OfflineThe Baby Boomer generation was lucky in many ways when it came to housing. The dollar was strong, there was plenty of cheap housing, mortgage rates were low, and all asset classes for investment were booming. Owning a home was a middle class dream that was easily realized during a period of high employment. Even those with only a single blue collar household income could buy a home.
There are major differences in today’s economic and social lifestyles, and this generation entering adulthood has far more challenges. Jobs are much scarcer. Costs are higher for just about everything, and the blue collar single income family can no longer afford to purchase a home in many areas around the country. Even multiple income families find some areas impossible. The dollar is weak, and student debt is keeping graduates from prosperity even if they do have good jobs.
People on the whole are not adventurous, and even though millions lost their homes to foreclosure, they didn’t pick up and move, as they have their social circles in place and didn’t see greater opportunity in other areas anyway. They simply decided to stay put and rent, and renting is their state of mind now and probably will be into the near future.
Today’s graduating students have on average no money in retirement accounts. They are not in the right place at the right time like their Baby Boomer parents and grandparents. They have student debt, lower expectations for excellent employment, and their dollars buy less. In more expensive housing markets the percentage of rental units is rising and in some like New York it was already quite high.
Growth in home prices post-bust came primarily from competition between investors to buy up bargains and convert them to rental units. Rents have been rising, and demand is expected to keep rising with population growth. Home sellers are enjoying their ability to generate competition, and prices will continue to rise as long as new home construction is depressed and underwater homeowners sit on their properties waiting for better days.
The country is becoming a generation of renters, and they don’t have a problem with that fact. There’s nothing wrong with renting, and it frees them up to move for a better job without having to deal with selling a home.
It also means we will never return to our Golden Years. Because of corruption and greed, we managed to destroy things in a single generation.
We all must get use to the new normal now.
P.S. - Everything else is immaterial, irrelevant, and unnecessary.
there are many people who are content to rent; they don't want to have the burdens of paying for insurance, taxes, or for maintenance of the properties; on the other side of the coin, you have investors who buy, fix, and hold. They don't mind paying the insurance, taxes, and repairs, usually with the funds from the rent that they receive from their tenants.
Seems like it's not such a bad thing for anyone...
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...
You're ignoring a big chunk of reality . Yes, some may prefer renting over owning, but the point is that the dynamics have changed for the worst. Every known economical aspect has been turned upside down.
1. Jobs are much scarcer
2. Costs are higher for just about everything
2. Blue collar single income family can no longer afford to purchase a home in many areas around the country
4. The dollar is weak
5. Student debt is keeping graduates from prosperity even if they do have good jobs
In a nut shell, the party is over for good!
P.S. - Everything else is immaterial, irrelevant, and unnecessary.
Jobs are available for those that want to work, maybe not in the traditional sense, but they are there! If you can't find one, create one...I created three and am loving life with more work than I can handle, wish I could find a good helper/worker!
Houses can be bought, although they are not as easy to get, the loose loans have actually caused opportunity for young buyer to get one of the many foreclosures.
When a family lives below their means, they can save and later buy a house either with a large down payment or all cash, patience, patience, patience!
Student debt was a way of pulling workers out of the workforce and making the unemployment numbers lower, now we have over-trained folks with debt and hundreds trying for white-collar jobs. If you can't find a job in what you want where you want, then move location or change what you are looking for...
In my humble opinion, the times have just changed, for instance, a few years ago there were houses being flipped like crazy, then it shifted to more of a buy and rent, now it is shifting again, So, you must adjust and capitalize on the opportunities! My glass was half full when yours was half empty, now mine is over flowing and yours is empty, so find a way to fill your glass, don't look at how it became empty!!!
Great post! I believe that more millionaires were created during the great depression then anytime before. Interesting.
The problem I see is a growing dependence on the government to take care of us rather than the old entrepreneurial spirit that made this country great. If we continue this shift towards socialism along with radical environmentalism we will never return to the good old days.
I have faith that right now close to 50% of Americans still believe in personal/individual responsibility. They will work hard towards their goals without giving up and whining. Hopefully others will see the folly of degrading the successful and relying on government food stamps!
I see a bright future!
Michael
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
Just as with shifting markets, we have to adapt our strategies to the changes that are happening everywhere. Change is a constant. Being aware of these changes and adjusting not only our strategies but our ways of thinking about them, I believe is the key to coming out on top.
