for our government's BS campaign of telling them that home ownership is a right. Save your money, use conventional financing and focus on family.

I'm looking forward to Whiskey's remarks on this.

 

[zelezo vlk]

I actually really like this trend. I would much rather have young professionals saving their money, focusing on career and contributing back to the family unit that sacrificed for them their entire life. I see it a positive metric that shows improvement in family values and community building.

If you look back in history, multi generational households were the norm. These were times where family values had a much higher importance to society. It's a good thing that millennials would rather help contribute to their families instead of falling for our government's BS campaign of telling them that home ownership is a right. Save your money, use conventional financing and focus on family.

I'm looking forward to Whiskey's remarks on this.

Well the article presents the cause as a lack of economic power, not due to an attachment to family.

Sent from my SAMSUNG-SM-G900A using Tapatalk

 

[woolybug25]

Well the article presents the cause as a lack of economic power, not due to an attachment to family.

Sent from my SAMSUNG-SM-G900A using Tapatalk

That was one cause they listed, the other was:

One, they’re putting off getting married, which many still see as a prerequisite to homeownership. (Though a large chunk of millennials, I should note, instead view homeownership as a prerequisite to marriage.)

Furthermore, if it was simply economic power, then why aren't these people renting? If young people are truly not caring about family and moving in with their families simply as a cost measure, then why aren't they flooding the rental market? According to Zillow, the rental market has been flat for over a year. You can't tell me that the huge increases in multigenerational households are entirely dependent on lack of financial resources. At least some portion would desire to rent on their own if the only determinant was cost of entry.

 

[zelezo vlk]

That was one cause they listed, the other was:



Furthermore, if it was simply economic power, then why aren't these people renting? If young people are truly not caring about family and moving in with their families simply as a cost measure, then why aren't they flooding the rental market? According to Zillow, the rental market has been flat for over a year. You can't tell me that the huge increases in multigenerational households are entirely dependent on lack of financial resources. At least some portion would desire to rent on their own if the only determinant was cost of entry.

I'll try to respond to this after work. I look forward to this discussion.

Sent from my SAMSUNG-SM-G900A using Tapatalk

 

[BleedBlueGold]

They're broke as shit, that's why.

Mortgage rates are even less than rent in some areas of the country.

 

[woolybug25]

I'll try to respond to this after work. I look forward to this discussion.

Sent from my SAMSUNG-SM-G900A using Tapatalk

Me too, homie.

They're broke as shit, that's why.

Mortgage rates are even less than rent in some areas of the country.

That is not the entire story. There are more barriers to entry than simply monthly cash flow. Historically, rental markets spike when mortgage numbers decrease. That's a long time economic continuum. If you look at all economic factors (unemployment, gdp, etc), the numbers don't align in the traditional manner.

Regardless, I think the end justifies the mean here. Does anyone disagree that it is better for young people to contribute to their family, save more and responsibly purchase homes rather than get sucked into the same kind of bs lending practices of pre recession?

 

[BleedBlueGold]

Me too, homie.



That is not the entire story. There are more barriers to entry than simply monthly cash flow. Historically, rental markets spike when mortgage numbers decrease. That's a long time economic continuum. If you look at all economic factors (unemployment, gdp, etc), the numbers don't align in the traditional manner.

Regardless, I think the end justifies the mean here. Does anyone disagree that it is better for young people to contribute to their family, save more and responsibly purchase homes rather than get sucked into the same kind of bs lending practices of pre recession?

I don't disagree. I'm just saying that when people (family generations in some cases) have made terrible financial decisions their entire lives, they're not going to be able to afford the rising housing prices nor will they be able to afford the rising rent prices. How often in history has it been more expensive or roughly the same to rent as it was just buy a home? Factor in the other variables for home buying like you mention with the barriers and basically both pathways are eliminated. People get stuck in limbo without a place to live and have no other choice but to move back to the nest.

Am I glad that more and more younger people are realizing the reality of their situation and not forcing themselves into a home they can't afford? Absolutely.

 

[Ndaccountant]

So this complements the first article, with a little more meat behind it. Consider this:

Now there is some hard data from Zillow that provides more insight into the Rent Trap, which may be one of the most pervasive but least understood reasons that Millennials are aging in place in rental housing. Recent research by Zillow’s Aaron Terrazas found that:

Savings rates tend to decline as rent burdens increase. In fact, about 30 percent of renters with the lowest rent burdens and 60 percent of renters with the highest rent burdens save nothing at all.

The typical renter with a low or median rent burden sets aside just 5 percent of his or her income each month as savings.

Among renters facing high rent burdens, the median savings rate was zero – they essentially spend all (or, in some cases, more than all if they borrow or use credit) of their incomes.

Almost 60 percent of high rent burden households said they could not cover three months’ worth of expenses if they were to lose their main source of income, compared to 22 percent of homeowners.

From a Harvard Study:

The number of cost-burdened renters—those paying more
than 30 percent of their income for housing—reached a
record high of 21.3 million in 2014, according to data from the
American Community Survey (See Figure 32).
▪ Cost burdens remain nearly universal among lowest-income
households (earning under $15,000). Among this group, 83
percent were burdened in 2014, including 70 percent with
severe burdens, paying more than 50 percent of their income
for housing.
▪ Moderate-income households are also burdened by high
housing costs. In the 10 highest-cost metros, three-quarters
of renter households earning $30,000–44,999 and half of those
earning $45,000–74,999 were cost burdened in 2014.
▪ The number of cost-burdened owners fell for the fourth
straight year to 18.5 million in 2014.

What this tells me is that they cannot afford rent, if they still have the overwhelming desire to own a home one day. If they rent now, they will not be able to save enough due to the high rents being charged today coupled with student loans and other obligations. There simply isn't enough $$ to both rent and save (for both down payment, retirement & safety nets). While it varies by ethnicity, I would imagine most would move out (rent or buy) if they could.


The Rent Trap: Why Millennials Can’t Afford a Down Payment

http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/son2016-key-facts.pdf

 

[wizards8507]

Regardless, I think the end justifies the mean here. Does anyone disagree that it is better for young people to contribute to their family, save more and responsibly purchase homes rather than get sucked into the same kind of bs lending practices of pre recession?

I'm shocked to see you, of all people, referring to them as "young people" as a way to rationalize childlike behavior.

<iframe width="560" height="315" src="https://www.youtube.com/embed/7nqcgUDoV_M" frameborder="0" allowfullscreen></iframe>

It's a false dichotomy that you either need to live with your mother or "get sucked into the same kind of BS lending practices pre-recession." I moved 1,200 miles from my family when I graduated. That's 1,000 miles from my wife's family and 1,100 miles away from my alma mater. I had no support system other than my wife and we're far better people today for the time we spent on our own for three years. We bought our first house at 22 and sold it at 24, and we did it all by ourselves like real live grown-up people. I meet people all the time who are five years older than me and still behave like children. They don't know how to cook, clean, do laundry, or make a simple budget. The #adulting phenomenon is disgraceful.

 

[BleedBlueGold]

So this complements the first article, with a little more meat behind it. Consider this:



From a Harvard Study:


What this tells me is that they cannot afford rent, if they still have the overwhelming desire to own a home one day. If they rent now, they will not be able to save enough due to the high rents being charged today coupled with student loans and other obligations. There simply isn't enough $$ to both rent and save (for both down payment, retirement & safety nets). While it varies by ethnicity, I would imagine most would move out (rent or buy) if they could.


The Rent Trap: Why Millennials Can’t Afford a Down Payment

http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/son2016-key-facts.pdf

Piss-poor savings rates aren't just linked to renters though. It's the norm in this country, currently. It didn't used to be. Bring in the "novelty" of credit and the brainwash-marketing with it and suddenly, after a couple of generations, people have gone from having a 10% savings rate on average, to a -10% savings rate. Most people today have less than $500-$1000 in savings and would have no clue how to pay for emergency. Expensive housing/rent may be one factor, but it's hardly thee factor.

People need to stop buying brand new cars, i-whatever, new clothes, expensive restaurants, etc and get back to living on less than what they make. Credit used to be considered taboo when it first hit the scene. Now it's the norm to borrow your way into literally everything you purchase.

 

[wizards8507]

Piss-poor savings rates aren't just linked to renters though. It's the norm in this country, currently. It didn't used to be. Bring in the "novelty" of credit and the brainwash-marketing with it and suddenly, after a couple of generations, people have gone from having a 10% savings rate on average, to a -10% savings rate. Most people today have less than $500-$1000 in savings and would have no clue how to pay for emergency. Expensive housing/rent may be one factor, but it's hardly thee factor.

People need to stop buying brand new cars, i-whatever, new clothes, expensive restaurants, etc and get back to living on less than what they make. Credit used to be considered taboo when it first hit the scene. Now it's the norm to borrow your way into literally everything you purchase.

 

[Ndaccountant]

Piss-poor savings rates aren't just linked to renters though. It's the norm in this country, currently. It didn't used to be. Bring in the "novelty" of credit and the brainwash-marketing with it and suddenly, after a couple of generations, people have gone from having a 10% savings rate on average, to a -10% savings rate. Most people today have less than $500-$1000 in savings and would have no clue how to pay for emergency. Expensive housing/rent may be one factor, but it's hardly thee factor.

People need to stop buying brand new cars, i-whatever, new clothes, expensive restaurants, etc and get back to living on less than what they make. Credit used to be considered taboo when it first hit the scene. Now it's the norm to borrow your way into literally everything you purchase.

No argument from me. I just was trying to help articulate why millennials aren't renting....they can't reach their goals if they do and maybe, just maybe, they are aware of that and are trying to avoid the pit falls you mention above.