The Great depression did create more millionaires than any other time and perhaps history will show that the current times we are living in created even more.
If you think about when most people get into any given market it is right near the top of it. The savvy and successful jump in while everyone else is sitting and waiting. This is the time for us all to jump in and in so doing not only improve life for ourselves but as an effect the economy will turn around. To paraphrase Dean, when improving your own economy, the greater economy improves by default. The more money I have to spend on wants rather than needs the more money is being pumped into the economy. And imagine our whole DG family pumping money into the economy...the country will once again enjoy being on top.
Any thoughts on how Bernanke’s Heir Apparent, Janet Yellen will Impact Real Estate? I think it will be good for us investors.
All the best to everyone in their endeavors and thanks to everyone who replied here, very interesting reads.
warmest regards,
Lisa Richardson
The only thing that pulled us out of the Great Depression was WWII.
In the 1950's - 1970's it was about cash
In the 1980's - 2000's it was about credit as savings were depleted
In the 2000's - 2010 it was about home equity because credit and cash were gone
In the 2007 - present it has been student loans to get more into higher paying jobs
Now that people have no savings, credit is tapped, loans maxed, homes tapped there is nothing left to fuel an exponential economy. Add in the fact that there is no new revenue generating breakthrough technology to purchase. Combine all this with saturated job market. Top it all off with a government so far in debt that it worries about interest payments exceeding the tax revenues.... What do you get?
Recipe for complete financial meltdown. This isn't conspiracy, it's not a hunch, it's not even guesswork. The US will in fact suffer a depression worse than the 1930's no sooner than 2015 and no later than 2022. How do I know this? Of all the wealth we traded China for near useless garbage, I found ONE thing which not only answered these questions, but predicted the future. A simple Casio calculator.
Crashes are NEVER unpredictable. They have ALWAYS been the most OBVIOUS financial issue. Runaway credit in the stock market was OBVIOUS in the 1920's. Runaway housing prices was OBVIOUS in 2000's, and now the national debt is OBVIOUS. How do I know this crash will be worse than any in history? Simple.
(adjusted for inflation and population to the year 2013)
Credit Bubble of 1920's = $509M per person
Housing Bubble of 2000's = $333M per person
Great Collapse of 2015-2022 = $48,571M per person
This means we can expect a disaster almost 95x worse than the Great Depression. In other words, complete collapse of the Financial System and no government to bail anything out. So please, stop calling those of us who have done the math "crazy" or "conspiracy theorists" or whatever derogatory name you can think of. I invite you to do 2 things:
1. Look up the definition of "Normalcy Bias"
2. Grab a calculator, use the Fed's own website, and do the math yourself.
You've been warned, now it is up to you to take the actions needed to protect your family.
P.S. - Everything else is immaterial, irrelevant, and unnecessary.
That is all wonderful news. I just made offers on 8 properties today. I can't control what may or may not happen, I can control working the Real Estate market however. If the Apocalypse comes then who cares anyway! Dig a hole, store food and water and whip out your AR if you are that worried.
Some quick facts about the power of the US economy vs China. Number 1 and number 2 largest economies in the world.
Americas economy is about 10 times larger than its closest competitor China.
Population wise every man, women and child in the US represents thousands of dollars in productivity where in China each individual is at about a $2.00 level.
It is not to late if we pull our heads out and create the tens of thousands of energy related jobs that are right here in the USA among other things. Some people in power don't want that to happen because they hate America. They WANT us to be a third world country.
Oh well, I can only vote and make money in REI!!
Michael
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
C'mon folks, don't be a fair weather business person! Why did we join up with DG? Because we bought into his ideas and told us we could be better entrepenuers and make noney as well as helping people out of their bad situation. We know we are on another cycle, perhaps like the last one, so get busy and show what you are made of. Go back and read "Abundance" and
other books by Dean. Read his life story and see what he achieved and stop whining!
Pauline Timmons
We have a daughter 21 and a son 19 both have dreams of one day owning a house of there own and they have friends that think the same way.
They both went out and rented and failed, they came back home and we gave them all the support they needed to try again, renting has a lot of meanings for ours it is a way of growing up without our help and we are all for that. If they dont fail they wont succeed, and we think this is a great learning experience, even tho we are REI we wont give them a house they have to earn it on there own.
Ok maybe that was to deep for some but we think there is nothing wrong with renting.
Aaron-n-Suzy