 

[wizards8507]

No argument from me. I just was trying to help articulate why millennials aren't renting....they can't reach their goals if they do and maybe, just maybe, they are aware of that and are trying to avoid the pit falls you mention above.

That's not true. The information you provided shows that millennials are overpaying for rent, I'll grant you that. But when you use language like "can't," it implies that they have no choice in the matter. Millennials treat their apartments like their smartphones. They're status symbols, and it's not enough to have a place to live. The reason such a large percentage of their income is going to rent is because they're choosing apartments that have prestige and sex appeal. They want to be in that trendy urban neighborhood instead of living somewhere half the price in the suburbs or a less prestigious urban area. So yes, millennials are paying too much in rent, but it's their own fault. Lower-rent options do exist, millennials just aren't picking them. Your article implies that high rent is a prima facie fact that millennials can't do anything about.

 

[woolybug25]

I'm shocked to see you, of all people, referring to them as "young people" as a way to rationalize childlike behavior.

<iframe width="560" height="315" src="https://www.youtube.com/embed/7nqcgUDoV_M" frameborder="0" allowfullscreen></iframe>

It's a false dichotomy that you either need to live with your mother or "get sucked into the same kind of BS lending practices pre-recession." I moved 1,200 miles from my family when I graduated. That's 1,000 miles from my wife's family and 1,100 miles away from my alma mater. I had no support system other than my wife and we're far better people today for the time we spent on our own for three years. We bought our first house at 22 and sold it at 24, and we did it all by ourselves like real live grown-up people. I meet people all the time who are five years older than me and still behave like children. They don't know how to cook, clean, do laundry, or make a simple budget. The #adulting phenomenon is disgraceful.

Where was I rationalizing childish behavior? I was calling for young people to live at home if they cannot afford their preferred housing rather than buying into the false premises of borrowing too much or living paycheck to paycheck. I wasn't excusing behavior, but rather encouraging mature life decisions that not only economically make sense, but also add to community building. The latter of which, is something your pseudo-libertarian philosophy fails to recognize.

My broader point has nothing to do with socioeconomic patterns, but rather the overall values of young professionals living in multigenerational homes. This was a norm in times of our country's highest levels of community. Now we have a bunch of kids getting out of college, buying houses they can't afford across the country and either a) not raising children or b) raising children with a complete lack of community. Only perpetuating the cycle of poor moral fiber within our culture.

 

[NorthDakota]

That's not true. The information you provided shows that millennials are overpaying for rent, I'll grant you that. But when you use language like "can't," it implies that they have no choice in the matter. Millennials treat their apartments like their smartphones. They're status symbols, and it's not enough to have a place to live. The reason such a large percentage of their income is going to rent is because they're choosing apartments that have prestige and sex appeal. They want to be in that trendy urban neighborhood instead of living somewhere half the price in the suburbs or a less prestigious urban area. So yes, millennials are paying too much in rent, but it's their own fault. Lower-rent options do exist, millennials just aren't picking them. Your article implies that high rent is a prima facie fact that millennials can't do anything about.

Can't speak for everyone but many people I know areally sound exactly this, living in these apartments that are downtown, in a "revitalized" area for big bucks. They also eat at all the hip fast casual places and the upscale restaurants for breakfast every weekend for 20+ a plate ("it's really coold though, really unique menu with locally sourced ingredients!")

 

[wizards8507]

Where was I rationalizing childish behavior? I was calling for young people to live at home if they cannot afford their preferred housing rather than buying into the false premises of borrowing too much or living paycheck to paycheck. I wasn't excusing behavior, but rather encouraging mature life decisions that not only economically make sense, but also add to community building. The latter of which, is something your pseudo-libertarian philosophy fails to recognize.

My broader point has nothing to do with socioeconomic patterns, but rather the overall values of young professionals living in multigenerational homes. This was a norm in times of our country's highest levels of community. Now we have a bunch of kids getting out of college, buying houses they can't afford across the country and either a) not raising children or b) raising children with a complete lack of community. Only perpetuating the cycle of poor moral fiber within our culture.

You have several points completely backwards.

1. There are certainly economic benefits of living with your parents but there are psychological benefits of living on your own that are far more important. Being able to get a mortgage at 80% or better LTV is not the be-all and end-all of adulthood. People are much better off in the long run learning how to live for themselves, even if that means spending a few extra dollars a month.

2. Millennials are hurting their own job prospects because they're only considering employment opportunities in commuting distance from their parents' homes. If millennials employed a national (or even regional) job search, their unemployment rates would be much more favorable. Young professionals living at home is a far smaller problem than young unemployed people living at home because there aren't any employers hiring psychology majors in Terre Haute.

3. The times when living at home was the norm were also the times when the gap between college graduation and marriage was a few months, not ten years. I'd be perfectly happy with a socioeconomic pattern of graduating college and moving home at 22, getting married and renting an apartment at 23, and buying a house at 25. The issue is that people aren't getting married (and reaping the benefits thereof) until they're 30.

4. The entire point of the data we're discussing is that millennials aren't buying homes, so I'm not sure where you're getting the idea that they're "buying houses they can't afford across the country."

5. Your entire post reads like somebody who just watched The Big Short. You didn't say the words, but you're a half-step away from blaming the situation we're in on "predatory lending practices" or some such thing. I hope that's not where you're going, because I'd be unable to resist debating the merits of the Community Reinvestment Act, and I really don't feel like it.

Can't speak for everyone but many people I know areally sound exactly this, living in these apartments that are downtown, in a "revitalized" area for big bucks. They also eat at all the hip fast casual places and the upscale restaurants for breakfast every weekend for 20+ a plate ("it's really coold though, really unique menu with locally sourced ingredients!")

Exactly, and that's in North Dakota! Blow the problem out to New York, Boston, LA, and Chicago, and it gets really nasty.

 

[Ndaccountant]

That's not true. The information you provided shows that millennials are overpaying for rent, I'll grant you that. But when you use language like "can't," it implies that they have no choice in the matter. Millennials treat their apartments like their smartphones. They're status symbols, and it's not enough to have a place to live. The reason such a large percentage of their income is going to rent is because they're choosing apartments that have prestige and sex appeal. They want to be in that trendy urban neighborhood instead of living somewhere half the price in the suburbs or a less prestigious urban area. So yes, millennials are paying too much in rent, but it's their own fault. Lower-rent options do exist, millennials just aren't picking them. Your article implies that high rent is a prima facie fact that millennials can't do anything about.

I am not sure that it is as clear as you depict it to be. The chart below shows that low end rentals are increasing just as fast, and in some cases faster, than the high end. Additionally, the new inventory is directed at the high end (which is the inventory everyone is counting on to drive up vacancies and put a hold on rent increases. Looks like it will help high end more).

then you get this......

Lifestyle and Renters by Necessity
Yardi Matrix divides rental assets into two classes, "Lifestyle" and "Renter by Necessity." Lifestyle households “have wealth sufficient to own but have chosen to rent,” according to the report, while the Renter by Necessity class covers a wide range of lower-income families for whom renting is the best or only option. According to Yardi, “These differences can weigh heavily in determining a property’s ability to attract specific renter market segments.”

For its trailing three-month (T-3) rental growth rate charts, Yardi notes that U.S. multifamily rents rose 0.6% on a T-3 basis. The Lifestyle group led, with 0.7% T-3 growth, versus the Renter by Necessity group’s 0.6% growth. Sacramento, Calif., is the leading metro in T-3 rent growth, at 1.3%, owing to a great deal of demand over supply “as people flee from its expensive Bay Area peer markets,” says the report.

On a trailing 12-month (T-12) basis, rents grew by 6.1% overall. Portland, Ore.; Sacramento; and Seattle saw the most gain in this area. The rate of T-12 rent growth for Renter by Necessity properties is currently higher than that for Lifestyle properties in 15 of the 16 metropolitan areas highlighted in the report (the exception being Las Vegas). In most cases, this represents a drastic change from data collected in 2013 and 2014, when Lifestyle growth rates far exceeded those among Renters by Necessity. In many of these cases, Lifestyle and Renter by Necessity rent growth rates have now grown much closer to each other than they were in 2013.

Yardi Matrix attributes this trend to an imbalance between supply and demand. The report states that supply is concentrated in the Lifestyle market, whereas demand for Renter by Necessity assets remains unmet. Renters by Necessity do lead over Lifestyle renters in occupancy rates, however, at 96.1% and 95.9%, respectively. Both categories are near historical highs. As noted above, the occupancy rate has remained stable over recent months, despite the growing supply of new rental properties.

While I agree with the overall sentiment of your post, things like job availability, transportation, ease of finding roommates, student loan debt, overall wages and job security make it a bit more challenging.

Yardi: July Sees Record-High Rents but Slowed Rent Growth | Multifamily Executive Magazine | Rent Trends, Research, Economic Conditions, Supply and Demand, Rent Growth, Oversupply, Markets, Forecast, Sacramento-Arden-Arcade-Roseville, CA, Yardi, Cali

 

[Wild Bill]

That's not true. The information you provided shows that millennials are overpaying for rent, I'll grant you that. But when you use language like "can't," it implies that they have no choice in the matter. Millennials treat their apartments like their smartphones. They're status symbols, and it's not enough to have a place to live. The reason such a large percentage of their income is going to rent is because they're choosing apartments that have prestige and sex appeal. They want to be in that trendy urban neighborhood instead of living somewhere half the price in the suburbs or a less prestigious urban area. So yes, millennials are paying too much in rent, but it's their own fault. Lower-rent options do exist, millennials just aren't picking them. Your article implies that high rent is a prima facie fact that millennials can't do anything about.

In my experience, those who can afford to rent "status symbols" in urban areas aren't having trouble saving money to buy a place. They are choosing to rent b/c they prefer mobility and do not want the responsibility of home ownership.

Generally, the people who are struggling to save enough money to buy are choosing smaller, slightly more expensive urban shitholes over slightly less expensive suburban condos. The savings, after you take increased transportation costs into account, is minimal.

I think these people are struggling b/c of student loans, lack of commitment to saving, failure to budget and frivolous spending on food, clothing and entertainment. That's just my experience.

 

[woolybug25]

You have several points completely backwards.

1. There are certainly economic benefits of living with your parents but there are psychological benefits of living on your own that are far more important. Being able to get a mortgage at 80% or better LTV is not the be-all and end-all of adulthood. People are much better off in the long run learning how to live for themselves, even if that means spending a few extra dollars a month.

2. Millennials are hurting their own job prospects because they're only considering employment opportunities in commuting distance from their parents' homes. If millennials employed a national (or even regional) job search, their unemployment rates would be much more favorable. Young professionals living at home is a far smaller problem than young unemployed people living at home because there aren't any employers hiring psychology majors in Terre Haute.

3. The times when living at home was the norm were also the times when the gap between college graduation and marriage was a few months, not ten years. I'd be perfectly happy with a socioeconomic pattern of graduating college and moving home at 22, getting married and renting an apartment at 23, and buying a house at 25. The issue is that people aren't getting married (and reaping the benefits thereof) until they're 30.

4. The entire point of the data we're discussing is that millennials aren't buying homes, so I'm not sure where you're getting the idea that they're "buying houses they can't afford across the country."

5. Your entire post reads like somebody who just watched The Big Short. You didn't say the words, but you're a half-step away from blaming the situation we're in on "predatory lending practices" or some such thing. I hope that's not where you're going, because I'd be unable to resist debating the merits of the Community Reinvestment Act, and I really don't feel like it.


Exactly, and that's in North Dakota! Blow the problem out to New York, Boston, LA, and Chicago, and it gets really nasty.

I'm a fucking banker, you think my response sounded like an excerpt from The Big Short?

I'm at work and have to go contribute to a too big to fail bank's bottom line while living within a mile of both sets of parents for my family. In a small town community where my kids can walk to school no less.

I'll be back later to tear your ideological bs comments apart, but hopefully Whiskey shows up to shred you before then.

 

[wizards8507]

In my experience, those who can afford to rent "status symbols" in urban areas aren't having trouble saving money to buy a place. They are choosing to rent b/c they prefer mobility and do not want the responsibility of home ownership.

Generally, the people who are struggling to save enough money to buy are choosing smaller, slightly more expensive urban shitholes over slightly less expensive suburban condos. The savings, after you take increased transportation costs into account, is minimal.

I think these people are struggling b/c of student loans, lack of commitment to saving, failure to budget and frivolous spending on food, clothing and entertainment. That's just my experience.

I agree, I was responding specifically to the post about the "rent trap." I don't believe rent is as detrimental to saving as the other things you mentioned.

I'm a fucking banker, you think my response sounded like an excerpt from The Big Short?

I'm at work and have to go contribute to a too big to fail bank's bottom line while living within a mile of both sets of parents for my family. In a small town community where my kids can walk to school no less.

I'll be back later to tear your ideological bs comments apart, but hopefully Whiskey shows up to shred you before then.

That's great that you live within a mile of both sets of families. That's not an option for some people, i.e. those of us with families that live hundreds of miles apart. As you know, my wife and I left Florida to be closer to our families but it's an absurd standard to suggest that living in a different town than your parents is somehow illegitimate.

 

[Ndaccountant]

I agree, I was responding specifically to the post about the "rent trap." I don't believe rent is as detrimental to saving as the other things you mentioned.

Wait a second. You first said that the rent trap is false, because

The information you provided shows that millennials are overpaying for rent, I'll grant you that. But when you use language like "can't," it implies that they have no choice in the matter. Millennials treat their apartments like their smartphones. They're status symbols, and it's not enough to have a place to live. The reason such a large percentage of their income is going to rent is because they're choosing apartments that have prestige and sex appeal. They want to be in that trendy urban neighborhood instead of living somewhere half the price in the suburbs or a less prestigious urban area. So yes, millennials are paying too much in rent, but it's their own fault. Lower-rent options do exist, millennials just aren't picking them. Your article implies that high rent is a prima facie fact that millennials can't do anything about.

Wild Bill then points out that those who are paying for the condos you describe are not the ones having issues saving money. Instead, those who are more cash/income strapped, save little to nothing by moving to other locations like you described.......and you agree.

So back to the original point in my two posts......the reason why the millennials who are opting to live at home versus renting is economic in nature. Numerous studies, as well as articles linked in this thread, suggest that millennials still want to own a home. Therefore, those millennials who are staying/living home instead of renting may best be explained by overall high rent costs, low vacancies, lower incomes and the desire to save for a home. Agree or no?

 

[woolybug25]

I agree, I was responding specifically to the post about the "rent trap." I don't believe rent is as detrimental to saving as the other things you mentioned.

That's great that you live within a mile of both sets of families. That's not an option for some people, i.e. those of us with families that live hundreds of miles apart. As you know, my wife and I left Florida to be closer to our families but it's an absurd standard to suggest that living in a different town than your parents is somehow illegitimate.

First of all, you know that I'm a commercial banker, so quit Trollin'... Especially rich coming from a low level book keeper at a media company

Secondly, you made it sound like staying close to home and not buying a house out in the suburbs was childish, when I'm saying moving far away from your family to live in some plastic world with no sense of community is childish. I live in a small town of 4K people in SW Michigan. It doesn't get more rural. But yet I have a good job, I responsibly purchased a home, am raising my kids within a traditional family structure (kids actually interact with cousins, grandparents, etc) in a community in which I am intimately involved. So to say that it's "not an option" is simply incorrect. Maybe not both family units, but one is attainable for even the most community bashing of libertarians out there.

Your premise has always been that people should move to the suburbs (not to be confused with small towns), get a souless job and raise your children in an isolated state away from community. The latter of which, wasn't so much suggested, but accepted. That's not the world I want to live in. That's not what our country has ever been in the best of times.

We need more people willing to work, willing to get education based on the ability to get said work. Care for their family and community.

 

[BleedBlueGold]

First of all, you know that I'm a commercial banker, so quit Trollin'... Especially rich coming from a low level book keeper at a media company

Secondly, you made it sound like staying close to home and not buying a house out in the suburbs was childish, when I'm saying moving far away from your family to live in some plastic world with no sense of community is childish. I live in a small town of 4K people in SW Michigan. It doesn't get more rural. But yet I have a good job, I responsibly purchased a home, am raising my kids within a traditional family structure (kids actually interact with cousins, grandparents, etc) in a community in which I am intimately involved. So to say that it's "not an option" is simply incorrect. Maybe not both family units, but one is attainable for even the most community bashing of libertarians out there.

Your premise has always been that people should move to the suburbs (not to be confused with small towns), get a souless job and raise your children in an isolated state away from community. The latter of which, wasn't so much suggested, but accepted. That's not the world I want to live in. That's not what our country has ever been in the best of times.

We need more people willing to work, willing to get education based on the ability to get said work. Care for their family and community.

Which town? New Buffalo is my old stomping grounds. I was just up there last weekend to get a Redamak's burger.

 

[Whiskeyjack]

I actually really like this trend. I would much rather have young professionals saving their money, focusing on career and contributing back to the family unit that sacrificed for them their entire life. I see it a positive metric that shows improvement in family values and community building.

If you look back in history, multi generational households were the norm. These were times where family values had a much higher importance to society. It's a good thing that millennials would rather help contribute to their families instead of falling for our government's BS campaign of telling them that home ownership is a right. Save your money, use conventional financing and focus on family.

I'm looking forward to Whiskey's remarks on this.

On it's face, I agree that this is a very positive trend. There are currently 10 people living under my roof spread across 4 generations. As you mentioned, multi-generational households were once the norm, and it's a very good thing when relatives rely on each other, with each person doing whatever he or she can to help the family.

But since my generation is also opting out of marriage, parenthood, church, and countless other measures of stability and community involvement, I share BBG's and Ndaccountant's skepticism that this trend is driven by an increased appreciation of community by millennials. Though they could always come to appreciate the benefits of such arrangements, even if they've been forced into it against their wills.

It's a false dichotomy that you either need to live with your mother or "get sucked into the same kind of BS lending practices pre-recession." I moved 1,200 miles from my family when I graduated. That's 1,000 miles from my wife's family and 1,100 miles away from my alma mater. I had no support system other than my wife and we're far better people today for the time we spent on our own for three years. We bought our first house at 22 and sold it at 24, and we did it all by ourselves like real live grown-up people. I meet people all the time who are five years older than me and still behave like children. They don't know how to cook, clean, do laundry, or make a simple budget. The #adulting phenomenon is disgraceful.

You give yourself a lot of credit for having "done it right". As I'm constantly reminding you, the social and cultural advantages you had growing up are increasingly rare. You would not be where you are today without the wholly gratuitous sacrifices made on your behalf by your parents, teachers, and countless others. A more gracious and humble perspective would be to realize that you're incredibly fortunate to have the stability and earning power you currently enjoy, which should hopefully lead to both pay it forward with your own children, and to pay it back to the community that raised you.

1. There are certainly economic benefits of living with your parents but there are psychological benefits of living on your own that are far more important. Being able to get a mortgage at 80% or better LTV is not the be-all and end-all of adulthood. People are much better off in the long run learning how to live for themselves, even if that means spending a few extra dollars a month.

Developing one's talents to the point of economic self-sufficiency and beyond, so that a man can then support others as he was once supported, is a very good thing. But being alone-- as in disconnected from family, friends, a stable community, etc.-- is never a good thing. And achieving economic self-sufficiency in our current economy increasingly requires rootlessness and the abandonment of community.

2. Millennials are hurting their own job prospects because they're only considering employment opportunities in commuting distance from their parents' homes. If millennials employed a national (or even regional) job search, their unemployment rates would be much more favorable. Young professionals living at home is a far smaller problem than young unemployed people living at home because there aren't any employers hiring psychology majors in Terre Haute.

Where have you seen evidence that Millennials are less willing to move away from home than previous generations? All the research I've seen points to the exact opposite.

3. The times when living at home was the norm were also the times when the gap between college graduation and marriage was a few months, not ten years. I'd be perfectly happy with a socioeconomic pattern of graduating college and moving home at 22, getting married and renting an apartment at 23, and buying a house at 25. The issue is that people aren't getting married (and reaping the benefits thereof) until they're 30.

It's almost as if they're in the grips of a vicious political ideology that exalts selfishness over sacrifice, no?

5. Your entire post reads like somebody who just watched The Big Short. You didn't say the words, but you're a half-step away from blaming the situation we're in on "predatory lending practices" or some such thing. I hope that's not where you're going, because I'd be unable to resist debating the merits of the Community Reinvestment Act, and I really don't feel like it.

Not sure where you got that from in wooly's post.

 

[wizards8507]

Wait a second. You first said that the rent trap is false, because

Wild Bill then points out that those who are paying for the condos you describe are not the ones having issues saving money. Instead, those who are more cash/income strapped, save little to nothing by moving to other locations like you described.......and you agree.

So back to the original point in my two posts......the reason why the millennials who are opting to live at home versus renting is economic in nature. Numerous studies, as well as articles linked in this thread, suggest that millennials still want to own a home. Therefore, those millennials who are staying/living home instead of renting may best be explained by overall high rent costs, low vacancies, lower incomes and the desire to save for a home. Agree or no?

Ah, I think we're talking about two different things. You're addressing the motiviations of millennials who choose to stay home. I'm addressing the behaviors of millennials other than where millennials choose to live that are inhibiting their ability to save.

Millennials who stay home are doing so for financial reasons: agree.

Millennials who rent are unable to save to buy a house becasuse the rent is too damn high: disagree.

First of all, you know that I'm a commercial banker, so quit Trollin'... Especially rich coming from a low level book keeper at a media company

Hey, I got promoted. I'm now a mid-level bookkeeper at a media company. But for real, I work in finance, not accounting. Bankers are just accountants who couldn't pass the CPA exam.

Secondly, you made it sound like staying close to home and not buying a house out in the suburbs was childish, when I'm saying moving far away from your family to live in some plastic world with no sense of community is childish. I live in a small town of 4K people in SW Michigan. It doesn't get more rural. But yet I have a good job, I responsibly purchased a home, am raising my kids within a traditional family structure (kids actually interact with cousins, grandparents, etc) in a community in which I am intimately involved. So to say that it's "not an option" is simply incorrect. Maybe not both family units, but one is attainable for even the most community bashing of libertarians out there.

That's great. I think community building is a noble goal and you seem to have made great decisions for yourself. However, it's irrelevant in the context of this discussion. The millennials we're talking about don't have good jobs, they hate the "traditional family structure," they're not having kids at all, they're not getting married, and they're not purchasing homes. So the reason Wooly brood lives in the woods near grandma and grandpa has nothing to do with why millennial Mason lives in his high school bedroom.

Your premise has always been that people should move to the suburbs (not to be confused with small towns), get a souless job and raise your children in an isolated state away from community. The latter of which, wasn't so much suggested, but accepted. That's not the world I want to live in. That's not what our country has ever been in the best of times.

I've never advocated for any such thing. I have a lot of problems with New Urbanism but none of that should be construed to be in favor of the kinds of "neighborhoods" that exist in places like Florida, Arizona, and Texas. My neighborhood in Florida was a pastel hellscape. Most of my neighbors rich old British people who lived there part-time. I went to Florida because that's where I got a great paying job out of undergrad. It was absolutely the correct decision for me to go there temporarily before coming back closer to home.

The thing you don't understand is that there's no difference between "suburbs" and "small towns" in this part of the country. They're one in the same. I had never even heard of a homeowner's association until I moved to Orlando.

We need more people willing to work, willing to get education based on the ability to get said work. Care for their family and community.

Right. But living with your parents is not indicative of any of that. Move next door to your parents for all I care. But leeching off of them is not "care for family and community."

 

[tussin]

I want to agree with Wooly and Whiskey but their views seem unrealistic and idealistic in today's economy.

I grew up in a small town in Northeast PA, about two hours from both Philly and NYC. I love it there and would love to move back and even buy my parents' beautiful home someday. But there are no jobs there for me -- in order to accumulate any sort of wealth you need to be: 1) a doctor or highly paid healthcare professional, 2) a lawyer, or 3) a successful entrepreneur. I am none of those things. Moving home would mean sacrificing tens of thousands of yearly income. I just can't do it.

 

[Whiskeyjack]

I want to agree with Wooly and Whiskey but their views seem unrealistic and idealistic in today's economy.

I grew up in a small town in Northeast PA, about two hours from both Philly and NYC. I love it there and would love to move back and even buy my parents' beautiful home someday. But there are no jobs there for me -- in order to accumulate any sort of wealth you need to be: 1) a doctor or highly paid healthcare professional, 2) a lawyer, or 3) a successful entrepreneur. I am none of those things. Moving home would mean sacrificing tens of thousands of yearly income. I just can't do it.

Not everyone can move home. You can always build community wherever you find yourself. The fact that you'd like to, and have looked into whether it'd be viable, speaks highly of you either way.

 

[wizards8507]

You give yourself a lot of credit for having "done it right". As I'm constantly reminding you, the social and cultural advantages you had growing up are increasingly rare. You would not be where you are today without the wholly gratuitous sacrifices made on your behalf by your parents, teachers, and countless others. A more gracious and humble perspective would be to realize that you're incredibly fortunate to have the stability and earning power you currently enjoy, which should hopefully lead to both pay it forward with your own children, and to pay it back to the community that raised you.

My "community" didn't do shit. I'm successful despite my community, not because of it. My hometown is a pit of misery, poverty, and addiction. They didn't prepare me for success, they motivated me to escape. Kindly refrain from speaking of things about which you know nothing.

As for my parents, they certainly sacrificed a great deal. As they're both still under fifty years old, there's little they "need" from me other than time with their granddaughter, which I moved the length of the country to provide to them. When the time comes that they need more tangible sacrifices, I believe I'll be prepared to provide that.

Developing one's talents to the point of economic self-sufficiency and beyond, so that a man can then support others as he was once supported, is a very good thing. But being alone-- as in disconnected from family, friends, a stable community, etc.-- is never a good thing. And achieving economic self-sufficiency in our current economy increasingly requires rootlessness and the abandonment of community.

As I've supported with my own story, the two are not mutually exclusive. We were "alone" for approximately three years, which sharpened our ability to provide for ourselves so that we could become assets to ourselves as well as others. It was temporary, and we always knew it would be.

I also think you overvalue physical proximity in 2016.

Where have you seen evidence that Millennials are less willing to move away from home than previous generations? All the research I've seen points to the exact opposite.

I think we're dancing around the same preferred outcome but coming at it from opposite sides. Some millennials are moving all across the country chasing the next big job or promotion. Other millennials are staying so close to home that they're literally not leaving it. I think we agree that the ideal scenario would be somewhere in between... adults living in their own homes (whether renter or purchased) but in close enough proximity to maintain family and community ties. That seems to be the only option millennials aren't taking.

It's almost as if they're in the grips of a vicious political ideology that exalts selfishness over sacrifice, no?

The issue is not selfishness over sacrifice, it's the perversion of self-interest to mean selfishness, as if the two were the same thing. It is in my self-interest to see my daughter grow up having a strong relationship with her grandparents because it brings me fulfillment to watch that relationship develop, thus I sacrifice time and money to develop that relationship. There's only tension between self-interest and sacrifice when you conflate self-interest and selfishness as you always do.

The classic example of this is Mother Theresa, who often talked of the joy she derived from sacrificing herself for others. In the derivation of that joy, her sacrifices were also in her self-interest. Somewhere along the lines, the "enlightened" dropped off of Adam Smith's enlightened self-interest. That's where liberalism jumped the shark.

I want to agree with Wooly and Whiskey but their views seem unrealistic and idealistic in today's economy.

I grew up in a small town in Northeast PA, about two hours from both Philly and NYC. I love it there and would love to move back and even buy my parents' beautiful home someday. But there are no jobs there for me -- in order to accumulate any sort of wealth you need to be: 1) a doctor or highly paid healthcare professional, 2) a lawyer, or 3) a successful entrepreneur. I am none of those things. Moving home would mean sacrificing tens of thousands of yearly income. I just can't do it.

Similarly, my wife is from Philadelphia and I grew up in Rhode Island. The closest we'd be able to get to "in between" my parents and her mom would be to move to Manhattan, but in that case I'd have to kill myself. Connecticut is the best we can hope for in terms of proximity to everyone and reasonable chances for economic flourishing.